Jemtec Inc. — Interim / Quarterly Report 2021

Jun 29, 2021

JEMTEC Inc.

Condensed Interim Financial Statements For the three and nine months ended April 30, 2021 and 2020 (Expressed in Canadian dollars) (Unaudited)

Notice of No Review of Interim Financial Statements

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

The accompanying unaudited condensed interim 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 Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

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JEMTEC INC.

Condensed Interim Statements of Operations and Comprehensive Loss (Expressed in Canadian Dollars) (Unaudited)

Three months ended April 30, Notes 2021	Three months ended April 30, Nine months ended April 30, Nine months ended April 30, 2020 2021 2020
Revenues Leasing, monitoring, activation and bail $ 609,343 Interestincome 641	$ 559,170 $ 1,875,244 $ 1,758,455 5,220 2,463 17,467
609,984 Expenses Accounting and administrative fees 11,12 10,500 Consulting fees 30,000 Depreciation 6 2,633 Directors’ fees 11,12 35,469 Equipment rent and installation 15,611 Foreign exchange (gain) loss (2,086) Lease interest 62 Monitoring and activation fees 233,066 Office 47,494 Professional fees 7,575 Repairs and maintenance 8,859 Salaries and benefits 11,12 74,254 Share-based payments 8(b),11 - Shareholder communications 11,390 Travel 8,707	564,390 1,877,707 1,775,922 9,000 29,000 27,000 30,000 90,000 90,000 30,459 7,900 91,377 13,750 70,575 56,250 16,255 41,526 41,821 7,340 1,751 14,244 119 231 398 197,758 667,746 621,920 33,827 140,452 102,718 6,115 26,357 28,415 9,911 26,887 43,921 72,752 216,606 212,159 1,215 - 5,496 9,637 18,991 16,385 4,405 31,278 14,241
483,534	442,543 1,369,300 1,366,345
Income before income taxes 126,450 Provision for income taxes 31,000	121,847 508,407 409,577 35,000 124,000 125,000
Net income and comprehensive income for theperiod $ 95,450	$86,847 $ 384,407 $284,577
Earnings per share Basic $ 0.03 Diluted $ 0.03	$ 0.03 $ 0.14 $ 0.10 $0.03 $ 0.14 $0.10
Weighted-average number of shares outstanding Basic 8(c) 2,794,679 Diluted 8(c) 2,854,356	2,716,874 2,757,499 2,716,874 2,865,953 2,809,728 2,871,319

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

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JEMTEC INC.

Condensed Interim Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited)

Notes	April 30, 2021	July 31, 2020
Assets Current assets Cash and cash equivalents Accounts receivable Prepaid expenses and deposits	$ 1,615,920 226,518 17,825	$ 2,093,645 206,878 18,290
Total current assets Equipment 6	1,860,263 10,350	2,318,813 18,250
Total assets	$ 1,870,613	$2,337,063
Liabilities and Shareholders’ Equity Current liabilities Accounts payable and accrued liabilities 7,11 Deferred revenue Income taxes payable Current portionof leaseliability 5	$ 209,997 4,820 3,448 9,647	$ 288,425 11,002 103,219 10,361
Total current liabilities Lease liability 5	227,912 -	413,007 7,035
Total liabilities	227,912	420,042
Shareholders’ equity Share capital 8 Share-based payments reserve 8 (Deficit) retained earnings	1,410,764 461,460 (229,523)	1,375,821 461,460 79,740
Total shareholders’ equity	1,642,701	1,917,021
Total liabilities and shareholders’ equity	$ 1,870,613	$2,337,063

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

Approved on behalf of the Board and authorized for issue on June 29, 2021.

“Eric Caton” “Leslie N. Markow"

Director

Director

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JEMTEC INC.

