Golden Shield Resources Inc. — Interim / Quarterly Report 2021

Apr 30, 2021

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GOLDBLOCK CAPITAL INC.

INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021

(Unaudited)

(EXPRESSED IN CANADIAN DOLLARS)

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GOLDBLOCK CAPITAL INC. STATEMENTS OF FINANCIAL POSITION

(UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

ASSETS Current Cash Receivables Accrued interest Advance (Note 10) Exploration and evaluation asset (Note 4) TOTAL ASSETS	As at February 28, As at May 31, 2021 2020
	$ 70,491 $ 424,208 4,302 9,899 - 5,387
	74,793 439,494 175,000 - 217,466 152,227
	$ 467,259 $ 591,721
CURRENT LIABILITIES Trade payables (Note 9) Accrued liabilities SHAREHOLDERS’ EQUITY Share capital (Note 5) Deficit TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 16,200 $ 20,475 2,200 12,000
	18,400 32,475
	700,000 700,000 (251,141) (140,754)
	448,859 559,246
	$ 467,259 $ 591,721

Going concern (Note 2)

Proposed Transaction (Note 10)

Approved by the Board of Directors:

“Jim Mustard” “Azim Dhalla”

Jim Mustard, CEO and Director Azim Dhalla, Director

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

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GOLDBLOCK CAPITAL INC. STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

EXPENSES Accounting fees (Note 9) Bank fees Filing fee Management fees (Note 9) Office Professional fees Rent (Note 9) Transfer fees	Three month ended February 28, 2021 Three month ended February 28, 2020 Nine month ended February 28, 2021 Nine month ended February 28, 2020
	$ 8,500$ 1,900$ 10,000$ 5,500 36 30127 90 2,919 675 10,0946,652 18,000 32,635 54,000 66,176 100 - 239 - 17,956 - 18,353 - 15,000 - 15,000 1,560 - 3,560 -
LOSS BEFORE OTHER ITEM	(64,071) (35,240) (111,373) (78,418)
OTHER ITEM Interest income (reversal)	(1,131) 1,485 986 3,869
NET LOSS AND COMPREHENSIVE LOSS	$ (65,202) $ (33,755) $ (110,387) $ (74,549)

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

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GOLDBLOCK CAPITAL INC. STATEMENT OF SHAREHOLDERS’ EQUITY

(UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

BALANCE, May 31, 2019 Subscription received (Note 5) Net loss for the year BALANCE, MAY 31, 2020 Net loss for the period BALANCE, February 28, 2021	Share capital Number of Shares Amount Deficit Subscriptions receivable Total shareholders’ equity
	12,000,000 $ 700,000 $ (27,927) $ (1,000) $ 671,073 - - - 1,000 1,000 - - (112,827) - (112,827)
	12,000,000 700,000 (140,754) - 559,246 - - (110,387) - (110,387)
	12,000,000 $ 700,000 $ (251,141) $- $ 448,859

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

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GOLDBLOCK CAPITAL INC. STATEMENTS OF CASH FLOWS (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period Change in non-cash working capital items: Receivable Prepaids Trade payables and accrued liabilities CASH FLOWS FROM INVESTING ACTIVITIES Option payment received Advances Exploration and evaluation assets CASH FLOWS FROM FINANCING ACTIVITY Subscription received CHANGE IN CASH CASH BEGINNING OF PERIOD CASH END OF PERIOD	Nine month ended February 28, 2021 Nine month ended February 28, 2020
	$ (110,387) $ (74,549) 10,984 5,652 - (3,869) (14,075) 2,819
	(113,478) (69,947)
	15,000 - (175,000) - (80,239) (87,991)
	(240,239) (87,991)
	- 1,000
	- 1,000
	(353,717) (156,938) 424,208 642,403
	$ 70,491 $ 485,465

Non-cash transactions:

During the nine month ended February 28, 2020, the Company recorded $1,000 in subscriptions receivable (Note 5).

