Helix BioPharma Corp. — Audit Report / Information 2020

Mar 16, 2021

Financial Statements (Expressed in Canadian Dollars)

New Klondike Exploration Ltd.

For the years ended November 30, 2020 and 2019

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Independent Auditor’s Report

To the Shareholders of New Klondike Exploration Ltd.

Opinion

We have audited the financial statements of New Klondike Exploration Ltd. (the “Company”), which comprise the statements of financial position as at November 30, 2020 and 2019, and the statements of loss and comprehensive loss, statements of changes in shareholders’ deficiency and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 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 audit 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 financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 1 in the financial statements, which indicates that the Company incurred a net loss during the year ended November 30, 2020 and, as of that date, the Company’s current liabilities exceeded its current assets. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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 financial statements

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

In preparing the 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 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 financial statements

Our objectives are to obtain reasonable assurance about whether the 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of the 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 risks 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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our

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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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

The engagement partner of the audit resulting in this independent auditor’s report is Jessica Glendinning.

McGovern Hurley LLP

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Chartered Professional Accountants Licensed Public Accountants

Toronto, Ontario March 12, 2021

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NEW KLONDIKE EXPLORATION LTD. Statements of Financial Position

(Expressed in Canadian dollars)

Statements of Financial Position (Expressed in Canadian dollars)
		November 30,			November 30,
	Notes		2020		2019
ASSETS
Current
Cash		$	4,293	$	471
Amounts receivable			1,234		347
Prepaid expenses			529		-
Total current assets			6,056		818
Total assets		$	6,056	$	818
LIABILITIES
Current
Trade and other payables	4	$	144,976	$	108,536
Loans payable	5		30,964		30,964
Promissory note payable	5		89,815		-
Total current liabilities			265,755		139,500
SHAREHOLDERS' DEFICIENCY
Share capital	6b	21,094,556			21,094,556
Deficit		(21,354,255)			(21,233,238)
Total shareholders' deficiency			(259,699)		(138,682)
Total shareholders' deficiency and liabilities		$	6,056	$	818

Nature and continuance of operations (Note 1) Commitments and contingencies (Note 11)

On behalf of the Board:

“Neil Pettigrew” Director “Charles Liu” Director

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

NEW KLONDIKE EXPLORATION LTD. Statements of Loss and Comprehensive Income (Loss)

(Expressed in Canadian dollars)

			For the year	For the year	ended
		November 30,		November 30,
	Notes		2020		2019
EXPENSES
General and administrative (recovery)		$	(6,444)	$	500
Exploration and evaluation			835	$	850
Investor relations			120,286	$	6,250
Professional fees, consulting			5,300	$	15,000
Total expenses			119,977		22,600
Operating loss			(119,977)		(22,600)
Other (expense) income
Interest			(1,040)		-
Net and comprehensive loss		$	(121,017)	$	(22,600)
Basic (loss) income per common share		$	(0.010)	$	(0.001)
Diluted (loss) income per common share		$	(0.010)	$	(0.001)
Weighted average number of shares
Basic	6		20,415,545		20,415,545
Diluted	6		20,415,545		20,415,545

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

NEW KLONDIKE EXPLORATION LTD.

Statements of Changes in Shareholders’ Deficiency For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

		# of
		outstanding					Total
		common				shareholders'
	Notes	shares	Share capital		Deficit		deficiency
Balance - November 30, 2018		20,415,545	21,094,556		(21,210,638)	$	(116,082)
Balance - December 1, 2018		20,415,545	21,094,556		(21,210,638)		(116,082)
Comprehensive loss for theyear		-	-		(22,600)		(22,600)
Net change in year		-	-		(22,600)		(22,600)
Balance - November 30, 2019		20,415,545	21,094,556		(21,233,238)	$	(138,682)
Balance - December 1, 2019		20,415,545	21,094,556	$	(21,233,238)		(138,682)
Comprehensive loss for theyear		-	-		(121,017)		(121,017)
Net change in the year		-	-		(121,017)		(121,017)
Balance - November 30, 2020		20,415,545	21,094,556	$	(21,354,255)	$	(259,699)

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

NEW KLONDIKE EXPLORATION LTD.