Condensed Interim Statements of Changes in Shareholders’ Equity (Expressed in Canadian Dollars) (Unaudited)

Number of common shares	Share capital Reserves	(Deficit) Retained Earnings Total Shareholders’ Equity
Balance, July 31, 2019 2,716,874 Share-based payments - Net income for the period - Impact of change in accounting Policy - Special dividend (Note 9) -	$ 1,375,821 $ 455,765 - 5,496 - - - - - -	$ 350,323 $ 2,181,909 - 5,496 284,577 284,577 (417) (417) (679,219) (679,219)
Balance,April 30,2020 2,716,874	$1,375,821 $461,261	$ (44,736) $1,792,346
Balance, July 31, 2020 2,716,874 Share-based payments 77,805 Net income for the period - Special dividend (Note 9) -	$ 1,375,821 $ 461,460 34,943 - - - - -	$ 79,740 $ 1,917,021 - 34,943 384,407 384,407 (693,670) (693,670)
	$ 1,410,764 $ 461,460

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

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JEMTEC INC.

Condensed Interim Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited)

Nine months ended April 30, 2021	Nine months ended April 30, 2021	Nine months ended April 30, 2020
Cash used for: Operating activities Net income for the period $ 384,407 Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 7,900 Share-based payments - Changes in non-cash operating working capital Accounts receivable (19,640) Prepaid expenses and deposits 465 Accounts payable and accrued liabilities (78,428) Customer deposits - Deferred revenue (6,182) Income taxes payable (99,771)		$ 284,577 91,377 5,496 14,584 1,501 (45,685) (8,198) 1,082 17,175
Cash flows from operating activities 188,751		361,909
Financing activities Stock options exercised 34,943 Special dividends (693,670) Right-of-use asset lease payment (7,749)		- (679,219) (7,582)
Cash flows from financing activities (666,476)		(686,801)
(Decrease) in cash during the period (477,725) Cashand cashequivalents, beginning ofperiod $ 2,093,645		(324,892) $2,194,824
Cash and cash equivalents, end ofperiod $ 1,615,920		$1,869,932
Cash and cash equivalents Cash $ 386,995 Short-termdeposits 1,228,925		$ 344,518 1,525,414
$ 1,615,920		$1,869,932
Supplementary Information Interest received $ 2,463		$17,467
Interestpaid $ 1,365		$1,807
Income taxes and instalmentspaid $ 223,768		$107,825

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

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Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

JEMTEC INC.

1. Nature of operations

JEMTEC Inc. (“the Company”) was incorporated under the Ontario Business Corporations Act and is listed on the TSX Venture Exchange (“TSXV”). The Company’s core business is the provision of services and technologies for offender monitoring with Canadian federal and provincial correctional departments. The Company services include global positioning systems, electronic monitoring, alcohol detection and voice verification technologies as they relate to location verification of offenders and individuals under restrictions in the community.

The corporate head office of the Company is located at Suite 200, 38 Fell Avenue, North Vancouver, BC, and its registered office is located at Suite 1800 - 130 King Street West, Toronto, ON.

2. Basis of presentation

a) Statement of compliance

These condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee (IFRICs). They do not include all of the information required by International Financial Reporting Standards (“IFRS”) for complete annual financial statements, and should be read in conjunction with the Company’s 2020 annual financial statements. They have been prepared using the accounting policies that were described in Note 3 to the Company’s annual financial statements as at and for the year ended July 31, 2020.

These condensed interim financial statements were approved by the Board of Directors of the Company on June 29, 2021.

b) Functional and presentation currency

The Company's functional and reporting currency is the Canadian dollar. Monetary assets and liabilities denominated in another currency are translated at the prevailing period-end exchange rates. Other nonmonetary assets and liabilities denominated in another currency are translated at historical exchange rates. Revenues and expenses are translated at the exchange rates in effect at the time of the transaction. Gains and losses arising from fluctuations in exchange rates are included in operations for the periods in which they occur.

3. Selected significant accounting policies

a) Cash and cash equivalents

Cash and cash equivalents are comprised of cash deposits in the bank and highly liquid investments with original maturities of three months or less that is readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

b) Revenue recognition

The Company has applied IFRS 15 to the revenue generated from the sale of parts which are required to repair and maintain the monitoring equipment, and to the revenue generated for maintenance and monitoring services.

