Jaguar Resources Inc. — Interim / Quarterly Report 2021

Sep 27, 2021

Jaguar Resources Inc.

Unaudited Interim Condensed Consolidated Financial Statements June 30, 2021

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, part 4, subsection 4.3(3)(a), if an auditor does not perform a review of the interim financial statements, the interim financial statements must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanied interim condensed consolidated financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by the entity’s auditor.

Jaguar Resources Inc. Consolidated Statements of Financial Position Unaudited (Canadian dollars)

June 30, 2021	December 31, 2020
Assets Current assets Cash $ 441,500 Good and services tax recoverable 1,647 Prepaid expense and deposits **267,369 **	$ - 4,713 -
Total current assets 710,516 Non-current asset Deposits **10,000 **	4,713 10,000
Total assets $ **720,516 **	$ 14,713
Liabilities Current liabilities Bank overdraft $ - Accounts payable and accrued liabilities 14,624,813 Short-term loan (note 6) 4,840,098 Promissory notes (note 7) 3,492,218 Decommissioningobligation **194,804 **	$ 958 14,062,217 5,043,304 1,520,796 194,804
Total current liabilities **23,151,933 **	20,822,079
Shareholders’ Deficit Share capital(note 8) 7,311,337 Warrants(note 8) - Contributed surplus 796,561 Deficit (30,539,315)	7,311,337 4,988 791,573 (28,915,264)
Total equity (22,431,417)	(20,807,366)
Total liabilities and equity $ **720,516 **	$ 14,713

Nature of Operations and Going Concern (note 2) Commitments and Contingencies (note 12) Subsequent Events (note 13)

Approved by the Board of Directors:

(signed) “ Corbin Blume” , Director (signed) “Murray Swanson” , Director

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

1

Jaguar Resources Inc. Consolidated Statements of Net Loss and Comprehensive Loss Unaudited (Canadian dollars)

	Six months ended June 30, 2021 Six months ended June 30,2020 Three months ended June 30, 2021 Three months ended June 30,2020
	Expenses Operating $ - $ - $ - $ - Administration (note 9) 535,506 564,664 250,359 322,785 Finance (note 10) 1,544,219 1,108,706 1,049,473 565,672 Transaction costs 127,641 6,304 127,641 4,902 Loss before other items $ 2,207,366 $ 1,679,674 $ 1,427,473 $ 893,359 Unrealized foreign exchange loss (gain) (583,315) 609,807 (397,711) (577,509) Net loss and comprehensive Loss $ 1,624,051 $2,289,481 $ 1,029,762 $315,850 Weighted average number of shares outstanding 16,396,230 16,396,230 16,396,230 16,396,230
	Net loss and comprehensive Loss $ 1,624,051 $2,289,481
	Basic and Diluted Loss per Share $ (0.10) $ (0.14) $ (0.06) $ (0.02)

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

2

Consolidated Statement of Changes in Deficit Unaudited (Canadian dollars)

Jaguar Resources Inc.

Share Capital Warrants Contributed Surplus Deficit	Total
Balance, January 1, 2020 7,311,337 4,988 791,573 (25,924,861) Netloss and comprehensiveloss - - - (2,289,481)	(17,816,963) (2,289,481)
Balance,June 30,2020 $ 7,311,337 $ 4,988 $ 791,573 $(28,214,342)	$(20,106,444)
Balance, January 1, 2021 7,311,337 4,988 791,573 (28,915,264) Netloss and comprehensiveloss - (4,988) 4,988 (1,624,051)	(20,807,366) (1,624,051)
Balance, June 30, 2021 $ 7,311,337 $ - $ 796,561 $(30,539,315)	$(22,431,417)

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

3

Jaguar Resources Inc. Consolidated Statements of Cash Flows Unaudited (Canadian dollars)

