Ginger Beef Corporation - Management Reports 2021

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GINGER BEEF CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSIS

For the year ended December 31, 2020 April 29, 2021

INTRODUCTION

How to use this Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) as at April 29, 2021 is intended to help readers understand Ginger Beef Corporation (the “Corporation”), its history, business environment, strategies, performance and risk factors from the viewpoint of management. It should be read in conjunction with the consolidated financial statements and the accompanying notes for the years ended December 31, 2020 and 2019. The following comments may contain management estimates of anticipated future trends, activities or results; these are not a guarantee of future performance, since actual results could change due to factors or variables beyond management control.

Management is responsible for the preparation and integrity of the consolidated financial statements, including the maintenance of appropriate information systems, procedures and internal controls, and to ensure that information used internally or disclosed externally, including the consolidated financial statements and MD&A, is complete and reliable.

Forward Looking Statements

Statements contained in the MD&A, which are not based on historical fact, including without limitation, statements containing the words “may”, “will”, “plans”, “intends”, “expects”, “projects”, “anticipates”, “believes”, “estimate”, “continue” and similar expressions, constitute “forward looking information” within the meaning of applicable Canadian securities laws. Forward looking statements contained in this document may involve, but are not limited to, statements relating to the Corporation’s objectives, priorities, strategies, actions, targets, expectations and outlook. Forward looking statements are necessarily based upon assumptions and predictions with respect to the future, including but not limited to the factors referred to below. As a result, forward looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied thereby. These risks, uncertainties and other factors include, but are not limited to, changes in the consumer packaged goods industry and external market factors, as well as the factors referred to in the Corporation’s Annual Consolidated financial statements dated April 29, 2020, and its other filings with the applicable Canadian securities regulatory authorities. In light of these uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward looking statements. Except as required by law, the Corporation assumes no obligation to update or revise such information to reflect later events or developments.

DESCRIPTION OF BUSNESS

Ginger Beef Corporation ("the Corporation" or "Ginger Beef") was incorporated under the Business Corporation Act (Alberta) on April 26, 2000 and is listed on TSX Venture Exchange (“TSXV”) under the symbol “GB”.

The Corporation’s operations include Ginger Beef Express Ltd. (“Express”) and its wholly-owned subsidiary Ginger Beef Choice Ltd. (“Choice”). Express is a franchisor of Chinese food restaurants located primarily in Calgary, Alberta and is the holding company for Choice. Express has developed takeout and delivery units, full-service restaurants as well as food court concepts. Choice is a federally inspected manufacturer of fresh and frozen Chinese food items for wholesalers in Canada. Choice was incorporated under the Business Corporation Act (Alberta) on July 22, 1998.

SELECTED ANNUAL FINANCIAL INFORMATION

The following is a summary of financial information for the Corporation Products Ltd. for the last four years:

	Years Ended December 31
	2020 2019 2018
Statement of financial position Total assets Total long-term liabilities (NOTE 1) Shareholders’ equity Statement of comprehensive income Net sales - deli Chinese food products Royalties and franchise fees	5,201,123 4,346,130 3,227,459 751,375 978,150 140,229 3,539,312 2,711,201 2,375,952 7,842,002 6,954,059 6,176,948 244,216 280,541 256,139
Sub-total Earnings (loss) before deducting interest, income tax and depreciation expenses (“EBITDA”) (NOTE 2) Net income (loss) Per Share Amounts EBITDA (NOTE 3) Net income(loss),basic and diluted(NOTE 3)	8,086,218 7,234,600 6,433,087 1,352,960 720,189 487,033 828,111 335,249 201,801 0.10 0.05 0.04 0.06 0.03 0.02

NOTE 1: Includes both current and long-term portions of loans and borrowings.

NOTE 2:

There is no standardized meaning of EBITDA or EBITDA per share under International Financial Reporting Standards (“IFRS”) and, therefore, EBITDA and EBITDA per share are non-IFRS financial measures that may not be comparable to similar measures presented by other companies. EBITDA is calculated in the table below and EBITDA per share is calculated by dividing EBITDA by the weighted average number of common shares outstanding during the year.