Statements of Cash Flows

For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

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For the year ended
November 30, November 30,
Notes 2020 2019
Cash flow provided by (used in) operating activities
Loss for the year $ (121,017) $ (22,600)
Net change in non-cash working capital
(Increase) decrease in amounts receivables (887) 500
-
(Increase) in prepaid expenses (529)
Increase in payables and other payables 89,100 22,100
Net cash used in operating activities $ (33,333) $ -
Cash flow provided by (used in) financing activities
-
Promissory note 37,155
Net cash provided by financing activities $ 37,155 $ -
Increase in cash 3,822 -
Cash - beginning of year 471 471
Cash - end of year $ 4,293 $ 471
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The accompanying notes are an integral part of these financial statements.

NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

1. Nature and continuance of operations

New Klondike Exploration Ltd. (“NK” or the “Company”) is a mineral exploration company and Reporting Issuer in Canada. The Company’s registered head office is located at Suite 3704, 88 Scott St., Toronto, ON, Canada.

As at November 30, 2020, the Company had a working capital deficiency of $259,699 (2019 - $138,682) and cash of $4,293 (2019 - $471). In addition, the Company had operating losses of $119,977 during the year ended November 30, 2020 (2019 - $22,600). Additionally, continuing operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. Management believes that sufficient working capital will be obtained from external financing to meet the Company’s current and future liabilities and commitments as they become due, though there is a significant risk that additional financing may not be available on a timely basis or on terms acceptable to the Company.

These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. These financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material. Material uncertainties as mentioned above cast significant doubt upon the Company’s ability to continue as a going concern.

Although the Company has taken steps to verify title to its mineral properties and 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 licensing requirements or regulations, social licensing requirements, unregistered prior agreements, unregistered claims, aboriginal claims and non-compliance with regulatory and environmental requirements. The Company’s assets may also be subject to increases in taxes and royalties, renegotiation of contracts, currency exchange fluctuations and restrictions and political uncertainty.

The financial statements were approved by the Board of Directors on March 12, 2021.

Suspension of Trading and Other Regulatory Matters

On August 28, 2015, the Company issued a press release at the request of the TSXV reporting that it had contravened TSXV requirements, including its previous undertaking to the TSXV, to hold a shareholder meeting within the prescribed time frame. The Company held its last annual general shareholder (“AGM”) meeting on January 6, 2014. During the review of this matter, the TSXV also determined that the Company failed to satisfy the continuous listing requirements of the TSXV’s policies as a Tier 2 Listed Issuer. The Company’s shares were halted from trading on August 28, 2015, and on August 31, 2015, they were transferred to the TSXV’s NEX Board.

On April 4, 2016, the Ontario Securities Commission (“OSC”) issued a cease trade order in relation to the securities of the Company.

On May 21, 2020, the Company held a special annual shareholders’ meeting (“SAGM”) wherein directors were appointed to the board of the Company. Thereafter the board appointed management.

In July 2020, the Company has applied to the OSC for a partial revocation pursuant to National Policy 12-202 Revocation of a Compliance Related Cease Trade Order, to date the application has not been approved.

On July 31, 2020, the Company’s shares were delisted from the NEX Board.

The Company can apply for reinstatement to trade when it is able to demonstrate that it has held an AGM and that it is otherwise in good standing pursuant to TSXV requirements and statutory regulations. The TSXV may have further conditions the Company must satisfy prior to reinstatement for trading.

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies

Basis of Preparation

The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value. All dollar amounts presented are in Canadian dollars unless otherwise specified. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

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

Mineral exploration and evaluation expenditures

Exploration and evaluation costs, including acquisition costs are recognized in profit or loss. Costs incurred before and after the Company has obtained the legal rights to explore an area of interest are recognized in profit or loss until such time the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, after which such costs are capitalized. Amounts received for the sale of exploration and evaluation assets, for option payments and for exploration advances are reflected on the statement of profit and loss. Upon achieving production, costs for a producing property will be amortized on a unit of-production method based on the estimated life of the ore reserves.