Six months ended June 30, 2021 Six months ended June 30,2020 Three months ended June 30, 2021 Three months ended June 30,2020	Six months ended June 30, 2021 Six months ended June 30,2020 Three months ended June 30, 2021 Three months ended June 30,2020
Cash provided by (used in): Operating activities Net loss and comprehensive loss $ (1,624,051)$ (2,289,481)$ (1,029,762)$ (315,850) Items not affecting cash: Unrealized foreign exchange loss (gain) (583,315) 609,807 (397,711) (577,509) Finance (note 10) 1,544,219 1,108,706 1,049,473 565,672 Net change in non-cash working capital items: Goods and services tax recoverable 3,066 2,393 (279) 3,431 Prepaid expense and deposits (267,369) 2,326 (267,369) - Accounts payable and accrued liabilities (489,336) 375,256 (746,111) 194,074
Cashusedinoperating activities (1,416,786) (190,993) (1,391,759) (130,182)
Financing activities Promissorynotes issued(note 7) 1,859,244 161,981 1,828,200 132,783
Cashprovided byfinance activities 1,859,244 161,981 1,828,200 132,783
Increase (decrease) in cash 442,458 (29,012) 436,441 2,601 (Bank overdraft) Cash, beginning ofperiod (958) 31,684 5,059 71
Cash, end ofperiod $ 441,500$ 2,672	$ 441,500$ 2,672

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

4

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

1. General

Jaguar Resources Inc. (the “Company”) was incorporated under the Business Corporations Act (Alberta) on January 26, 2012. The Company is listed on the TSX Venture Exchange (the “Exchange”) under the symbol “JRI.P”. The registered address of the Company is Suite 730, 1015 4 Street SW, Calgary, Alberta T2R 1J4.

2. Nature of Operations and Going Concern

The Company is involved in the exploration and development of and production of petroleum and natural gas properties in Southern Alberta.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they become due.

As at June 30, 2021, the Company had a cash balance of $441,500, a working capital deficit of $22,441,417, deficit of $30,539,315 and negative cash flow from operating activities for the six months ended June 30, 2021 of $1,416,786. The short-term loan (note 6) and promissory notes (note 7) were in default at June 30, 2021.

As security for payment of the principal and interest on the short-term loan (note 6) and promissory notes (note 7), the Company has granted a first floating charge in favor of the lenders thereof as evidenced by a general security agreement. Unless the Company obtains additional financing, it will not be able to repay these amounts.

These events and conditions indicate a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to generate future profitable operations, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due, and to resolve outstanding claims and judgements against the Company (note 12).

The Company continues to pursue financing opportunities to fund the proposed acquisitions of petroleum and natural gas assets that may include a private placement of common shares, preferred shares or debt instruments or the establishment of a debt facility.

These consolidated financial statements do not reflect the adjustments that would be necessary if the going concern assumption was not appropriate. If the going concern assumption was not appropriate for these consolidated financial statements, then necessary adjustments to the carrying values of assets and liabilities and the reported revenues and expenses and statement of financial position classifications would be required. Such adjustments could be material.

5

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

3. Basis of Presentation

Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”).

These condensed consolidated financial statements have been prepared following the same IFRS accounting policies and methods of computation as disclosed in the annual consolidated financial statements for the year ended December 31, 2020. Certain information and disclosures normally required to be included in the notes to the annual audited financial statements have been condensed, omitted or have been disclosed on an annual basis only. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2020.

The condensed consolidated financial statements were approved by the Board of Directors on September 27, 2021.

Basis of consolidation

These consolidated financial statements include the accounts of Jaguar Resources Inc. and its whollyowned U.S. subsidiary, Jaguar Energy LLC, a limited liability company organized and existing under the laws of Delaware. The subsidiary is fully consolidated from the date of acquisition, being the date of which the Company obtained control, and continues to be consolidated until such control ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent, using consistent accounting policies. Any balances, unrealized gains or losses, or income and expenses from Intra-Company transaction are fully eliminated upon consolidation.

Basis of measurement

These consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, warrants and share-based transactions which are measured at fair value. Refer to note 5 of the annual consolidated financial statements for the year ended December 31, 2020 for details on the determination of fair value.

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is the Company’s presentation and functional currency. Jaguar Energy LLC’s functional currency is United States dollars.

4. Significant Accounting Judgements, Estimates and Assumptions

The preparation of these interim condensed consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets, liabilities and contingent liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues, expenses, gains and losses during the reporting period. These judgements, estimates and assumptions are the same as those set out in the annual audited consolidated financial statements for the year ended December 31, 2019. Estimates and judgements are continuously evaluated and are based on management’s experience and other factor, including expectations of future events that are believed to be reasonable under the circumstances.

5. Significant Accounting Policies

The accounting policies adopted in the preparation of these interim condensed consolidated financial statements are the same as those set out in the annual audited consolidated financial statements for the year ended December 31, 2020.