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

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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1. NATURE OF BUSINESS

Goldblock Capital Inc. (the “Company” or “Goldblock”) is a company domiciled in Canada. The Company was incorporated on January 29, 2018 under the laws of the Province of British Columbia. The address of the Company’s registered and head office is Suite 808, 1090 West Pender Street, Vancouver, B.C., V6E 2N7.

The Company’s principal business is the acquisition and exploration of mineral properties in British Columbia, Canada.

On February 20, 2020, the Company filed a non-offering prospectus and listed its common shares on the Canadian Securities Exchange (“CSE”).

2. BASIS OF PREPARATION

Statement of compliance and going concern

These interim financial statements have been 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”). Therefore, these interim financial statements comply with International Accounting Standard ("IAS") 34 "Interim Financial Reporting".

The Company’s continuing operations as intended are dependent upon the successful results from its mineral property exploration activities and its ability to attain profitable operations. In order to continue as a going concern and meet its corporate objectives, the Company will require additional financing through debt or equity issuances or other available means. There is no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. The Company will require additional financing to meet its projected minimum financial obligations for the next fiscal year. The Company is aware, in making its assessment, of material uncertainties which may cast significant doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. The total impact on the Company is not currently determinable but management continues to monitor the situation.

These interim financial statements were approved by the Board of Directors and authorized for issue on April 26, 2021.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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2. BASIS OF PREPARATION (continued)

Basis of measurement

These interim financial statements have been prepared on an historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Functional and presentation currency

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

Use of estimates and assumptions

The preparation of interim financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Management has determined that estimates and assumptions where there is significant risk of material adjustments to the Company’s assets and liabilities in future accounting periods relate to the recoverability of the carrying value of its exploration and evaluation asset, the provision for restoration and environmental obligations and the fair value measurements for financial instruments.

Significant judgements

The preparation of interim financial statements in accordance with IFRS requires the Company to make judgements apart from those involving estimates, in applying accounting policies. Management has determined that the only significant judgements applying to the financial statements for the nine month period ended February 28, 2021 is the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty and the classification/allocation of expenditures as exploration and evaluation expenditures or operating expenses.

3. SIGNIFICANT ACCOUNTING POLICIES

Share capital

Common shares issued for non-monetary consideration are recorded at their fair value on the measurement date and classified as equity. The measurement date is defined as the earliest of the date at which the commitment for performance by the counterparty to earn the common shares is reached or the date at which the counterparty’s performance is complete.

Transaction costs directly attributable to the issue of common shares and share purchase options are recognized as a deduction from equity, net of any tax effects.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes

Income taxes are recognized for the estimated taxes payable for the current period, and deferred taxes are recognized for temporary differences between the tax and accounting bases of assets and liabilities, and for the benefit of losses available to be carried forward for tax purposes that are more likely than not to be realized. To the extent that the Company does not consider it more likely than not that a deferred tax asset will be recovered, it provides a valuation allowance against the excess. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or settled.

Financial instruments

(i) Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-byinstrument basis) to designate them at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL. The Company has classified cash at FVTPL and receivable, advances and trade payables at amortized cost.

(ii) Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of net (loss) income. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of net (loss) income in the period in which they arise.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income (“OCI”). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments (continued)

(iii) Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of net (loss) income, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

(iv) Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

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

Gains and losses on derecognition are generally recognized in profit or loss.

Exploration and evaluation expenditures

Costs incurred before the Company has obtained the legal rights to explore an area are expensed as incurred.

Exploration and evaluation expenditures include the costs of acquiring licenses and costs associated with exploration and evaluation activity. Option payments are considered acquisition costs provided that the Company has the intention of exercising the underlying option.

Property option agreements are exercisable entirely at the option of the optionee. Therefore, option payments (or recoveries) are recorded when payment is made (or received) and are not accrued.

Exploration and evaluation expenditures are capitalized. The Company capitalizes costs to specific blocks of claims or areas of geological interest. Government tax credits received are recorded as a reduction to the cumulative costs incurred and capitalized on the related property.

