Flow Metals Corp. — Interim / Quarterly Report 2020

May 13, 2020

FLOW METALS CORP.

Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019

(Unaudited)

(Expressed in Canadian dollars)

FLOW METALS CORP.

Condensed Interim Statements of Financial Position (Unaudited) (Expressed in Canadian dollars)

	April 30,	July 31,
	2020	2019
	$	$
Assets
Current Assets
Cash and cash equivalents	139,139	94,563
Receivables	3,973	2,549
Prepaid expenses	9,524	-
Total Current Assets	152,636	97,112
Mineralproperties (Note 5)	425,750	375,750
Total Assets	578,386	472,862
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	76,832	37,582
Due torelated parties (Note7)	17,298	17,594
Total Current Liabilities	94,130	55,176
Shareholders’ Equity
Share capital (Note 6)	595,750	545,750
Share subscriptions receivable (Note 6)	-	(30,000)
Share subscriptions received in advance	90,000	-
Deficit	(201,494)	(98,064)
Equity	484,256	417,686
Total Liabilities and Shareholders’ Equity	578,386	472,862

Nature of operations and continuance of business (Note 1) Subsequent events (Note 11)

Approved by the Board of Directors on May 12, 2020:

“Scott Sheldon” Scott Sheldon, Director & CEO	“Donald Sheldon”
	Donald Sheldon, Director

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

FLOW METALS CORP.

Condensed Interim Statements of Loss and Comprehensive Loss For the Nine Months Ended April 30, 2020 and 2019 (Unaudited)

(Expressed in Canadian dollars)

	Three months ended	Three months ended	Nine months ended	Nine months ended
	April 30,	April 30,	April 30,	April 30,
	2020	2019	2020	2019
	$	$	$	$
Exploration Expenses(Note 5)	9,047	-	27,652	-
Administrative Expenses
Audit and accounting fees	20,000	5,250	26,436	14,813
Consulting fees	-	3,550	5,499	12,650
General and administrative	13,520	468	21,689	734
Legal	2,297	-	6,413	1,750
Management fees	-	5,750	-	7,588
Transfer agent and filing fees	590	1,315	9,133	6,689
Travel	-	-	6,811	-
Total administration expenses	(36,407)	(16,333)	(75,981)	(44,224)
Other Income
Interest income	68	-	203	-
Net loss and comprehensive loss for theperiod	(45,366)	(16,333)	(103,430)	(44,224)
Lossper share,basic and diluted	(0.00)	(0.00)	(0.01)	(0.01)
Weighted average shares outstanding	14,695,565	9,925,565	14,379,946	8,150,270

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

FLOW METALS CORP.

Condensed Interim Statements of Changes in Equity For the Nine Months Ended April 30, 2020 and 2019 (Unaudited)

(Expressed in Canadian dollars)

	Share Capital Common Shares # Amount $ Share subscriptions received in advance $ Share subscriptions receivable $ Deficit $ Total $
Balance, at July 31, 2018 Shares issued for Plan of Arrangement (Note 4) Shares issued for mineral property Shares cancelled Share subscriptions received in advance Net loss for theperiod	100 5 - - (5,681) (5,676) 9,767,234 326,000 - - - 326,000 158,331 4,750 - - - 4,750 (100) (5) - - - (5) - - 55,000 - - 55,000 - - - - (44,224) (44,224)
Balance, at April 30, 2019	9,925,565 330,750 55,000 - (44,905) 335,845
Balance, at July 31, 2019 Shares issued for mineral interests Share subscriptions received Share subscriptions received in advance Net loss for theperiod	14,225,565 545,750 - (30,000) (98,064) 417,686 1,000,000 50,000 - - - 50,000 - - - 30,000 - 30,000 - - 90,000 - - 90,000 - - - - (103,430) (103,430)
Balance, at April 30, 2020	15,225,565 595,750 90,000 - (201,494) 484,256

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

FLOW METALS CORP.