6

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

6. Short-Term Loan

On June 5, 2014, the Company completed a first lien, senior secured 120-day term loan in the principal amount of US$3,533,000 ($3,858,389 Canadian) (the “Term Loan”). Proceeds from the Term Loan were used to complete an acquisition, fund certain costs, fees and expenses related to the Term Loan and for working capital purposes. The Term Loan matured on October 3, 2014 (the “Maturity Date”) and was repayable anytime on or before maturity. At June 30, 2021, US$3,533,000 ($4,811,946 Canadian) remains outstanding. As the Term Loan was not fully repaid 90 days after the date of issuance, September 3, 2014 (the “Repayment Date”), the Company was obligated to grant the lender a 1.0% gross overriding royalty (‘GORR”) interest in perpetuity on all the Company’s current and future production from the Company’s Medicine Hat assets and certain Saskatchewan lands (the “Lands”). Subsequently, the Term Loan was modified to extend the Repayment Date and GORR grant date to September 15, 2014 (the “Term Loan Extension”). As consideration for the Term Loan Extension, and subject to the review and approval of the Exchange, the lender will be granted US$100,000 in Jaguar common shares.

As a condition of completing the Term Loan, a subordination and postponement agreement between the Company, the lender and the Promissory Notes (note 7) holders was executed. Under the terms of this agreement, these promissory note holders agreed to the subordination and postponement of any payments of principal, interest or any other amounts or exercise any right of offset which it has or may have until the Term Loan has been paid and satisfied in full. After the closing of the Term Loan, the Company made payments to certain holders of the Promissory Notes.

In addition, the Company did not meet the requirement to repay the Term Loan prior to the Maturity Date and has not met certain reporting requirements. During the existence of any event of default, interest is payable at a rate of 3% per month, subject to applicable law.

In May 2015, the Term Loan was amended to increase the principal amount by US$178,124 ($212,342 Canadian), (the “May 2015 Addition”) to enable the Company to participate in an exploration and evaluation capital program. In June 2015, the Term Loan was further amended to increase the principal amount by an additional US$250,000 ($309,800 Canadian), (the “Four Wells Loan”). Under the revised terms, the proceeds are to be used exclusively to drill four proposed wells and was to be repaid the earlier of July 20, 2015 or the close of a flow through offering. As further consideration for this loan, the Company is to provide the lender an additional GORR of 1% (the “Four Wells GORR”) and 3,000,000 common shares of the Company to be issued on or before July 30, 2015. These common shares were issued in 2016. As a result of the Company not repaying the Four Wells Loan by July 20, 2015, a further GORR of 0.75% (the “Default GORR”) is to be paid. The Four Wells GORR and Default GORR are in addition to the GORR of 1% granted in the Term Loan and is payable in perpetuity on the Medicine Hat assets, the Lands and any other operation that the Company proposes prior to repayment of all principal and interest owing. As at June 30, 2021, there is no payable amount associated with the GORR, as the Company did not have any production.

The Term Loan is secured by: (i) a first priority secured lien on Jaguar’s Medicine Hat assets; (ii) a first priority secured lien on the Lands; and (iii) a general security agreement granting a security interest over all present and after-acquired personal property of Jaguar.

7

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

7. Promissory Notes

On July 4, 2013, the Company issued two secured promissory notes in the principal amount of $20,000 each with a due date of October 4, 2013 (each a “Third Tranche Note” and collectively, the “Third Tranche Notes”). The due dates on the Third Tranche Notes were amended a number of times with the final amendment extending the due date to September 30, 2015.

On February 5, 2015, the Company issued a secured promissory note in the principal amount of $60,000 with a due date of September 30, 2015 (the “Fourth Tranche Note”).

During 2015, the Company issued two secured promissory notes in the total principal amount of $60,000 with a due date of September 30, 2015 (each a “Fifth Tranche Note” and collectively, the “Fifth Tranche Notes”).

Interest is calculated at a rate of 12% per annum and payable to the holder thereof on the due date of the Third Tranche Notes, Fourth Tranche Note and Fifth Tranche Notes or such earlier date that the total indebtedness is repaid on all promissory notes. At June 30, 2021, $160,000 of these notes remain outstanding.

Two promissory notes issued in 2015, one issued in 2016 and one issued in 2018, collectively, the “Additional Notes” totaling $47,461 remain outstanding at June 30, 2021. In addition, there is a deferred fee of $11,500 that is payable in common shares at $0.80 per share on a post consolidation basis or cash at the option of the note holders. The issuance of the common shares is subject to approval by the Exchange. The Additional Notes carry an interest of 2% per month and a structure fee of 12.5%.