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GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Exploration and evaluation expenditures (continued)

Exploration and evaluation assets are tested for impairment if facts or circumstances indicate that impairment exists. Examples of such facts and circumstances are as follows:

• the period for which the Company has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;

• substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;

• exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and

• sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

After technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the Company stops capitalizing expenditures for the applicable block of claims or geological area of interest and tests the asset for impairment. The capitalized balance, net of any impairment recognized, is then reclassified to either tangible or intangible mine development assets according to the nature of the asset.

Although the Company has taken steps that it considers adequate to verify title to exploration and evaluation assets which it has an interest, these procedures do not guarantee the Company’s title. Title to exploration and evaluation assets in foreign jurisdictions is subject to uncertainty and consequently, such properties may be subject to prior undetected agreements or transfers and title may be affected by such instances.

Restoration and environmental obligations

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of long-term assets, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future restoration cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to the related asset along with a corresponding increase in the restoration provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.

The Company’s estimates of restoration costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related asset with a corresponding entry to the restoration provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates. These changes are recorded directly to the related asset with a corresponding entry to the provision.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Restoration and environmental obligations (continued)

The net present value of restoration costs arising from subsequent site damage that is incurred on an ongoing basis during production are charged to the statement of comprehensive loss in the period incurred.

The costs of restoration projects that were included in the provision are recorded against the provision as incurred. The costs to prevent and control environmental impacts at specific properties are capitalized in accordance with the Company’s accounting policy for exploration and evaluation assets.

Leases

IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, onbalance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for annual periods beginning on or after January 1, 2019. As the Company does not have any leases, this standard did not have any impact on the financial statements.

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. Diluted loss per share is not presented as there are no dilutive securities outstanding.

Recent accounting pronouncements

Certain new accounting standards, amendments to standards and interpretations have been issued, effective for annual periods beginning on or after February 28, 2021. These standards have been assessed to not have a significant impact on the Company’s financial statements.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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4. EXPLORATION AND EVALUATION ASSET

On April 25, 2018, the Company entered into an option agreement to acquire a 100% interest in the Copper Canyon Property, located in the Nicola Mining Division of British Columbia, Canada, for the following consideration:

Date			Optionpayments	Exploration expenditures
April	25,	2018	Payment of $22,500 (paid)	N/A
April	25,	2019	N/A	N/A
April	25,	2020	Payment of an additional $20,000 (paid)	Incur $100,000
April	25,	2021	Payment of an additional $150,000	Incur an additional $100,000
			($75,000 paid on November 2020)
April	25,	2022	N/A	Incur an additional $250,000

Exploration expenditures in excess of the minimum amount in any period will be applied towards the next period’s minimum required amount.

The vendors will retain a 1.5% Net Smelter Royalty (“NSR”). The Company has the option to purchase 0.5% of the NSR for $1,000,000.

The following are details of the Company’s exploration and evaluation asset:

	February28,2021	May31,2020
Acquisition cost Beginning of year Additions End of year Exploration costs: Beginning of year Consulting Drilling Sampling Geophysics Other End of year Other payments received	$ 42,500 75,000 117,500 109,727 4,999 - - - 240 114,966 (15,000) $ 217,466	$ 22,500 20,000
		42,500
		19,440 - 57,986 15,961 1,815 14,525
		109,727
		-
		$ 152,227

The Company entered into an option agreement with 2294253 Alberta Ltd. (the “Optionee”), a private company, providing for it to acquire a 75% interest in the Company’s Copper Canyon project. The Optionee is required to pay to Goldblock a total of $245,000 in cash, issue a total of 1,300,000 common shares, and spend a total of $575,000 in qualified expenditures on the Copper Canyon property, all over a three-year period. On December 8, 2020 the Optionee advanced $15,000 to Goldblock as the part payment on the agreement.

