Grounded Lithium Corp. — Annual Report 2021

Feb 2, 2021

VAR RESOURCES CORP. (formerly CANADIAN INTERNATIONAL PHARMA CORP.)

Consolidated Financial Statements

For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars)

Contact Information:

VAR Resources Corp. 2489 Bellevue Avenue West Vancouver, BC V7V 1E1 Phone: (604) 922-2030 Fax: (604) 922-2037 Contact Person: Mr. Douglas L. Mason

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of

VAR Resources Corp. (formerly Canadian International Pharma Corp.)

Opinion

We have audited the accompanying consolidated financial statements of VAR Resources Corp. (formerly Canadian International Pharma Corp.) (the “Company”), which comprise the consolidated statements of financial position as at October 31, 2020 and 2019 and the consolidated statements of loss and comprehensive loss, changes in shareholders’ deficiency and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has incurred a net loss of $84,138 during the year ended October 31, 2020 and, as of that date, the Company has a working capital deficit of $352,526. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management’s Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

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We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is David Harris.

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Vancouver, Canada February 1, 2021

Chartered Professional Accountants

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Consolidated Statements of Financial Position

As at October 31, 2020 and 2019

(Expressed in Canadian Dollars)

	2020 2019
ASSETS Current Cash and cash equivalents Receivables Prepaid expenses Reclamation deposit(Note 4)	$ 3,032 $ 7,327 1,173 1,289 833 833
	5,038 9,449 - 5,000
	$ 5,038 $ 14,449
LIABILITIES AND SHAREHOLDERS' DEFICIENCY Current Accounts payable and accrued liabilities (Note 7) Loans payable (Notes 7 and 9) Shareholders' deficiency Capital stock (Note 5) Reserves Deficit	$ 302,564 $ 282,837 55,000 -
	357,564 282,837 14,342,545 14,342,545 1,280,521 1,280,521 (15,975,592) (15,891,454)
	(352,526) (268,388)
	$ 5,038 $ 14,449

Nature of operations and going concern (Note 1) Commitments (Note 11) Subsequent events (Note 14)

On behalf of the Board:

“Douglas L. Mason” Director “Ron Schmitz” Director

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

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Consolidated Statements of Loss and Comprehensive Loss

Years ended October 31, 2020 and 2019

(Expressed in Canadian Dollars)

	2020 2019
EXPENSES Consulting fees (Note 7) Interest Office and miscellaneous Professional fees Rent (Note 7) Transfer agent and regulatory fees Wages and benefits (Note 7) Loss before other income (expenses) OTHER INCOME (EXPENSES) Interest income Gain on sale of marketable securities Recovery of exploration and evaluation assets(Note4) **Loss and comprehensive loss for the year **	9,000 34,000 3,296 - 13,654 27,139 23,911 55,017 5,954 23,818 14,076 15,960 14,314 31,068
	(84,205) (187,002)
	67 50 - 2,051 - 9,000
	67 11,101
	(84,138) (175,901)
Basic and diluted loss per share	$ (0.02) $ (0.05)
Weighted average number of shares outstanding	3,845,302 3,845,302

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

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.)

Consolidated Statements of Change in Shareholders’ Deficiency

(Expressed in Canadian Dollars)

						Residual
	Number of			Share-based		Value of
	Common			Payments		Warrants
	Shares		Amount	Reserve		Reserve	Deficit		Total
Authorized:
Unlimited number common shares without par value
Balance as at October 31, 2018	3,845,302	$	14,342,545	$ 1,180,354	$	100,167	$ (15,715,553)	$	(92,487)
Loss for the year	-		-	-		-	(175,901)		(175,901)
Balance as at October 31, 2019	3,845,302		14,342,545	1,180,354		100,167	(15,891,454)		(268,388)
Loss for the year	-		-	-		-	(84,138)		(84,138)
Balance as at October 31, 2020	3,845,302	$	14,342,545	$ 1,180,354	$	100,167	$ (15,975,592)	$	(352,526)

On October 28, 2020, the Company’s common shares were consolidated on a basis of one post-consolidated common shares for every 10 pre-consolidated common shares. The number of the shares, options, warrants, and per share amounts presented have been adjusted to reflect the impact of this share consolidation.