Rental and monitoring income are recognized pursuant to various lease agreements which specify the terms and conditions of rental and the services to be performed for electronic surveillance. Rental and bail income are recognized on a straight-line basis over the terms of the leases.

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JEMTEC INC. Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

3. Selected significant accounting policies (Continued)

b) Revenue recognition (Continued)

The Company recognizes sales and leasing revenue over the term of the applicable operating services agreements. The term of existing service agreements is between one to seven years. Generally, the lessees have the option to renew or cancel the lease and service agreements upon the expiration of each lease term or, in certain circumstances, the agreements may be cancelled upon specific notice provided to the Company.

In situations where leases are terminated, the leased monitoring equipment would be returned to the Company or the Company’s lessors with no further obligation on behalf of the lessee.

Interest income is recorded when earned.

c) Financial instruments – recognition and measurement

i) Financial assets

The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”), or at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Measurement and classification of financial assets is dependent on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

Financial assets at 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 income statement in the period in which they arise.

Financial assets at FVTOCI: Financial assets carried at FVTOCI are initially recorded at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income.

Financial assets at amortized cost: Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date.

ii) Financial liabilities

Financial liabilities are recognized initially at fair value, net of transaction costs incurred and are subsequently measured at amortized cost. Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognized in profit and loss over the period to maturity using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

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JEMTEC INC. Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

3. Selected significant accounting policies (Continued)

c) Financial instruments – recognition and measurement (Continued)

iii) Derecognition of financial instruments (Continued)

When an existing financial liability is replaced by another from the same counterparty with substantially different terms, or the terms of an existing liability are substantially modified, it is treated as a derecognition of the original liability and the recognition of a new liability. When the terms of an existing financial liability are altered, but the changes are considered non-substantial, it is accounted for as a modification to the existing financial liability. Where a liability is substantially modified, it is considered to be extinguished and a gain or loss is recognized in net earnings based on the difference between the carrying amount of the liability derecognized and the fair value of the revised liability. Where a liability is modified in a nonsubstantial way, the amortized cost of the liability is remeasured based on the new cash flows and a gain or loss is recorded in net earnings.

The following table shows measurement categories as at April 30, 2021 for each of the Company’s financial assets and financial liabilities:

Financial Instrument
Cash and cash equivalents	FVTPL
Accounts receivable	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Lease liability	Amortized cost

d) Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in the stock options note 8(b).

The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

e) Leases

The Company has adopted IFRS 16 Leases effective August 1, 2019 using the modified retrospective method. IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged.

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Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

JEMTEC INC.

3. Selected significant accounting policies (Continued)

e) Leases (Continued)

On adoption of IFRS 16, the Company recognized a lease liability (Note 5) in relation to a vehicle lease, which had previously been classified as operating lease under the principles of IAS 17 Lease with a corresponding right-of-use asset for the underlying vehicle. The Company applied the exemption not to recognize right-of-use assets and lease liabilities for short-term leases on its office space lease.

f) Future accounting changes

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2020. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following standard is not expected to have a material effect on the financial statements of the Company and the Company intends to adopt it when it becomes effective:

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to clarify the guidance for the classification of liabilities as current or non-current. It could affect the classification of liabilities, particularly for entities that previously considered management’s intentions to determine classification and for some liabilities that can be converted into equity. The amendment is effective for annual reporting periods beginning on or after January 1, 2022.

4. Financial instruments and financial risk management

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

a) Credit risk

The Company’s principal business activities are located in Canada. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers, and based upon factors surrounding the credit risk of its customers, establishes an allowance for uncollectible accounts and, as a consequence, believes that its account receivable credit risk beyond such allowances is limited.

The Company maintains cash deposits with financial institutions, which from time to time may exceed federally insured limits. The Company believes it is not exposed to any significant credit risk from cash. At April 30, 2021, the Company had cash balances on deposit that exceeded federally insured limits by $1,415,920 (July 31, 2020 - $1,893,645). All of these funds are on deposit with Schedule I bank in Canada.