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GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

4. EXPLORATION AND EVALUATION ASSET (Continued)

The following is a summary of the key terms of the option agreement with the Optionee:

• (i) $15,000 (received) cash payment to Goldblock within 14 days of signing the agreement and an additional $10,000 cash payment and the issuance of 200,000 common shares of the Optionee to Goldblock within 60 days of the execution of the option agreement, subject to regulatory approvals.

• (ii) On or before April 25, 2021, a cash payment of $50,000 to Goldblock and the issuance of an additional 300,000 common shares of the Optionee to Goldblock and a work commitment of $125,000 in qualifying expenditures to be incurred by the Optionee on the Copper Canyon property on or before April 25, 2021.

• (iii) On or before April 25, 2022, a cash payment of $70,000 to Goldblock and the issuance of an additional 300,000 common shares of the Optionee to Goldblock and a further work commitment of $200,000 in qualifying expenditures to be incurred by the Optionee on the Copper Canyon property.

• (iv) On or before April 25, 2023, a cash payment of $100,000 to Goldblock and the issuance of an additional 500,000 common shares of the Optionee to Goldblock and an additional work commitment of $250,000 in qualifying expenditures to be incurred by the Optionee on the Property.

During the nine month ending February 28, 2021, the Company amended the option agreement providing for an extension of the work commitment of $100,000 to July 25, 2021 from April 25, 2021 and an additional minimum of $250,000 in exploration expenditures are to be incurred on the property on or before April 25, 2022 which will be partially funded by the Optionee by incurring a minimum of $200,000 on the property on or before July 25, 2021. In consideration of the extension, and consent to the previously announced option of 75% of the property to optionee, an advance payment of $75,000 has been made, being 50% of the total amount due on April 25, 2021.

5. SHARE CAPITAL

Authorized

The Company is authorized to issue an unlimited number of common shares without nominal or par value.

Issued

During the year ended May 31, 2019, the Company issued 5,000,000 common shares at a price of $0.10 for proceeds of $500,000. At November 30, 2019, $1,000 in proceeds was recorded as subscriptions receivable and was received during the year ended May 31, 2020.

There were no shares issued during the year ended May 31, 2020 and nine month period ending February 28, 2021.

6,737,000 shares issued to the principals of the Company were subject to escrow conditions required by applicable securities laws and the CSE requirements. Pursuant to the terms of the escrow agreements, 10% of the escrowed shares were released from escrow on March 3, 2020. As at May 31, 2020 6,063,300 were held in escrow and during the nine month period ending February 28, 2021 an additional 1,010,550 from the remaining shares were released from the escrow and as at February 28, 2021, 5,052,750 shares were held within the escrow and will be released over a period of 30 months. Subsequent to the nine month period ended February 28, 2021, 1,010,550 from the remaining shares were released from the escrow.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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6. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

As at February 28, 2021, the Company’s financial instruments are comprised of cash, receivable, advances and trade payables. The fair value of these financial instruments approximate their carrying value due to their shortterm maturity. Fair values of financial instruments are classified in a fair value hierarchy based on the inputs used to determine fair values. The levels of the fair value hierarchy are as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

As at February 28, 2021, the fair value of cash held by the Company was based on level 1 inputs of the fair value hierarchy.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

(a) Credit risk

Credit risk is the risk of loss associated with the counterparty’s inability to fulfill its payment obligations. The Company believes it has no significant credit risk.

(b) Liquidity risk

Liquidity risk is the risk that the Company cannot meet its financial liabilities as they become due. As at February 28, 2021, the Company had a cash balance of $70,491 to settle current and future liabilities. The Company will require additional funding to carry over its exploration program. Liquidity risk is high.

(c) Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

(d) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company’s cash is held in an account with a major Canadian financial institution. The funds may be withdrawn at any time without penalty. Interest rate risk is assessed as low.

(e) Foreign currency risk

The Company does not have assets or liabilities in a foreign currency and therefore is not exposed to foreign currency risk.