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

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Consolidated Statements of Cash Flows

Years ended October 31, 2020 and 2019

(Expressed in Canadian Dollars)

	2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year Items not affecting cash Gain on sale of marketable securities Recovery of exploration and evaluation assets Changes in non-cash working capital items Decrease in receivables Decrease in prepaid expenses Increase in accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS INVESTING ACTIVITIES Proceeds on sale of investments Reclamation deposits Net cash provided by investing activities CASH FLOWS FINANCING ACTIVITIES Loan proceeds Net cash provided by financing activities Decrease in cash during the year Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	$ (84,138) $ (175,901) - (2,051) - (9,000) 116 198 - 16,750 19,727 143,606
	(64,295) (26,398)
	- 5,000 12,808 -
	5,000 12,808
	55,000 -
	55,000 -
	(4,295) (13,590) 7,327 20,917
	3,032 7,327
Cash paid for interest Cash paid for income taxes	$ - $ 47 $ - $ -

Supplemental disclosures with respect to cash flows (Note 8)

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

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

VAR Resources Corp. (formerly Canadian International Pharma Corp.), (the “Company”) was incorporated under the laws of the Province of British Columbia. The Company changed its name on January 29, 2021 and has received approval to trade on the TSX Venture Exchange (“TSX-V”) as a Tier 2 Mining Issuer under the symbol “VAR” (previously “CIP.H”) (Note 14). The Company was previously engaged in the acquisition and exploration of mineral resource properties, then attempted to pursue new business opportunities in the area of pharmaceutical and nutraceutical manufacturing and distribution; but has returned to its pursuit of mineral resource acquisition and exploration.

On October 28, 2020, the Company’s common shares were consolidated on a basis of one post-consolidated common shares for every 10 pre-consolidated common shares. The number of the shares, options, warrants and per share amounts presented have been adjusted to reflect the impact of this share consolidation.

These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will be able to continue in operation for the foreseeable future, will be able to realize its assets, discharge its liabilities and commitments in the normal course of business.

Management believes the Company will be successful at securing additional funding to continue its operations and intends to advance its new business opportunities in the area of mineral exploration. However, the Company has incurred significant operating losses over the past several fiscal years (2020 - $84,138; 2019 - $175,901), has a working capital deficit of $352,526 (October 31, 2019 - $273,388), has a deficit of $15,975,592 (October 31, 2019 - $15,891,454), has limited resources, no source of operating cash flows and no assurances that sufficient funding will be available to further its goals and objectives. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

The application of the going concern concept is dependent upon the Company’s ability to successfully complete its manufacturing process, commercialize its products and receive regulatory approvals for its business, the outcome of which cannot be predicted at this point. As a result, it may be necessary for the Company to obtain additional capital, such as issuance of equity and/or debt securities, or alternative financing sources of financing. There is no assurance that the Company will be able to obtain sufficient funds to continue its operating activities.

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. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

2. BASIS OF PRESENTATION

Statement of compliance

These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

The policies applied in these financial statements are based on IFRS issued and effective as of October 31, 2020. The Board of Directors approved the financial statements for issue on February 1, 2021.

Basis of measurement

The consolidated 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.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

2. BASIS OF PRESENTATION (Continued)

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is the Company and its subsidiary’s functional currency. All financial information is expressed in Canadian dollars unless otherwise stated and have been rounded to the nearest dollar.

Use of estimates and judgements

The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The most significant accounts that require estimates as the basis for determining the stated amounts include the impairment of assets, valuation of share-based payments and recognition of deferred tax amounts.

Critical accounting estimates:

a) Share-based payments

The fair value of share options granted is measured using the Black-Scholes option pricing model. Measurement inputs include share price on measurement date, exercise price of the option, expected volatility, expected life of the options, expected dividends and the risk-free rate. These estimates will impact the amount of share-based payments recognized.

b) Income taxes

Related assets and liabilities are recognized for the estimated tax consequences between amounts included in the financial statements and their tax base using substantively enacted future income tax rates. Timing of future revenue streams and future capital spending changes can affect the timing of any temporary differences and, accordingly, affect the amount of the deferred tax asset or liability calculated at a point in time.