In August 2017 and January 2018, the Company received net proceeds of $85,000 USD ($106,633 Canadian) and $17,000 USD ($21,275 Canadian) from the issuance of two secured promissory notes in the principal amount of $100,000 USD ($125,915 Canadian) and $25,500 USD ($31,897 Canadian) with a due dates of September 29, 2017 and February 1, 2018, respectively. These notes collectively, the “US Notes” are outstanding at June 30, 2021. In addition to the finance fees totaling $23,500 USD, 300,000 options are to be issued.

During 2018, the Company received net proceeds of $262,000 from the issuance of fifteen secured promissory notes with $252,000 due within 2018 and $10,000 due on January 15, 2019 (collectively, the “2018 Notes”). In addition to finance fees totaling $74,050, a total of 95,000 options and 3,000 common shares are to be issued. At June 30, 2021, $72,000 of these promissory notes remain outstanding.

During 2018, the Company received net proceeds of $452,840 from the issuance of eleven secured promissory notes with the total amount due within 2018 (collectively, the “Other 2018 Notes”). In addition to finance fees totaling $41,340, interest at 10.5% per annum is to be paid on all outstanding amounts beyond the maturity dates. At June 30, 2021, $452,840 of these promissory notes remain outstanding.

During 2019, the Company received net proceeds of $233,500 from the issuance of secured promissory notes (collectively, the “2019 Notes”) with $216,000 past due and $10,000 due on demand. In addition to finance fees totaling $45,050, 64,166 options and 83,500 common shares of the Company are to be issued. Interest at 10.5% per annum is to be paid on two notes, 15% on two notes, 20% on one note and 24% on another note.

During 2019, the Company received net proceeds of $158,000 USD ($209,106 Canadian) from the issuance of secured promissory notes (the “2019 US Notes”). In addition to total finance fees of $24,000 USD and 3,000 common shares of the Company are to be issued. Interest at 15% per annum is to be paid on $6,000 on one note commencing October 1, 2019. At June 30, 2021, the $158,000 USD are past due.

8

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

During 2020, the Company received net proceeds of $138,000 from the issuance of secured promissory notes (collectively, the “2020 Notes”) with $138,000 past due. In addition to finance fees totaling $13,100, interest at 15% per annum is to be paid on two of these notes.

During 2020, the Company received net proceeds of $20,558 USD from the issuance of secured promissory notes (the “2020 US Notes”). Finance fees totaling $5,350 USD are to be paid on these promissory notes. At June 30, 2021, these promissory notes remain outstanding.

During the six months ended June 30, 2021, the Company received net proceeds of $21,500 and $1,507,500 USD from the issuance of four Canadian and two US secured promissory notes. In addition to finance fees totaling $5,475 and $226,500 USD, 2,500 and nil common shares, $4,000 and $301,500 USD in bonus shares of the Company are to be issued to the Canadian and US promissory note holders, respectively. The bonus shares to be issued require the approval of the Exchange. At June 30, 2021, these promissory notes remain outstanding and, with the exception of one promissory note totaling $1,725,000 USD ($1,500,000 USD net proceeds and finance fee of $225,000 USD) are all past due. The $1,725,000 USD promissory note was due on July 31, 2021.

Bonus shares of the Company in an amount equal to 20% of the value of the notes divided by the market price of the Company’s common shares on the Exchange are to be issued on some promissory notes pending the approval of the Exchange. At June 30, 2021, bonus shares in the amount of $161,300 and $337,212 USD remain outstanding.

As of June 30, 2021, there were no new terms negotiated to extend the terms of all the above outstanding promissory notes. Unless the Company obtains additional financing, there is a significant risk that it may default on the notes.

As security for payment of the principal and interest on all the above promissory notes, the Company has granted a first floating charge in favor of the holders, subordinated to the holder of the short-term loan (note 6), as evidenced by a general security agreement.