(f) Price risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potentially adverse impact on the Company’s ability to obtain equity financing due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

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GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

7. CAPITAL MANAGEMENT

Capital is comprised of the Company’s shareholders’ equity and any debt that it may issue. As at February 28, 2021, the Company’s shareholders’ equity was $448,859. The Company’s objectives when managing capital are to maintain financial strength and to protect its ability to meet its future liabilities, to continue as a going concern, to maintain creditworthiness and to maximize returns for shareholders over the long term. Protecting the ability to pay current and future liabilities includes maintaining capital above minimum regulatory levels, current financial strength rating requirements and internally determined capital guidelines and calculated risk management levels.

There were no changes in the Company’s approach to capital management during the nine month period ended February 28, 2021.

8. INCOME TAXES

NCOME TAXES
Net loss for the year Tax rate Expected income tax recovery Change in unrecognized benefit of non-capital losses	Nine month period ended February 28, 2021 Year ended May 31, 2020
	$ (110,387) $ (112,827) 27% 27%
	(29,804) (30,463) 29,804 30,463
	$- $-

The Company has the following potential deferred tax assets for which no deferred tax asset has been recognized.

Non-capital loss carry-forwards	Nine month period ended February 28, 2021 Year ended May 31, 2020
	$ 165,698 $ 139,578

The Company has accumulated non-capital losses of approximately $165,000, which may be deducted in the calculation of taxable income in future years. The losses commence expiring in 2040.

9. RELATED PARTY TRANSACTIONS

During the nine-month period ended February 28, 2021, the Company paid $54,000 (2020 - $NIL) in management fees to a director of the Company.

During the nine-month period ended February 28, 2021, the Company accrued and paid $10,000 (2020 - $NIL) in accounting fees to a director of the Company.

During the nine-month period ended February 28, 2021, the Company incurred $15,000 (2020 - $ NIL) in rent from a company controlled by a director.

Included in trade payables is $16,200 (May 31, 2020 - $18,900) owing to a director of the Company and a company under common control as at February 28, 2021.

GOLDBLOCK CAPITAL INC. NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2021 (UNAUDITED, EXPRESSED IN CANADIAN DOLLARS)

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10. Proposed Transaction

On March 13, 2021, the Company incorporated a wholly owned subsidiary, 1294320 BC Ltd. in the province of British Columbia.

On April 19, 2021 Goldblock entered into a definitive agreement with Virgin Gold Corp. (“Virgin Gold”), a private mineral exploration company exploring for gold in Guyana, pursuant to which the Company will acquire all of the issued and outstanding shares of Virgin Gold (the “Transaction”). The Transaction will be completed by way of a three�cornered amalgamation under the Business Corporations Act (British Columbia), whereby 1294320 BC Ltd., will amalgamate with Virgin Gold (the “Amalgamation”).

The Transaction will constitute a “Fundamental Change” of the Company, as defined by the policies of the CSE. As a result, the Company will be required to obtain shareholder approval, by simple majority, which it intends to seek by way of written consent. The Amalgamation will also require the approval of the shareholders of Virgin Gold.

Immediately prior to the completion of the Amalgamation, the Company will complete a share consolidation on a 2:1 basis (the “Consolidation”). In connection with the Transaction, the Company will change its name to “Golden Shield Resources Corp.” (the “Name Change”) and reconstitute its board of directors (the “Director Changes”) such that the board of the Company following completion of the Transaction (the “Resulting Issuer”) will consist of five directors, nominated by Virgin Gold.

Currently Goldblock has 12,000,000 shares issued and outstanding. Following the Consolidation, and prior to closing of the Transaction, Goldblock will have 6,000,000 shares outstanding.

In connection with the Transaction, the Company or Virgin Gold will undertake a non-brokered private placement of units for gross proceeds of at least $5,000,000.

Goldblock advanced to Virgin Gold a non-refundable deposit of $175,000 in cash on December 23, 2020.