The following are a list of significant accounting policies used by the Company.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned inactive subsidiary, Grupo Minero Venturex, S.A. de C.V. (Mexico). All significant inter-company transactions and balances have been eliminated.

(b) Cash and cash equivalents

Cash and cash equivalents include highly liquid instruments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For the periods presented, the Company does not have any cash equivalents.

(c) Financial Instruments

The following is the Company’s accounting policy for financial instruments under IFRS 9:

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 as 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 the Company has opted to measure them at FVTPL.

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 profit or loss. 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 consolidated statements of comprehensive loss 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 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.

Impairment of financial assets at amortized cost

An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows:

the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period. In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. Gains and losses on derecognition are generally recognized in the consolidated statements of comprehensive loss.

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.

The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(d) Exploration and evaluation assets

For investments in exploration and evaluation assets the Company follows the practice of capitalizing all costs upon obtaining the legal right to explore relating to the acquisition of, exploration for and evaluation of mineral claims and crediting all proceeds received against the cost of the related claims. Such costs include, but are not exclusive to, geological, geophysical studies, exploratory drilling and sampling. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment, or when it has been determined that there is evidence of a permanent impairment. An impairment charge relating to an exploration and evaluation asset is subsequently reversed when new exploration results or actual or potential proceeds on sale or farmout of the property result in a revised estimate of the recoverable amount, but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized.

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

The Company recognizes in income costs recovered on exploration and evaluation assets when amounts received, or receivable are in excess of the carrying amount.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets. At such time as commercial production commences, these costs are reclassified as mining assets and will be charged to operations on a unitof-production method based on proven and probable reserves.

All capitalized exploration and evaluation expenditure is monitored for indications of impairment at each financial position reporting date. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that exploration expenditure is not expected to be recovered, it is charged to the results of operations.

Although the Company has taken steps to verify the title to exploration and evaluation assets in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects.

(e) Impairment of non-current assets

At each financial position reporting date, the Company’s non-current assets are reviewed to determine whether there is any indication that the carrying value of those assets are impaired and may not be recoverable. If any such indication exists, the recoverable amount of the asset is evaluated at the level of a cash-generating unit (“CGU”), the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets, where the recoverable amount of a CGU is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(f) Share capital

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

Equity units

The Company uses the residual value method with respect to the measurement of common shares and share purchase warrants issued as units. The proceeds from the issue of units is allocated between common shares and share purchase warrants where the fair value of the common shares is based on the market value on the date of the announcement of the placement and the balance, if any, is allocated to the attached warrants. Share issue costs are netted against common share component.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Share-based payment transactions

The Company’s stock option plan allows employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as an employee or consultant expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. Share-based payments to non-employees are measured at the fair value of the goods or services received or at the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received.

The fair value is measured at grant date, and each tranche is recognized on the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. The fair value of the options is accrued and charged either to operations or exploration and evaluation assets, with the offset credit to share-based payments reserve, over the vesting period. If and when the stock options are exercised, the applicable amounts from share-based payments reserve are transferred to capital stock.

The Black-Scholes option valuation model used by the Company to determine fair values of options and similar financial instruments requires the input of highly subjective assumptions including future stock volatility and expected time until exercise. Changes in the subjective input assumptions can materially affect the fair value estimate.

• (h) Loss per share

Basic loss per share is calculated by dividing the loss for the period by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if potentially dilutive securities were exercised or converted to common shares. The dilutive effect on loss per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

(i) Income taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized as equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded by providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable profit; nor differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, it will not be recognized. Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(j) Restoration and rehabilitation provision

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of an exploration and evaluation asset interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflects the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight-line method. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses. As at October 31, 2020 the Company does not have any significant restoration obligations.

(k) Provisions

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation; and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as interest expense.

(l) New accounting standards, interpretations, and amendments

New accounting policies

Effective November 1, 2019, the Company adopted the following accounting standards.