The Company is a Canadian distributor of Stop LLC, SuperCom Inc., and BI Inc.’s (all U.S. companies) offender monitoring and tracking devices, the sales and leasing of which account for substantially all of the Company’s revenues, equipment additions and replacement parts purchased. The Company is economically dependent on these three U.S. companies for the continued supply of monitoring equipment, replacement parts, and maintenance services for resale or rental by the Company.

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Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

JEMTEC INC.

4. Financial instruments and financial risk management (Continued)

b) Liquidity risk

Most of the Company’s financial liabilities are classified as current. The Company intends to settle its financial liabilities with funds from its working capital position.

Cash resources, repayment obligations and spending plans are monitored, and actions are taken with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. As at April 30, 2021, the Company had cash of $1,615,920 (July 31, 2020 - $2,093,645) to settle $227,912 (July 31, 2020 - $413,007) in current liabilities which fall due for payment within 12 months of the Statement of Financial Position.

c) Market risk

The market risk exposure to which the Company is exposed is interest rate risk. The Company’s bank account earns interest income at variable rates. The Company’s future interest income is exposed to short-term rate fluctuations. This is not a significant risk to the Company.

d) Foreign exchange risk

Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rate. Only insignificant balances of the Company's accounts payable and accrued liabilities are denominated in US dollars and therefore the Company’s exposure to foreign currency exchange risk is limited.

e) Fair value

The recorded value of the Company’s financial assets and liabilities approximate their fair values due to their demand nature and their short-term to maturity.

f) Sensitivity analysis

Based on management's knowledge and experience of the financial markets, the Company does not expect any material movements in the underlying market risk variables over a three-month period.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

5. Right-of-use asset and lease liability

The Company has a lease agreement for a company vehicle. Upon transition to IFRS 16, the Company recognized $27,531 for a right-of-use asset and $27,531 for a lease liability. The continuity of the right-of-use asset and lease liability for the nine months ended April 30, 2021 is as follows:

	April 30, 2021	July 31, 2020
Right-of-use asset Value of right-of-use asset as at beginning Depreciation for the period	$ 17,207 (7,743)	$ 27,531 (10,324)
	$ 9,464	$ 17,207
Lease liability Lease liability recognized as at beginning Lease payments Lease interest	$ 17,396 (7,980) 231	$ 27,531 (10,641) 506
	$ 9,647	17,396
Current portion Non-current portion	$ 9,647 -	$ 10,361 7,035
	$ 9,647	$17,396

For the quarter ended April 30, 2021, the Company incurred short-term lease expense for office space of $5,414.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

6. Equipment

Right-of-use Asset	Furniture Monitoring Equipment	Total
Costs, July 31, 2020 $ 27,531 Additions -	$ 50,222 $ 603,953 - -	$ 681,706 -
Costs,April 30,2021 27,531	50,222 603,953	681,706
Accumulated depreciation, July 31, 2020 10,324 Depreciation for the period 7,743	49,179 603,953 157 -	663,456 7,900
Accumulated depreciation,April 30,2021 18,067	49,336 603,953	671,356
Net book value, April 30, 2021 $ 9,464	$ 886 $ -	$ 10,350
Right-of-use Asset	Furniture Monitoring Equipment	Total
Costs, July 31, 2019 - Additions 27,531	$ 50,222 $ 603,953 - -	$ 654,175 27,531
Costs,July31,2020 27,531	50,222 603,953	681,706
Accumulated depreciation, July 31, 2019 - Depreciation for the year 10,324	48,918 520,418 261 83,535	569,336 94,120
Accumulated depreciation,July31,2020 10,324	49,179 603,953	663,456
Net book value, July 31, 2020 $ 17,207	$ 1,043 $ -	$ 18,250

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

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7. Accounts payable and accrued liabilities