9

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

8. Share Capital

Authorized

Unlimited number of common shares Unlimited number of preferred shares, issuable in series

Issued and outstanding common shares:

	Number		Amount
Balance, December 31, 2019,
December 31, 2020 and June 30,
2021	16,396,229	$	7,311,337
Issued and outstanding Warrants:
	Number		Amount
Balance, December 31, 2019 and December 31, 2020	30,000	$	4,988
Expired	(30,000)		(4,988)
Balance, June 30, 2021	-	$	-

9. Administration Expenses

dministration Expenses
Six months ended June 30, 2021 Six months ended June 30, 2020 Three months ended June 30, 2021	Three months ended June 30, 2020
Salaries and benefits $ 447,929 $ 415,083$ 209,889 Professional fees 40,113 93,060 10,798 Travel 9,703 15,350 7,749 Public company filing fees 7,927 10,947 3,472 Other expenses 29,834 30,224 18,451	$ 222,412 75,310 1,410 7,221 16,432
$ 535,506 $ 564,664$ 250,359	$ 322,785

10

Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

Jaguar Resources Inc.

10. Finance Expenses

Six months ended June 30, 2021 Six months ended June 30, 2020 Three months ended June 30, 2021 Three months ended June 30, 2020	Six months ended June 30, 2021 Six months ended June 30, 2020 Three months ended June 30, 2021 Three months ended June 30, 2020
Interest expense(1) $ 946,053$ 1,026,764 $ 466,892 $ 520,986 Financing costs(2) 598,166 81,942 582,581 44,686
$ 1,544,219$ 1,108,706$ 1,	049,473 $ 565,672

(1) The six months ended June 30, 2021 amount includes interest on Term Loan (including the May 15 Addition and the Four Wells Loan), the Promissory Notes, bank interest and vendor interest of $889,329, $55,596, $155 and $973, respectively. The six months ended June 30, 2020 amount includes interest on Term Loan (including the May 15 Addition and the Four Wells Loan) and the Promissory Notes of $973,296 and $53,468, respectively.

(2) This includes financing, promissory note structuring and extension fees.

11. Earnings (Loss) per Common Share

Earnings (Loss) per common share is calculated using the weighted average number of common shares outstanding for the year.

Diluted earnings (loss) per share is not presented as the warrants are all anti-dilutive.

12. Commitments and Contingencies

In 2017, the Company entered into an agreement with a financial advisor (the “Financial Advisor”) with respect to a proposed private placement in the United States and Canada. The Company agreed to pay a cash fee of four percent (4%) of any equity sold or arranged pursuant to such private placement as introduced by the Financial Advisor. On equity securities sold or arranged by any party not introduced by the Financial Advisor, a two percent (2%) advisory fee is payable to the Financial Advisor. In addition, the Company agreed to reimburse the Financial Advisor's expenses.

The Company has received seven claims from vendors related to the non-payment of amounts outstanding. These amounts outstanding have been included in the accounts payable as at June 30, 2021.

In addition, another vendor filed a claim for costs related to a well program. In 2019, the Company and this vendor entered into a mutual release whereby the Company would pay this vendor $127,000 plus costs and interest. These amounts have been included in the accounts payable at June 30, 2021.

The Alberta Energy Regulator (the “AER”) released a new edition of Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licenses and Approvals on December 6, 2017. Under these requirements, companies were required to provide an updated schedule to the AER by January 31, 2018. The Company did not complete the updated schedule and as a result the license eligibility was revoked. A return to general eligibility status after restriction or revocation will require re-application and the payment of a $10,000 fee.

11

Jaguar Resources Inc. Notes to the Condensed Consolidated Financial Statements June 30, 2021 Going Concern – Note 2 (Canadian dollars)

On January 30, 2020, the World Health Organization declared the novel Coronavirus disease (“COVID19”) outbreak a public health emergency of international concern and, on March 11, 2020, declared it to be a pandemic. The outbreak of the COVID-19 pandemic has had a significant negative impact on global economic conditions in 2020. This has included a sharp decrease in crude oil demand which, combined with other macro-economic conditions, has resulted in significant volatility in oil and natural gas commodity prices, as well as economic uncertainty. The extent and duration of the impacts of COVID-19 on future demand for oil and gas, on the Company’s cash flow and access to capital and on the Company’s suppliers and employees continues to remain uncertain.

The Company has established remote working capabilities and procedures to ensure business continuity and the reliability of its operations in the event of future COVID-19 related restrictions or lockdowns. The COVID-19 pandemic remains an evolving situation that has had, and may continue to have, a significant impact on the Company’s business, results of operations, financial condition and the environment in which it operates. Management cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption will impact the Company’s go-forward financial position, profit or loss and cash flows. The potential direct and indirect impacts of the economic downturn have been considered in management’s estimates and assumptions at December 31, 2020 and have been reflected in the Company’s results.

12