IFRS 16, Leases

In January 2016, the IASB issued IFRS 16, Leases, which would replace IAS 17, Leases. This standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.

The Company adopted this standard on November 1, 2019, the date of initial application. does. There was no impact on the adoption of IFRS 16 on the Company’s consolidated financial statements.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

4. EXPLORATION AND EVALUATION ASSETS

Reclamation deposit

As at October 31, 2020, the Company had a refundable deposit of $nil (October 31, 2019 - $5,000) with the Ministry of Energy, Mines and Petroleum.

Seagull Property, Ontario

The Company entered into an option agreement dated October 2, 2008 with Rainy Mountain Royalty Corp., (“Rainy Mountain”), and White Metal Resources Corp., (“White Metal”) whereby the Company was granted an option to earn an initial 30% interest (earned) in the Seagull property located near Thunder Bay, Ontario. In order to acquire its initial 30% interest, the Company was required to spend $500,000 in exploration expenditures by February 28, 2009 (completed).

By an amending agreement dated October 15, 2010, the Company increased its ownership interest in the Seagull property from 30% to 40% interest, (based on its exploration expenditures incurred) with White Metal and Rainy Mountain each owning a 30% interest. The Seagull property is subject to two separate royalties (2.4% NSR in total), of which 1.4% can be purchased for $2 million.

During the year ended October 31, 2015, the Company recorded an impairment charge of $927,224 related to the Seagull Property (due to the Company’s change of business and the inactivity on the Seagull Property).

By agreements dated March 7, 2019, the Company and Rainy Mountain sold their respective 40% and 30% property interest in the Seagull property to White Metal. For its 40% property interest, the Company received 200,000 shares of White Metal (valued at $9,000) and retained a 0.4% net smelter return royalty (the “NSR”), which NSR can be purchased by White Metal at any time up until commencement of commercial production for $600,000. The Company recorded a recovery of $9,000 on receipt of 200,000 common shares. The shares were then sold resulting in a gain of $2,051.

The Company and Rainy Mountain had certain directors in common.

5. CAPITAL STOCK

Authorized share capital:

• Unlimited number common shares without par value

During the year ended October 31, 2020, the Company completed the following share transactions:

• On October 28, 2020, the Company’s common shares were consolidated on a basis of one post-consolidated common shares or every 10 pre-consolidated common shares. The number of the shares, options, warrants and per share amounts presented have been adjusted to reflect the impact of this share consolidation.

During the year ended October 31, 2019, there were no share transactions.

6. STOCK OPTIONS AND WARRANTS

Options

The Company has a rolling stock option plan, whereby it is allowed to issue options of up to 10% of the Company’s issued and outstanding common shares at any given time. Under the plan, options can be granted for a maximum term of five years and vesting of stock options is at the discretion of the board of directors at the time options are granted.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020

(Expressed in Canadian Dollars)

6. STOCK OPTIONS AND WARRANTS (Continued)

As at October 31, 2020 the following incentive stock options were outstanding:

Expiry Date	Number ofOptions 2020 2019 Exercise Price
April 15,2021	101,000 131,000 $ 0.7
Outstanding and exercisable	101,000 131,000

Stock option transactions are summarized as follows:

		Weighted
		Average
	Number	Exercise
	ofOptions	Price
Outstanding, October 31, 2019 and 2018	131,000	$ 0.7
Cancelled	(30,000)	0.7
**Outstanding, October 31, 2020 **	101,100	$ 0.7

Warrants

As at October 31, 2020 there were no warrants outstanding.

7. RELATED PARTY TRANSACTIONS

Included in accounts payable and accrued liabilities at October 31, 2020 is $219,425 (October 31, 2019 - $203,113) owing to companies controlled by directors, directors in common.