NOTE 3: EBITDA is reconciled to net income (loss) and per share amounts are as follows:

	Years Ended December 31
	2020 2019 2018
Net income (loss) Deduct: Finance income Add: Interest on lease liabilities Income taxes (recovery) Depreciation - COGS Depreciation-G&A	828,111 335,249 201,801 (60,284) (69,700) - 61,807 72,618 4,842 256,895 124,656 78,851 193,074 188,580 135,207 73,357 68,786 66,332
EBITDA Weighted average number of shares outstanding	1,352,960 720,189 487,033 13,361,997 13,361,997 13,361,997
EBITDA per share, basic and diluted	0.10 0.05 0.04
Net income(loss) per share,basic and diluted	0.06 0.03 0.02

OVERALL PERFORMANCE

The Corporation’s gross revenue in 2020 was $8,086,218 compared to $7,234,600 in 2019. The Corporation’s net income in 2020 was $828,111 or $0.062 per share, compared to net income of $335,249 or $0.025 per share in 2019.The increase in the Corporation’s gross revenue in 2020 was due primarily to increase in sales to the Corporation’s largest customer group.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

Results of Operations

The Corporation’s gross revenue in 2020 was $8,086,218 or 11.77% higher than in 2019.

Deli Chinese food products sale

The Corporation’s deli Chinese food products are sold nationally across Canada. Gross revenue in 2020 was $7,842,002, 12.77% higher than in 2019. The increased revenue was primarily due to increase in sales to the Corporation’s one largest customer group.

Royalties and franchise fees

The Corporation’s other source of revenue, royalties and franchisee fees had been impacted by the pandemic. Net royalties and franchise fees in 2020 were $ 244,216, 12.95% less than in 2019. The decrease was primarily due to fewer royalties collected as a result of lockdowns on its franchisees. Ginger Beef Express also forgave royalties to support its franchisees during mandated shut downs of operations.

Cost of sales and gross profit

The Corporation’s gross profit in 2020 was $ 1,751,174 or 22% of gross revenue compared to $ 1,608,100 or 22% of gross revenue in 2019. Gross profit margin remained relatively stable.

Operating expenses

The Corporation’s sales and marketing expenses in 2020 were $ 52,928, compared to $ 54,616 in 2019. A little lower marketing expense was mainly resulted from the Corporation’s effort in reduction of this type of cost.

General and administrative expenses (“G&A”) in 2020 were $ 870,153, compared to $ 1,017,608 in 2019, decreased by $ 147,455 or 14.49%. Less G&A costs in 2020 were primarily resulted from management bonuses in amount of $105,000 that was recorded in 2019 but not declared in 2020, and also less repair and maintenance costs in 2020 compared to 2019 as the Corporation upgraded its facilities and equipment mostly in 2018 and 2019.

Net income, EBITDA and earnings per share

The Corporation’s net income in 2020 was $ 828,111 or $ 0.062 per share, compared to net income of $ 335,249 or $ 0.025 per share per share in 2019. The Corporation’s EBITDA in 2020 was $ 1,352,960 compared to $ 720,189 in 2019. Increased EBITDA were primarily resulting from higher revenue and gross margin, lower G&A costs, and government’s Covid-19 supporting programs. Management believes that EBITDA, in addition to net income (loss), provides investors with a basis to evaluate the Corporation’s operating performance, its ability to incur and service debt and fund capital expenditures.

There is no prescribed standardized meaning for EBITDA under IFRS and, therefore, EBITDA is a non-IFRS financial measure that may not be comparable to similar measures presented by other companies.

Cash flow and working capital

Cash generated from the Corporation’s operating activities in 2020 was $ 982,973 compared to cash generated from operating activities of $ 391,753 from 2019. Increased cash flow from operations resulted primarily from higher net profit, timing difference in collection of accounts receivable and payments of accounts payable, and government’s Covid-19 supporting programs.

Cash used in financing activities in 2020 was $ 99,473, compared to $ 52,785 in 2019. The increase was primarily resulted from one-time payment the Corporation made to pay off one of its equipment leases.