Condensed Interim Statements of Cash Flows For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

	Nine months	ended
	April 30,	April 30,
	2020	2019
	$	$
Cash provided by (used in):
Operating activities
Net loss for the period	(103,430)	(44,224)
Changes in non-cash operating working capital:
Receivables	(1,424)	(1,060)
Prepaid expenses	(9,524)	-
Accounts payable and accrued liabilities	39,250	33,295
Due to relatedparties	(296)	18,088
Cash(used in) provided byoperatingactivities	(75,424)	6,099
Investing activities
Optionpayments made	-	(5,000)
Cash received from(used in)investingactivities	-	(5,000)
Financing activities
Share subscriptions received	30,000	55,000
Share subscriptions received in advance	90,000	-
Cancellation of shares	-	(5)
Bank overdraft	-	(1)
Cash received from(used in)financingactivities	120,000	54,994
Increase (decrease) in cash	44,576	56,093
Cash,beginningofperiod	94,563	-
Cash, end ofperiod	139,139	56,093
Supplemental information
Shares issued for plan of arrangement	-	326,000
Shares issued for property	50,000	4,750
Interest paid	-	-
Taxespaid	-	-

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

Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

FLOW METALS CORP.

1. Nature of Operations and Continuance of Business

Flow Metals Corp. (“Flow Metals” or the “Company”) was incorporated under the Business Corporations Act (British Columbia) with 100 common shares issued to its initial and sole shareholder, Go Metals Corp. (“Go Metals”). The Company’s registered office is located at Suite 810 – 789 West Pender Street, Vancouver, BC, V6C 1H2, Canada.

The Company entered into a Plan of Arrangement (the “Arrangement”) with Go Metals whereby the Company would own all of Go Metals’ interest in the New Brenda Property (Note 4). As consideration for the New Brenda Property, the Company issued 9,767,234 common shares to Go Metals, which would then be distributed to the shareholders of Go Metals pro-rata based on their relative shareholdings of Go Metals. Following the Arrangement, the Company would be a junior mineral exploration company focused on copper and gold exploration projects in Canada.

These condensed interim financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due. As at April 30, 2020, the Company has not generated any revenues from operations and has an accumulated deficit of $201,494. The Company expects to incur further losses in the development of its business, all of which casts significant doubt about the Company’s ability to continue as a going concern. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company’s liabilities and commitments as they become due, although there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company. These financial statements do not reflect any adjustments to the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used that may be necessary if the Company is unable to continue as a going concern. Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from novel coronavirus (COVID-19). The Company continues to operate its business at this time. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on business operations cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, results of operations, financial position and cash flows in 2020.

2. Basis of Presentation

• (a) Statement of Compliance

These interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

The condensed interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual financial statements as at and for the year ended July 31, 2019.

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Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

FLOW METALS CORP.

2. Basis of Presentation (continued)

• (b) Basis of Measurement

The accounting policies followed in these condensed interim financial statements are consistent with those applied in the Company’s most recent annual financial statements for the year ended July 31, 2019.

These financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair value, as explained in the accounting policies set out in Note 3.

• (c) Functional and Presentation Currency

The functional currency of a company is the currency of the primary economic environment in which the company operates. The presentation currency for a company is the currency in which the company chooses to present its financial statements. These financial statements are presented in Canadian dollars, which is the Company’s presentation and functional currency.

3. Significant Accounting Policies

• (a) Critical Accounting Judgments and Estimates

The preparation of financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

The most significant accounts that require estimates as the basis for determining the stated amounts include recognition of deferred income tax amounts and provision for restoration, rehabilitation and environmental costs.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Determination of functional currency

The Company determines the functional currency through an analysis of several indicators such as expenses and cash flow, financing activities, retention of operating cash flows, and frequency of transactions with the reporting entity.

Income taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

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Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

FLOW METALS CORP.

3. Significant Accounting Policies (continued)

(b) New Accounting Standards

In June 2016, the IASB issued IFRS 16 Leases (“IFRS 16”). IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. However, lessees are no longer classifying leases as either operating leases or finance leases as it is required by IAS 17. The standard is effective for annual periods beginning on or after January 1, 2019. The adoption of IFRS 16 did not have a material impact on the Company’s financial statements.