The Company entered into two loan agreements dated February 25, 2020 and May 4, 2020, pursuant to which the Company received $40,000 for working capital purposes. The loans were provided by a company controlled by a director and an officer with a term of one year with interest at a rate of 1% per month (12% per annum). There were two advancements of $23,000 and $17,000 under the loan agreements and $40,000 was outstanding as at October 31, 2020.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

7. RELATED PARTY TRANSACTIONS (Continued)

During the year ended October 31, 2020, the Company paid or accrued the following amounts to companies controlled by directors or companies having directors in common:

		2020		2019
Consulting fees	$	7,500	$	30,000
Rent		5,954		23,818

Key management compensation to the CEO, President, CFO, Directors and/or related entities includes the following:

		2020		2019
Consultingfees	$	7,500	$	30,000

The Company reimbursed Waterfront Communications Inc. (a company with certain directors in common) on a cost basis, to cover shared administrative and payroll costs in the amount of $14,314 (October 31, 2019 - $31,068) and shared expenses in the amount of $15,382 (October 31, 2019 - $22,945).

8. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

There were no significant non-cash financing or investing during the year ended October 31, 2020.

Non-cash financing or investing during year ended October 31, 2019 are as follows:

• 200,000 shares of White Metal at a value of $9,000 were received as marketable securities and recorded as a recovery on the sale of the Company’s interest in the Seagull Property (Note 4).

9. LOANS PAYABLE

The Company entered into two loan agreements dated February 25, 2020 and May 4, 2020, pursuant to which the Company received $40,000 for working capital purposes. The loans were provided by a company controlled by a director and an officer with a term of one year with interest at a rate of 1% per month (12% per annum). There were two advancements of $23,000 and $17,000 under the loan agreements and $40,000 was outstanding as at October 31, 2020.

The Company entered into a loan Agreement , dated August 13, 2019, pursuant to which the lender agreed to loan the Company up to $15,000 for working capital purposes. The loan agreement was provided by the private lender for a term of one year with interest at a rate of 1% per month (12% per annum). The $15,000 was advanced under the loan agreement and was outstanding as of October 31, 2020.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020

(Expressed in Canadian Dollars)

10. INCOME TAXES

A reconciliation of income taxes at statutory rates with the reported taxes as at October 31, 2020 and 2019 is as follows:

reconciliation of income taxes at statutory rates with the reported taxes as at ollows:	October 31, 2020 and 2019 is as
	2020 2019
Loss for theyear	$ (84,138) $ (175,901)
Expected income tax (recovery) Change in statutory foreign tax, foreign exchange rates and other Adjustment to prior years provision versus statutory tax returns Change in unrecognized deductible temporary differences Income tax recovery	$ (23,000) $ (47,000) - 2,000 (2,000) - 25,000 49,000
	$ - $ -

The significant components of the Company’s unrecognized temporary differences, including unused tax credits and unused tax losses as at October 31, 2020 and 2019 are as follows:

		Expiry Date
	2020	Range		2019
Temporary differences:
Exploration and evaluation assets	$ 1,315,000	No expiry	$	1,337,000
Investment tax credits	17,000	2031 to 2034		17,000
Property and equipment	3,000	No expiry		3,000
Share issue costs	2,000	2037 to 2041		9,000
Allowable capital losses	143,000	No expiry		143,000
Non-capital losses available for futureperiods	6,108,000	2026 to 2041		5,989,000

The attributes are subject to review, and potential adjustment, by tax authorities.

11. COMMITMENTS

The Company has entered into three 5 year term renewable agreements with companies controlled by two directors and one former director of the Company for the provision of consulting and/or legal services at a cost of $2,500 per month ($30,000 per annum) for each of the three agreements. If any of such agreements are terminated without cause, or if there is a change in control of the Company, the Company is required to pay $150,000 to such contracted party so affected. During the year ended October 31, 2020, a director voluntarily resigned and accordingly no fees are owing under the agreement.

The Company has also entered into two agreements with certain directors/officers for services rendered in such capacities. If such agreements are terminated without consent of the director/officer or the director/officer resigns within 120 days following a change in control, the Company must pay $50,000 to such director/officer and allow any unvested stock options to vest. During the year ended October 31, 2020, a director voluntarily resigned and accordingly no fees are owing under the agreement.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

12. CAPITAL MANAGEMENT

The Company’s shareholders’ deficiency comprises its capital under management. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue new business opportunities in the area of pharmaceutical and nutraceutical manufacturing and distribution and to maintain a flexible capital structure that optimizes the costs of capital at an acceptable risk.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. 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.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with maturities of 365 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.