Expenditures on property, plant and equipment totaled $ 154,642 in 2020, compared to $ 349,609 in 2019. The Corporation started to upgrade its facilities and equipment in 2018 and spent most amounts in 2018 and 2019; consequently investment in plant and equipment in 2020 was lower. The Corporation also received $48,472 of government grant for the purchase of equipment. The Corporation also lent $400,000 to a related party to open a new franchise to take advantage of lease opportunities that became available due to COVID-19 in 2020.

Trade receivables and trade payables

The Corporation’s trade and other receivables totaled $ 1,215,300 at December 31, 2020, compared to $ 747,078 at December 31, 2019. Increase in trade and other receivables were primarily due to the timing difference in collections of accounts receivable from its franchisees and customers.

Trade and other payables were $ 540,910 at December 31, 2020, compared to $ 382,471 at December 31, 2019. The change in trade and other payables was primarily due to the timing difference in payments made to its suppliers.

Under normal operating conditions, receivables and payables levels may increase or decrease by as much as 25% in a given period depending on the timing of sales orders, purchases and payments.

Inventories

The Corporation’s total inventories were $ 294,033 at December 31, 2020, compared to $ 277,042 at December 31, 2019. Inventory levels were relatively stable compared to 2019.

Summary of quarterly results

	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
	2020	2020	2020	2020	2019	2019	2019	2019
Gross revenue - deli Chinsese food products (in $000’s)
	2,252	2,313	1,133	2,144	1,834	1,780	1,876	1,464
Net income (loss) ($)	306,387	286,176	5,634	229,914	97,632	61,758	146,347	29,512
Net income (loss) per share ($)	0.023	0.021	0.000	0.017	0.007	0.005	0.011	0.002

Variability in the Corporation’s gross revenue of deli Chinese food products is due in part to the timing and level of the Corporation and competitors’ promotional activities and the launch of new products.

Variability in the Corporation’s earnings is due to changes in sales levels and commodity costs, and the timing of expenditures. The costs of certain raw materials, including chicken, beef and pork fluctuate between quarters and years, impacting gross profit, and net income. Higher commodity prices can be partially recovered through higher product selling prices, subject to delays in implementation of such increases, within the limits of market and consumer acceptance and competition from other Chinese food products. The Corporation expenses new product launch costs, including new product listing fees, as incurred and this causes variability in reported results depending on when new products are developed and released. The level of consumer marketing expenditures incurred by the Corporation fluctuates between quarters, contributing to variability in earnings by reporting period.

The Corporation purchases some of the raw materials at prices denominated in U.S. dollars. As a result, the Corporation is exposed to the effects of fluctuations in exchange rates between Canadian and U.S. dollars. The resulting realized and unrealized foreign exchange gains and losses also contribute to variability in earnings from one period to the next.

Fourth Quarter

The Corporation’s gross sales in the fourth quarter of 2020 were $ 2,252,206 compared to $ 1,834,257 in 2019. Sales in fourth quarters were increased due to more home consumptions of deli Chinese food products from consumers as a result of lockdown.

Gross profit in the fourth quarter of 2020 was $ 605,834, compared to $ 476,134 in the same period of 2019. Higher gross profit in fourth quarter of 2020 was primarily due to increased sales in 2020 compared to the same period in 2019.

Operating expenses in the fourth quarter of 2020 was $ 306,387 compared to $ 412,388 in the same period of 2019. The decrease was primarily resulted from management bonuses in amount of $105,000 that were booked in the fourth quarter of 2019.

Net profit for the fourth quarter of 2020 was $ 306,387 or $ 0.023 per share, compared to net income of $ 97,632 or $ 0.007 per share in the comparable period of 2019. The increase in net profit is a combination of above factors.

Outlook for 2021

Despite increased net profit in 2020 compared to 2019, the Corporation continues to face challenges. The strong competitive pressures experienced on deli Chinese food products in 2020 are anticipated to continue. The prices of certain inputs, such as chicken, beef and pork are still expecting to increase continuously going forward.