4. Plan of Arrangement

Under the terms of the Arrangement, in consideration of the New Brenda Property, the Company would issue to Go Metals 9,767,234 common shares (the “Flow Metals Shares”) based on one Flow Metals Share being issued for every six issued and outstanding Go Metals common shares (“Go Metals Shares”) (Note 6). As a step in the Arrangement, Go Metals distributed the Flow Metals Shares to its registered shareholders by way of a return of paid-up capital, and each registered shareholder would receive one Flow Metals Share for every six Go Metals Shares held (Note 1). On September 10, 2018, the B.C. Supreme Court approved the Arrangement effective for September 17, 2018. On September 17, 2018, the Company issued 9,767,234 common shares valued at $326,000 to Go Metals under the terms of the Arrangement.

As a result of the Arrangement, outstanding warrants and options to purchase Go Metals Shares would be exercisable to acquire Flow Metals Shares as well as Go Metals Shares on the basis that the holder would receive, upon exercise, one Flow Metals Share for every six Go Metals Shares so acquired.

5. Mineral Properties

The Company’s mineral property interests are comprised of the following properties:

	New Brenda	Others	**Total **
Balance, at July 31, 2019	$ 330,750	$ 45,000	$ 375,750
Additions	-	50,000	50,000
Balance at April 30, 2020	$ 330,750	$ 95,000	$ 425,750

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FLOW METALS CORP.

Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

5. Mineral Properties (continued)

During the nine months ended April 30, 2020, the Company incurred exploration expenditures as follows:

Exploration and related expenditures	New Brenda	Sixty Mile	Total
Assay/analytical	$ 5,008	$ 1,349	$ 6,357
Field work	-	5,200	5,200
Geological	21,848	3,711	25,559
Transportation / travel	536	-	536
Recovery of expenses	-	(10,000)	(10,000)
Total mineral property
expenditures	$27,392	$260	$27,652

During the Nine months ended April 30, 2019, the Company did not incur any exploration expenditures.

New Brenda Property, British Columbia, Canada

On September 17, 2018, the Company acquired the 100% of the New Brenda Property from Go Metals valued at $326,000 pursuant to the Arrangement (Note 4). The New Brenda Property is comprised of 15 contiguous mineral claims located in South Central British Columbia in the traditional territory of the West Bank First Nation.

During the year ended July 31, 2019, the Company issued 158,331 common shares valued at $4,750 to shareholders of Go Metals upon exercise of Go Metals’ stock options and warrants, pursuant to the Arrangement which has been capitalized to the New Brenda Property (Notes 4 and 6).

Sixty Mile Property, Yukon Territory, Canada

On March 23, 2019, the Company signed an option agreement with three optionors to acquire a 100% interest in the Sixty Mile Property located in Yukon Territory, Canada. For consideration, the Company is required to make the following payments:

• a) $5,000 cash payment on the agreement date or within five calendar days thereof (paid);

• b) $25,000 cash payment (paid) and 300,000 common shares (issued and valued at $15,000) of the Company on the earlier of 120 days from the agreement date or upon listing of the common shares of the Company on the Canadian Securities Exchange;

• c) $30,000 cash payment and 300,000 common shares of the Company on or before the first-year anniversary of the agreement date; (Issued 600,000 shares with a fair market value of $30,000 for the Cash payment and Issued 300,000 shares with a fair value of $15,000 for the shares)

• d) $30,000 cash payment and 300,000 common shares of the Company on or before the second year anniversary of the agreement date; and

• e) $30,000 cash payment and 300,000 common shares of the Company on or before the third year anniversary of the agreement date.

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FLOW METALS CORP.

Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

5. Mineral Properties (continued)

Sixty Mile Property, Yukon Territory, Canada (continued)

Upon completion of these payments, the Company will earn a 100% interest in the property (“Earn-In”) subject to a 3% NSR royalty retained by the optionors. At any time, the Company shall have the option to acquire 2% of the 3% NSR by paying $1,000,000 per 1% to the optionors. In addition, the Company is required to pay an advance royalty of $30,000 to the optionors one year following the Earn-In and annually thereafter on the Earn-In anniversary date, until the mineral claims are in commercial production which the advance royalty payments shall be deducted from the Optionors’ share of the NSR. The Company can elect to issue common shares in substitution for such cash payment at a deemed value equal to the most recent closing price of the Company’s shares on the Canadian Securities Exchange.