To fund future operating activities, the Company will need to become profitable in perusing its new business and/or raise funds through future share issuances, issue new debt or dispose of assets.

There have been no changes to the Company’s approach to capital management during the year ended October 31, 2020. The Company is not subject to externally imposed capital requirements.

13. FINANCIAL INSTRUMENTS

Fair value

The Company classifies its cash and cash equivalents and marketable securities as fair value through profit or loss; receivables and reclamation deposits as financial assets at amortized cost; and accounts payable and accrued liabilities at amortized cost.

The carrying values of receivables, reclamation deposits, accounts payable and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments.

The Company’s measurement of fair value of financial instruments in accordance with the fair value hierarchy is as follows:

ollows:
	Total Level 1 Level 2 Level 3
October 31, 2020 Assets Cash and cash equivalents October 31, 2019 Assets Cash and cash equivalents	$ 3,032 $ 3,032 $ - $ -
	$ 3,032 $ 3,032 $ - $ -
	$ 7,327 $ 7,327 $ - $ -
	$ 7,327 $ 7,327 $ - $ -

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS (Continued)

The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below.

Credit risk

Credit risk is the risk of potential loss to the Company if a counter party to a financial instrument fails to meet its payment obligations. The Company is exposed to credit risk with respect to its cash and other receivables.

The Company's credit risk is primarily attributable to cash and cash equivalents. Management believes that the credit risk concentration with respect to cash and cash equivalents is remote as it maintains accounts with highly rated financial institutions.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. As at October 31, 2020, the Company had accounts payable and accrued liabilities of $302,564 (October 31, 2019 $282,837). Based on the current funds held, the Company does not have sufficient working capital for the short term, and thus will need to rely upon financing from shareholders and/or debt holders to obtain sufficient working capital. There is no assurance that such financing will be available on terms and conditions acceptable to the Company.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.

• (i) Interest rate risk

Interest rate risk consists of two components:

• (a) To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

• (b) To the extent that changes in prevailing market rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

The Company is not exposed to significant interest rate risk.

• (ii) Foreign currency risk

The Company is not exposed to foreign currency risk.

• (iii) Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to other price risk since it has sold its marketable securities.

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VAR RESOURCES CORP. (FORMERLY CANADIAN INTERNATIONAL PHARMA CORP.) Notes to the Consolidated Financial Statements October 31, 2020 (Expressed in Canadian Dollars)

14. SUBSEQUENT EVENTS

The Company completed a non-brokered private placement financing, whereby the Company issued 6,250,000 subscription receipts at a price of $0.105 per subscription receipt for aggregate proceeds of $656,250.

Each subscription receipt entitles the holder to acquire, for no additional consideration, one unit consisting of one share of the Company and one transferable share purchase warrant. Each warrant shall entitle the holder thereof to acquire one share at a price of $0.14 per share until December 2, 2025.

On January 29, 2021, the TSX-V accepted for filing the non-brokered private placement and the Option Agreement described below.

Under the terms of the Option Agreement, the Company has the exclusive right and option to acquire a 100% interest in the Hook Bay Property, located on Vancouver Island, British Columbia, by making a cash payment of $50,000, issuing an aggregate of 2,700,000 common shares of the Company and incurring an aggregate of $400,000 in exploration expenditures as set out below:

Payment Date	Cash Payment	Shares	Expenditures
Within 5 days of the Closing Date (as defined in the Option Agreement)	$50,000 (paid)	2,200,000	-
Within 30 days of the Closing Date (as defined in the Option Agreement)	-	-	$100,000
Within 18 months of the Closing Date (as defined in the Option Agreement)	-	500,000	$300,000
TOTAL:	$50,000	2,700,000	$400,000

Upon completion of the Option Agreement, the Company will have earned an undivided 100% legal and beneficial interest in Hook Bay Property, subject to a 2.0% net smelter return royalty to be granted to the optionor. The royalty can be reduced to 1% prior to commercial production by paying $1,500,000 to the optionor.

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