Subsequent to year end, the impact of COVID-19 in Canada and on the global economy is continuing. Certain risks which may affect the Corporation include:

Supply chain disruptions
Dealing with the suspension or termination of contracts
• The introduction of government incentives and aid.

In addition, if the impacts of COVID-19 continue there could be further impact on the entity and its major customers, suppliers and other third-part business associates that could impact the timing and amounts realized on the Corporation’s assets and future probability. At this time, the impact of COVID-19 on the entity has been decreased franchise fee income. The full impact of COVID-19 continues to be assessed by the entity.

The Corporation is continuing to focus on launching innovative products and broadening geographic distribution of its products to mitigate the challenges described. Increased product development and launch costs are expected in 2021, and there is no certainty that the incremental sales from these new products will exceed costs.

Liquidity and Capital Resources

The Corporation’s bank financing is comprised of the following:

(a) A demand operating revolving line of credit to a maximum of $ 300,000 with the Royal Bank of Canada with interest at Royal Bank Prime plus 1.75% secured by a general security agreement. The Corporation uses this facility to fund working capital. At December 31, 2020, there was no outstanding balance on this facility.

This bank financing is secured by a general assignment of trade receivables, inventories and issuance of demand debentures that create a fixed and floating charge over all the Corporation’s assets and is subject to the Corporation maintaining compliance with certain financial and non-financial covenants.

Management expects that cash flow from operations together with available credit will be adequate to maintain current operations and fund sustaining capital expenditures for 2020.

The Corporation’s contractual commitments at December 31, 2020 require the following payments:

		Bank loan		Franchisee
	Total	(CEBA)	Equipment	headleases
	$	$	$	$
2021	209,064	-	15,427	193,637
2022	213,704	40,000	-	173,704
2023	118,130	-	-	118,130
2024	112,227	-	-	112,227
2025 and after	278,318	-	-	278,318
	931,442	40,000	15,427	876,015
Less:Interestexpense	(180,067)	-	-	(180,067)
	751,375	40,000	15,427	695,948

For certain of its franchise locations the Corporation holds the lease and subsequently subleases the property to the franchisee at cost. The transactions related to lease and sublease are recognized in the consolidated financial statements in accordance with IFRS 16, the new accounting policy the Corporation adopted during the year.

Although the Corporation carries the lease liabilities for certain of its franchise locations, these rents will be paid by its franchisees directly to the landlords. However, as a result of Covid-19 and the shut-down of all stores and restaurants, the continuity of its franchisees’ business and the ability of paying the rents are at risk. The direct impacts to the Corporation would be loss in royalties and franchise fees, the product sales to these franchisees, and the potential liabilities to pay the rents if the franchisees closed the restaurants permanently. Although, with the recent adaptation to Ecommerce in recent years the impact of COVID-19 was mitigated significantly with the new source of revenue franchise wide.

Risks and Uncertainties

The uncertainties and risk factors described below are those that may significantly affect the Corporation’s financial position or results of operations. Not all contingencies and risks have been addressed, and the risks or uncertainties may not materialize or occur in the manner expected or have the anticipated consequences described herein.

Competition

The Corporation competes with large food companies that have greater resources than the Corporation. To the extent that these competitors are able to produce competitive products at a lower cost and utilize larger financial, distribution and marketing resources, the Corporation may be required to make significant expenditures to improve or even maintain its competitive position.

Customer concentration

The Corporation’s customers consist primarily of grocery stores, mass merchandisers and club stores across Canada. The Canadian grocery market is highly concentrated. The largest Canadian retailers have significant buying power, and can have significant negotiating leverage over suppliers such as the Corporation. The Corporation’s three largest customers comprise approximately 77% of gross revenue.

Commodities

The Corporation’s major inputs, such as beef, pork, chicken, are commodities that experience supply and price volatility. Management continually evaluates the long-term availability of these inputs in conjunction with its forecasted production needs. Higher commodity prices can be partially recovered through higher product selling prices, subject to possible delays in implementation of such increases, within the limits of market and consumer acceptance and competition from other beverage and food products.