Mineral Property Agreements With Other Parties

A portion of the Company's activities may be conducted jointly with other parties wherein the Company enters into agreements that provide for specified percentage interests in mineral properties. Once the parties have earned their respective interests and undertake to conduct further acquisition, exploration or development through a joint venture or other legal arrangement, the Company determines the proper accounting treatment for its continued interest in the mineral property.

Where the property is subject to the shared joint control of the parties, the Company discloses this relationship as "a joint venture" and applies proportionate consolidation accounting. Under this method of accounting, the Company's share of assets, liabilities, revenue and expenses are grouped with similar items in the Company's financial statements. Where shared joint control is not present, the Company discloses this relationship as being one of "undivided working interests" and instead recognizes its own assets, liabilities, revenue and expenses and/or its relative shares thereof related to the property. In either case, costs incurred by the Company during earn-in periods are charged to profit and loss. The Company currently has no joint venture interests and one undivided working interest.

Financial instruments

Classification

Financial assets are classified at initial recognition as either: measured at amortized cost, Fair value through profit or loss (“FVTPL”), or fair value through other comprehensive income ("FVTOCI"). The classification depends on the Company’s business model for managing the financial assets and the contractual cash flow characteristics. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI.

Fair value through profit or loss (“FVTPL”) – Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the income statement. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in the statement of loss in the period in which they arise.

Fair value through other comprehensive income (“FVTOCI”) - Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financial assets at amortized cost - A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL or the Company has opted to measure at FVTPL.

Measurement

Financial assets and liabilities at FVTPL are initially recognized at fair value and transaction costs are expensed in the statement of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets or liabilities held at FVTPL are included in the statement loss and comprehensive loss in the period in which they arise. Where the Company has opted to designate a financial liability at FVTPL, any changes associated with the Company's credit risk will be recognized in OCI.

Financial assets and liabilities at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost less any impairment.

Impairment

The Company assesses on a forward-looking basis the expected credit loss ("ECL") associated with financial assets measured at amortized cost, contract assets and debt instruments carried at FVTOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Transaction Costs

For FVTPL and FVTOCI financial assets and liabilities, transaction costs on initial recognition and thereafter are included directly in profit or loss. For financial assets and liabilities at amortized cost, transaction costs are capitalized and included in the calculation of the effective interest rate – i.e. amortized through profit or loss over the term of the related instrument.

Fair Value Hierarchy

Financial instruments recorded at fair value are classified using a hierarchy that reflects the significance of the inputs used in making the measurements. The three levels of the fair value hierarchy are: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly (e.g. broker quotes); and

Level 3 – Inputs for assets or liabilities that are not based on observable market data.

Financial assets and liabilities are recognized in the statement of financial position when the Company becomes party to the contractual provision of the instruments.

Income taxes

Income tax expense is comprised of current and deferred taxes. Current and deferred taxes are recognized in net income except to the extent that they relate to a business combination or items recognized directly in equity or profit

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NEW KLONDIKE EXPLORATION LTD.

Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

or loss.

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is possible that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year, the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Provision

Provisions are recognized for liabilities of uncertain timing or amounts that have arisen as a result of past transactions, including legal or constructive obligations. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date.

Provision for environmental rehabilitation

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of exploration and evaluation assets and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation 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 rehabilitation provision in the period incurred. Discount rates using a pretax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as the related asset.

The Company’s estimates of reclamation 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 rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.

Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit or loss for the year.

For the years presented the Company has no provisions for environmental rehabilitation.

Capital Stock

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares, share warrants, share options and flow-through shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The Company uses the residual approach when allocating the fair value of the share purchase warrants issued in conjunction with the offering of units through a private placement. The Company determines the fair value of the common share and the residual value is allocated to the share purchase warrant for unit offerings that contain a common share and a share purchase warrant.

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Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

NEW KLONDIKE EXPLORATION LTD.

Flow-through shares

The Company will from time to time issue flow-through common shares to finance a significant portion of its exploration program. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On issuance, the Company bifurcates the flow-through share into i) a flow-through share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability, and ii) share capital.

Upon expenditures being incurred, the Company derecognizes the liability and recognizes a future tax liability for the tax reduction renounced to the shareholders. The pro-rata amount of the premium is recognized as finance income and the related deferred tax is recognized as a deferred tax provision.