Ashuanipi Gold, Quebec, Canada

On February 21, 2020, the Company signed an option agreement with Windfall Geotek “Windfall”, to acquire a 100% interest in 115 claims located in Quebec, Canada. The Ashuanipi property is located from 30 to 90 kilometers west and north-west of Schefferville, Quebec, and lies within the Ashuanipi Complex in the northeastern portion of the Superior Province. As consideration, the Company is required to make cash payments of $120,000 over three years, Issue 2,100,000 common shares over three years, and have a strategic partnership with Windfall Geotek for $60,000 and expend exploration expenditures of $450,000, as follows:

Cash consideration

• (i) $30,000 to be paid within 13 months of the common shares of the Company being listed on the Canadian Securities Exchange(amended on April 23, 2020);

• (ii) $40,000 to be paid February 20, 2022; and (iii) $50,000 to be paid February 20, 2023

Share consideration

• (iv) 100,000 to be issued within 10 days of signing; (Issued 100,000 shares with a fair value of $5,000)

• (v) 500,000 to be issued upon listing on the CSE;

• (vi) 500,000 to be issued February 20, 2021;

• (vii) 500,000 to be issued February 20, 2022; and

• (viii) 500,000 to be issued February 20, 2023

Strategic partnership

The Company agreed to use the artificial intelligence “AI” exploration targeting, Computer Aided Resource Detection System “CARDS” supplied by Windfall Geotek, on another project with a contract value of $60,000 CAD plus tax.

Exploration expenditures

• $450,000 to be spent during the first three years of the agreement.

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Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

FLOW METALS CORP.

6. Share Capital

(a) Authorized

Unlimited number of common shares without par value.

• (b) Issued and Outstanding

The Company had 15,225,565 (July 31, 2019 – 14,225,565) shares outstanding.

• (i) Shares issued during the nine-month period ending April 30, 2020

On March 23, 2020, the Company issued 600,000 common shares valued at $30,000 in stead of cash payment pursuant to the mineral property acquisition option agreement of the Sixty Mile property (Note 5).

On March 18, 2020, the Company issued 300,000 common shares valued at 15,000 pursuant to the mineral property acquisition option agreement of the Sixty Mile property (Note 5).

On February 24, 2020 the Company issued 100,000 common shares valued at $5,000 pursuant to the mineral property acquisition option agreement of the Ashuanipi Gold property (Note 5).

• (ii) Shares issued during the year ended July 31, 2019

On September 17, 2018, the Company issued 9,767,234 common shares valued at $326,000 to Go Metals under the terms of the Arrangement (Note 4).

On November 8, 2018, the Company issued 158,331 common shares valued at $4,750 related to the acquisition of the New Brenda Property (Note 5).

On June 12, 2019, the Company closed a non-brokered private placement of 4,000,000 units issued at a price of $0.05 per unit for gross proceeds of $200,000. Each unit consisted of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share at a price of $0.10 per common share until June 12, 2021.

On July 23, 2019, the Company issued 300,000 common shares valued at $15,000 related to the acquisition of the Sixty Mile Property (Note 5).

• (c) Warrants

Opening Granted Ending	Nine months ended April30, 2020 Number of Warrants Weighted Average Exercise Price 4,000,000 $ 0.10 - - 4,000,000 $ 0.10	Year ended July 31, 2019	Year ended July 31, 2019
	Number of Warrants 4,000,000 - 4,000,000	Number of Warrants - 4,000,000 4,000,000	Weighted Average Exercise Price
			$ - 0.10 $ 0.10

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FLOW METALS CORP.

Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

6. Share Capital (continued)

• (c) Warrants (continued)

As at April 30, 2020, the Company had the following warrants outstanding:

Numberof warrants	Exercise price	Expiry date
4,000,000	$0.10	June 12,2021

7. Related Party Transactions

During the nine months ended April 30, 2020, the Company paid legal fees of $6,413 (2019 - $Nil) to a company controlled by a director of the Company and $19,048 geology fees to a company controlled by an officer of the Company.