Foreign currency

The Corporation is exposed to currency risk on purchases of inventory from the U.S. for processing. As a result, the Corporation is exposed to financial risk, including from fluctuations in the U.S. dollar exchange rate and a change in the currency exchange rates between the Canadian dollar and the U.S. dollar could have a material effect on the Corporation’s reported results of operations, financial position and cash flows.

Product liability

All food-processing companies are exposed to the risks inherent in the safety and integrity of their products. If such a safety risk were to materialize, it could result in an expensive product recall that could severely damage the Corporation’s reputation. Consequently, The Corporation maintains liability insurance coverage as a producer and has other coverage consistent with current industry practices.

Regulatory matters

The production and distribution of food products and the impact of these activities on the environment are subject to legislation and regulations. If a law or regulation were amended, the resulting impact would depend on the Corporation’s ability to adapt, comply and assume any related costs. The Corporation believes that its production and distribution activities, and their environmental impact, currently comply in all material respects with major government laws and regulations and also believes that it has all the permits and licenses required by the nature of its activities.

Crisis management and business continuity

The Corporation has developed crisis management and business continuity plans for its operations. The plans include back-up physical locations in the event of a disaster, generators in the event of power failures and back-up systems.

Insurance and claims

The Corporation is engaged in certain claims and legal actions in the ordinary course of business. The Corporation limits its exposure to such risk by holding insurance to cover the risk of claims related to its operations through a comprehensive insurance program and by securing insurance with reputable and financially stable insurers.

Laws, taxation and accounting

Changes made to taxation and other laws, regulations, rules and policies that affect the Corporation, as well as new accounting requirements of the relevant authorities may materially affect the Corporation’s financial and operating performance.

Covid-19

Subsequent to the year end, the pandemic of Covid-19 has been continuously impacting every aspect of Canadian life and businesses. Certain risks which may affect the Corporation include:

Supply chain disruptions
Dealing with the suspension or termination of contracts
The introduction of government incentives and aid.

Financial Instruments

The Corporation’s financial instruments include cash, trade and other receivables, trade and other payables, and lease liabilities for which the carrying values approximate fair values. The Corporation’s financial instruments are exposed to certain financial risks, including currency, credit, liquidity and interest rate risk. The Corporation’s exposure to these risks is set out in note 4 to the Corporation’s consolidated financial statements for the year ended December 31, 2020.

(a) Currency risk

The Corporation is exposed to currency risk on purchases of inventory for processing to the extent that the payment of foreign denominated accounts payable are subject to fluctuations in the foreign exchange rate. A significant change in the value of the Canadian dollar relative to the U.S. dollar could have a material effect on the Corporation’s results of operations, financial position and cash flows. Foreign currency risk is managed in accordance with the Corporation’s treasury policy, the objective of which is to partially mitigate the impact of foreign exchange rate fluctuations on the Corporation’s results of operations, financial position and cash flows. Under this policy, the Corporation may enter into foreign currency forward purchase contracts to manage foreign currency risk associated with anticipated future cash flows.

(b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or a third party to a financial instrument fails to meet its contractual obligations. Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Corporation will grant credit. A majority of the Corporation’s customers are long-established retailers and food manufacturers in Canada and most have been transacting with the Corporation for several years.

(c) Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk by maintaining financial forecasts as well as long-term operating and strategic plans. Managing liquidity requires monitoring of projected cash inflows and outflows using forecasts of the Corporation’s financial position to ensure adequate and efficient use of cash resources. The appropriate liquidity level is established based on historical volatility and seasonal requirements, as well as planned investments and debt maturity requirements.

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Corporation is exposed to fair value interest rate on its lease liabilities as the rates are fixed interest rates.

Off-Balance Sheet Arrangements

At December 31, 2020, the Corporation had no off-balance sheet obligations that have or are likely to have a current or future material effect on the Corporation’s results of operations or financial condition.

Critical Accounting Estimates

Management considers an accounting estimate critical if it requires assumptions to be made that were highly uncertain at the time the estimate is made and if changes in the estimate or different estimates that may have been selected could have a material impact on the Corporation’s results of operations or financial position.