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period.

The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the Look-back Rule, in accordance with Government of Canada flow-through regulations. When applicable, this tax is accrued as a financial expense until paid.

Share-based payments

The Company applies the fair value method of accounting for all stock option awards. Under this method, compensation expense attributed to the award of options to employees is measured at the fair value of the award on the date of grant and is recognized over the vesting period of the award. Share-based payments to non-employees are valued based on the fair value of the service received, if reliably determinable, otherwise based on the fair value of the award granted. Valuation is calculated based on the date at which the Company receives the service. If and when the stock options are ultimately exercised, the applicable amounts of other equity reserves are transferred to capital stock.

The fair value of instruments granted is measured using the Black-Scholes Option pricing model, taking into account the terms and conditions under which the instruments are granted. The fair value of the awards is adjusted by an estimate of the number of awards that are expected to vest as a result of non-market conditions. At each reporting date, the Company revises its estimates of the number of options that are expected to vest based on the non-market conditions including the impact of the revision to original estimates, if any, with corresponding adjustments to equity.

Foreign currency translation

The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian dollar.

Transactions in currencies other than the functional currency for an entity are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the profit or loss.

Loss per share

Basic loss per common share is calculated by dividing net loss available to common shareholders by the weightedaverage number of shares outstanding during the year. The effect of dilutive stock options, warrants and similar instruments on loss per share is recognized on the use of the proceeds that could be obtained upon of these and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. Diluted loss per share excludes all dilutive potential common shares if their effect is anti-dilutive.

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

Critical accounting estimates and judgments

The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. The estimates and underlying assumptions are based on historical experience and other factors believed to be reasonable under the circumstances. Accounting estimates are reviewed on an ongoing basis and revisions are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive loss/income in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.

Information about critical estimates and judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements within the next financial year are discussed below:

Critical judgements in applying accounting policies

Income taxes

Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company’s current understanding of the tax law. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability, including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent that it is probable that taxable profit will be available against which a deductible temporary difference can be utilized. This is deemed to be the case when there are sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity that are expected to reverse in the same year as the expected reversal of the deductible temporary difference, or in years into which a tax loss arising from the deferred tax asset can be carried back or forward. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

Going concern

The assessment of the Company’s ability to continue as a going concern requires significant judgment. The financial statements have been prepared on the basis of accounting principles applicable to a going concern, as disclosed in Note 1.

Critical estimates

Share-based payment transactions

The Company measures the cost of options granted for goods and services with reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant.

This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.

Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate

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Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

NEW KLONDIKE EXPLORATION LTD.

tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Provision for environmental rehabilitation

Rehabilitation provisions have been created based on the Company’s internal estimates. Assumptions, based on the current economic environment, have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates take into account any material changes to the assumptions that occur when reviewed regularly by management. Estimates are reviewed annually and are based on current regulatory requirements. Significant changes in estimates of contamination, restoration standards and techniques will result in changes to provisions from year to year.

Actual rehabilitation costs will ultimately depend on future market prices for the rehabilitation costs that will reflect the market condition at the time the rehabilitation costs are actually incurred. The final cost of the currently recognized rehabilitation provisions may be higher or lower than currently provided for. As at November 30, 2020 and 2019, the Company had no known rehabilitation requirements, and accordingly, no provision has been made.

Commitments and contingencies

See Note 11.

New Accounting Standards and Interpretations Adopted

During the year ended November 30, 2020, the Company adopted a number of new IFRS standards, interpretations, amendments and improvements of existing standards. These included IFRS 16 and IFRIC 23. These new standards and changes did not have any material impact on the Company’s financial statements.

New accounting standards issued but not yet effective

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after December 1, 2020. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020.

3. MINERAL PROPERTIES

The Company’s mineral properties consist of:

a.) Goldstorm Project, Ontario

On February 2, 2014, the Goldstorm Project consisted of 109 claims comprising 1,443 units covering 23,088 hectares. After conversion to the new MNDM digital claims system on April 10, 2018, the Goldstorm property stood at 1283 individual claims. 1281 of these claims were released on February 22, 2018. As at November 30, 2020, only 2 claims are held by the Company. Certain of the Goldstorm Project claims are subject to a net smelter royalty (“NSR”) of

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NEW KLONDIKE EXPLORATION LTD.

Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

either 0.5% or 1%.

b.) Santa Maria Project, Ontario

The Company held a 30% interest in the Santa Maria Project, pursuant to a 2012 option and joint venture agreement with BWR Exploration Inc. “BWR”. The Santa Maria Project consisted of 25 unpatented mining claims (pre-April 2018 transition to the digital claim system) (160 units or 2,560 hectares) located 45 km southeast of Dryden, Ontario. In February 2019, the majority of the claims were allowed to lapse. Currently only 1 claim from the original Santa Maria project remains current and is held 100% by the Company. Certain of the Santa Maria Project claims are subject to a NSR of either 1% or 2%.

c.) Nickel Offsets Property, Ontario

The Company currently holds a 100% interest in 15 unpatented claims and 12 patented claims known as the Nickel Offsets project located in Foy Township, Sudbury Mining Division, Ontario, subject to a NSR of 3.5%.

4. TRADE AND OTHER PAYABLES

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|||||
|---|---|---|---|
|As at November 30,|2020|2019|
|Accounts payable|$ 32,469|$ 87,036|
|Accrued expenses|112,507|21,500|
|$|144,976|$|108,536|
|LOANS PAYABLE|
|As at November 30,|2020|2019|
|Loan payable|$ 30,964|$ 30,964|
|Promissory Note|89,815|-|
|$|120,779|$|30,964|

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5. LOANS PAYABLE

• a. The loan payable is unsecured, non-interest bearing and without fixed terms of repayment.

• b. On October 27, 2020, the Company entered an unsecured Demand Promissory Grid Note, with unrelated parties. The maximum amount of principal (excluding interest) permitted to be outstanding at any time pursuant to the Promissory Note is $150,000, inclusive of pre-existing indebtedness. Interest shall be payable on the principle amount at a rate per month equal to 0.5% and shall be payable on the first anniversary date of the Promissory Note. As an inducement to a lender, the Company granted a Net Smelter Return (“NSR”) royalty for 3.5% and a Right of First Refusal for the Company’s 100% owned Nickel Offsets property.

6. SHARE CAPITAL

a) Authorized Share Capital

The Company’s authorized share capital consists of an unlimited number of voting common shares without par value.

b) Issued Share Capital As at November 30, 2020, the Company’s issued share capital is 20,415,545 (2019 – 20,415,545) common shares with a stated value of $21,094,556 (2019 - $21,094,556). A continuity of the Company’s share capital is disclosed in the statements of changes in shareholders’ deficiency.

c) Loss Per Common Share

Loss per common share is calculated using the basic and diluted weighted-average number of common shares

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

outstanding.

7. INCOME TAXES

The Company recognizes deferred tax assets in respect of deductible temporary differences, which includes unused tax losses and other tax deductions/credits but only to the extent that it is probable that future taxable income will be available against which they can be utilized. The Company does not presently satisfy this recoverability test; accordingly, no deferred tax asset has been recorded.

There are no current taxes payable or recoverable as at November 30, 2020 and 2019. The deferred tax recovery (expense) for each year are as follows:

a) Provision for Income Taxes

Major items causing the Company's effective income tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% (2019 - 26.5%) were as follows:

2020 2019
(Loss)income before income taxes (121,017) (22,600)
Expected income tax (recovery) expense based on statutory rate (32,000) (6,000)
Adjustments to expected income tax benefit: Change in unrecorded deferred tax asset 32,000 6,000
Deferred income taxprovision(recovery) - -
b) Deferred Income Tax
2020 2019
Unrecognized deferred tax assets
Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:
Non-capital loss carry-forwards 1,028,000 1,028,000
Capital loss carry-forwards 2,363,000 2,363,000
Mineral property costs 4,237,000 4,164,000
Other temporarydifferences - 17,000
Total 7,628,000 7,572,000

The tax losses expire from 2026 to 2040. The other temporary differences do not expire under current legislation.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can use the benefits.

As at November 30, 2020, unrecognized timing differences on exploration and evaluation assets includes $1,166,000 (2019 – $1,166,000) of foreign exploration expenses.