As at April 30, 2020, the Company had an amount owing of $6,000 (July 31, 2019 - $6,296) to the Chief Executive Officer of the Company. This amount is non-interest bearing, unsecured and repayable on demand.

As at April 30, 2020, the Company had an amount owing of $11,298 (July 31, 2019 - $11,298) to Go Metals, a company with certain management and directors in common. This amount is non-interest bearing, unsecured and repayable on demand.

As at April 30, 2020 the Company paid $9,524 (July 31, 2019 - $Nil) in advance to a company controlled by the COO of the Company.

8. Financial Instruments

• (a) Classification of Financial Instruments

The Company has classified its financial instruments as follows:

	April 30,	July 31,
	2020	2019
	$	$
Financial assets, measured at amortized cost:
Cash	139,139	94,563
	139,139	94,563
Financial liabilities, measured at amortized cost:
Accounts payable	76,832	37,582
Due to related parties	17,298	17,594
	94,130	55,176

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FLOW METALS CORP.

Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

8. Financial Instruments (continued)

(b) Fair Values

The Company has classified fair value measurements of its financial instruments using a fair value hierarchy that reflects the significance of inputs used in making the measurements as follows:

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

• Level 2: Valuations based on directly or indirectly observable inputs in active markets for similar assets or liabilities, other than Level 1 prices, such as quoted interest or currency exchange rates; and

• Level 3: Valuations based on significant inputs that are not derived from observable market data, such as discounted cash flow methodologies based on internal cash flow forecasts.

• As at April 30, 2020, the fair values of accounts payable and due to related parties approximate their carrying values due to the relatively short-term maturity of these instruments.

(c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

(d) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The Company is not exposed to any significant credit risk at April 30, 2020.

(e) Price Risk

The Company is exposed to price risk with respect to commodity prices. The Company’s ability to raise capital to fund exploration and development activities is subject to risks associated with fluctuations in the market price of commodities. The Company is not exposed to any significant price risk at April 30, 2020.

(f) Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not hold any financial liabilities with variable interest rates. The Company does not believe it is currently subject to any significant interest rate risk.

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FLOW METALS CORP. Notes to the Condensed Interim Financial Statements For the Nine Months Ended April 30, 2020 and 2019 (Unaudited) (Expressed in Canadian dollars)

8. Financial Instruments (continued)

• (g) Foreign currency exchange rate risk

The Company currently has no significant operations denominated in foreign currencies. Management believes there is no significant foreign currency exchange rate risk.

9. Capital Management

The Company defines its capital as cash and equity comprised of issued share capital and deficit. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration stage. As such, the Company has historically relied on the equity markets to fund its activities. In addition, the Company is dependent upon external financings to fund activities. In order to carry out planned exploration and pay for administrative costs, the Company will need to raise additional funds. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

The Company is not subject to externally imposed capital requirements as at April 30, 2020.

10. Segmented Information

The Company operates in one reportable operating segment, being the acquisition and exploration of mineral properties in Canada. As the operations comprise a single reporting segment, amounts disclosed also represent segment amounts.

11. Subsequent events

The Company closed a non-brokered private placement, by issuing 3,700,000 units at $0.05 per unit for gross proceeds of $185,000. Each unit is comprised of one common share and one transferable share purchase warrant. Each warrant is exercisable to purchase one additional share at a price of $0.10 for a period of 24 months from closing.

The Company has also entered into debt settlement agreements (“Settlement Agreements”) to settle outstanding cash payments owed to four creditors for $127,075 for management, administration and accounting consulting services. A total of $52,000 of the debt is owed to Scott Sheldon and Jacob Verbaas, two insiders of the Company for management fees (the “Insider Debt”). The disinterested directors of the Company have approved the Settlement Agreements with each of the insiders. Pursuant to the Settlement Agreements, the Company will issue an aggregate of 1,270,750 Shares to the creditors at a deemed price of $0.10 per Share.

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