The Corporation’ most critical accounting estimates are as follows:

(i) Depreciation and valuation of property, plant and equipment

The amounts recorded for depreciation and amortization of property, plant and equipment and trademarks, respectively, are based on estimates. Property, plant and equipment are recorded at cost less related accumulated depreciation and accumulated amortization, respectively.

(ii) Valuation of accounts receivable

The valuation of accounts receivable is based on management’s best estimate of the provision for doubtful accounts.

(iii) Inventory

The Corporation evaluates its inventory to ensure it is carried at the lower of cost or net realizable value. Allowances are made against obsolete or damaged inventories and charged to cost of sales. The reversal of any write down of inventory arising from an increase in net realizable value would be recognized as a reduction in cost of sales in the period in which the reversal occurred.

(iv) Income taxes

The amounts recorded for deferred income taxes are based on estimates as to the timing of the reversal of temporary differences and tax rates currently substantively enacted. They are also based on estimates of the probability of the Corporation utilizing certain tax losses in future periods and tax rates applicable to those periods.

(v) Stock-based compensation

The amounts recorded relating to the fair value of stock options issued are based on estimates of the future volatility of the Corporation’s share price, estimated market price of the Corporation’s shares at grant date, expected lives of the options, and other relevant assumptions.

Future Accounting Changes

The International Accounting Standards Board and International Financial Reporting Interpretations Committee have issued a number of new standards, amendments to standards and interpretations that are not yet effective for the year ended December 31, 2020, and have not been applied in preparing the Corporation’s 2020 consolidated financial statements. None of the foregoing is expected to have a significant effect on the consolidated financial statements of the Corporation.

Outstanding Shares

As of April 29, 2021, the Corporation had 13,361,997 issued and outstanding common shares.

Transactions with Related Parties

Transactions with related parties include management service fees received; product costs, sharing of promotional costs, product sales, franchise fees and royalties received from related franchisees according to terms outlined in the individual franchise agreements. These are considered to be in the normal course of business and were recorded at the exchange amount used by the Corporation under normal business terms.

In the year ended December 31, 2019, a net amount of $ 134,855 was receivable from related parties. This amount consisted of $ 50,860 due from related franchisees and $ 83,995 from companies controlled by related parties.

In the year ended December 31, 2020, a net amount of $ 417,774 was receivable from related parties. This amount consisted of $ 9,434 due from related franchisees and $ 408,340 from companies controlled by related parties, which included $400,000 of demand loan lent to a related company under common control to open a new franchise to take advantage of lease opportunities that became available due to COVID-19.

During the year ended December 31, 2019, the Corporation’s revenues included product sales to related parties of $97,143, and royalties charged of $ 86,990.

During the year ended December 31, 2020, the Corporation’s revenues included product sales to related parties of $46,070, and royalties charged of $ 54,629.

Controls and Procedures

Management maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Corporation in its annual filings, interim filings and other reports filed or submitted under securities legislation are recorded, processed, summarized, and reported within the required time periods. The President & Chief Executive Officer (“CEO”) and Vice President, Finance & CFO (“CFO”), after evaluating the effectiveness of the Corporation’s disclosure controls and procedures as of December 31, 2020, have concluded that disclosure controls and procedures, as of such date, were effective to provide reasonable assurance that information required to be disclosed by the Corporation that it files or submits, is (i) recorded, processed, summarized and reported within the time periods as required, and (ii) accumulated and made known to management, including the CEO and CFO, to allow timely decisions regarding required disclosure.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS. Because of the inherent limitations in a cost-effective control system, any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will prevent or detect all misstatements, due to error or fraud, from occurring in the consolidated financial statements.

The CEO and CFO acknowledge responsibility for the design of internal controls over financial reporting (“ICFR”), and confirm that there were no changes in these controls that occurred during the year ended December 31, 2020 which materially affected, or are reasonably likely to materially affect, the Corporation’s ICFR. Based upon their evaluation of these controls for the year ended December 31, 2020, the CEO and CFO have concluded that these controls are operating effectively.

Additional Information

Additional information relating to the Corporation’s operations can be found in the Corporation’s Annual Information Form, filed with all applicable Canadian securities commissions and available from the Canadian Securities Administrator’s website at www.sedar.com .