8. RELATED PARTY TRANSACTIONS

The Company considers its related parties to consist of the Company’s key management personnel, namely officers and directors, and those companies subject to their control or significant influence. There were no related party transactions or balance due or receivable from related parties during the years ended November 30, 2020 and 2019.

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

9. FINANCIAL RISK FACTORS

The Company’s financial instruments consist of financial assets and liabilities as outlined below:

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As at November 30, 2020 2019
Financial assets
Amortized cost
Cash $ 4,293 $ 471
Amounts receivable 1,234 347
Total financial assets $ 5,527 $ 818
Financial liabilities
Amortized cost
Trade and other payables $ 144,976 $ 108,536
-
Promissory note payable 89,815
Loans payable 30,964 30,964
Total financial liabilities $ 265,755 $ 139,500
(Deficiency) of financial assets
over financial liabilities $ (260,228) $ (138,682)
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The Company classifies its fair value measurements in accordance with an established hierarchy that prioritizes the inputs in valuation techniques used to measure fair value 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 November 30, 2020 and 2019, the Company had no financial instruments carried at fair value to classify in the fair value hierarchy. The fair value of the Company’s financial instruments approximates their fair values because of their short-term nature.

Risk exposures and the impact on its financial instruments are summarized below.

Credit risk

The Company’s financial assets are exposed to some credit risk. The Company has no significant concentration of credit risk arising from operations. The Company does not use derivatives to manage credit risk.

Liquidity risk

The Company's approach to managing liquidity risk is to have, whenever feasible, sufficient liquidity to meet liabilities when due. The Company's trade and other payables are financial liabilities which have contractual maturities of less than 30 days and are subject to normal trade terms. The promissory note payable is due on demand. The Company also has $30,964 of loans payable which have no fixed terms of repayment. The Company presently assesses its overall liquidity risk as significant.

Market risk

The Company’s market risk has three components – interest rate risk, foreign currency risk and price risk.

(i) Interest rate risk

The Company presently has cash balances but no cash equivalents or interest-bearing debt. Periodically, the Company will invest its excess cash in guaranteed investment certificates issued by its banking institution. The Company monitors the investments it makes and is satisfied with the credit ratings of its bank.

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NEW KLONDIKE EXPLORATION LTD. Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

(ii) Foreign currency risk

The Company's functional currency is the Canadian dollar and all purchases are transacted in Canadian dollars. The Company has no foreign operations and thus has no foreign exchange risk derived from either currency conversions or from holding foreign currencies. The Company does not speculate in the foreign currency market nor does it have any need to acquire foreign currency hedges.

(iii) Price risk

The Company is exposed to some price risk with respect to commodity prices; however, this is limited since the Company is not a producing entity. The Company closely monitors commodity prices to determine appropriate courses of action.

Sensitivity Analysis

Management believes that sensitivity analysis on the Company’s financial instruments is presently unnecessary, since any changes in interest rates, foreign currency and commodity prices are unlikely to have a material effect on the Company’s financial instruments.

10. CAPITAL MANAGEMENT

The Company considers its capital structure to consist of components of shareholders’ deficiency. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.

The properties in which the Company currently has an interest are in the exploration stage; as such, the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company spends its existing working capital and raises additional amounts as needed. The Company continues to assess new properties and seeks to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the years ended November 30, 2020 and 2019. The Company is not subject to externally imposed capital requirements.

11. COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. Management believes that the Company has made appropriate expenditures to comply with such laws and regulations.

Flow-Through Expenditures

In connection with prior financings completed by the issuance of flow-through shares, the Company provides subscribers with an indemnification for any tax liability that may arise if the Company is found to have not incurred the qualifying exploration expenditures in accordance with the flow-through subscription agreements. Management believes that the Company has incurred and renounced sufficient eligible expenditures to meet its obligations.

Novel Coronavirus (“COVID-19”)

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of

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NEW KLONDIKE EXPLORATION LTD.

Notes to the Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

12. SEGMENTED INFORMATION

The Company’s operations comprise a single operating segment engaged in the acquisition, exploration and development of mineral properties in Canada.

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