	April 30, 2021	July 31, 2020
Trade payable and accrued liabilities Government service tax and remittance liabilities	$ 134,912 75,085	$ 187,814 100,611
	$ 209,997	$ 288,425

8. Share capital and reserves

a) Authorized

Common shares: Unlimited, no par value First preference shares: Unlimited, no par value, issuable in series - None issued as at April 30, 2021 and July 31, 2020 Second preference shares: 25,000 Series A, no par value, redeemable, $0.60 non-cumulative dividend - None issued as at April 30, 2021 and July 31, 2020

As at April 30, 2021, 2,794,679 common shares were outstanding.

b) Stock options

The Company adopted a fixed stock option plan that permits the directors of the Company to grant incentive stock options to employees, directors and consultants of the Company. The maximum number of shares issuable under the plan, which follows the policies of the TSXV regarding stock option awards, is 471,118. Options granted under the plan vest in six equal installments over a period of 18 months, with the first installment vesting immediately, and the remaining options vesting upon 6, 9, 12, 15 and 18 months after the date of grant. The option exercise price is generally set as the market price at the time of grant; however, a discount from the market price is permitted under the plan, subject to the policies of the TSXV.

On December 3, 2015, the Company granted 346,830 stock options to officers and directors, at a price of $0.345 per share, expiring on December 2, 2020. The fair value of the options granted was estimated on the date of grant at $62,350 using the Black-Scholes option-pricing model with the following assumptions: i) riskfree interest rate of 0.97%; ii) expected life of 5 years; iii) expected annualized volatility of 63.26%; and iv) no dividend yield. For the years ended July 31, 2016 and 2017, share-based payments were fully recognized in the Statement of Operations.

On January 7, 2019, 102,805 shares of these stock options granted were exercised at a price of $0.345 per share for consideration totaling $35,468. On April 11, 2019, 70,610 of these stock options granted were exercised at a price of $0.345 per share for consideration totaling $24,360. On April 24, 2019, 57,805 shares of these stock options granted were exercised at a price of $0.345 per share for consideration totaling $19,943. On December 2, 2020, 57,805 shares of these stock options granted were exercised at a price of $0.345 per share for consideration totaling $19,943 and 57,805 shares of these stock options granted were expired at a price of $0.345 per share.

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Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

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JEMTEC INC.

8. Share capital and reserves (Continued)

b) Stock options (Continued)

On May 14, 2018, the Company granted 125,000 stock options to officers and directors, at a price of $0.75 per share, expiring on May 13, 2028. The fair value of the options granted was estimated on the date of grant at $62,000 using the Black-Scholes option-pricing model with the following assumptions: i) risk-free interest rate of 2.43%; ii) expected life of 10 years; iii) expected annualized volatility of 55.19%; and iv) no dividend yield. For the years ended July 31, 2018, 2019 and 2020, share-based payments were fully recognized in the Statement of Operations.

On December 31, 2020, 20,000 shares of these stock options granted were exercised at a price of $0.75 per share for consideration totaling $15,000. As at April 30, 2021, 100,000 shares of the options were outstanding.

A summary of changes in stock options is presented below:

		Weighted
	Number	Averaged
	of	Exercise
	Options	Price
Balance, July 31, 2018	471,830	$0.452
Exercised, January 7, 2019	(102,805)	$0.345
Exercised, April 11, 2019	(70,610)	$0.345
Exercised,April 24,2019	(57,805)	$0.345
Balance, July 31, 2019 and 2020	240,610	$0.555
Exercised, December 2, 2020	(57,805)	$0.345
Expired, December 2, 2020	(57,805)	$0.345
Exercised, December 31, 2020	(20,000)	$0.750
Expired,December 31,2020	(5,000)	$0.750
Balance, April 30, 2021	100,000	$0.750

Options outstanding at April 30, 2021 are as follows:

						Weighted
	Number			Number	Number	Average	Weighted
	of			Exercisable	Outstanding	Remaining	Average
Date of	Options		Exercise	as at April 30,	as at April 30,	Contractual	Exercise
Grant	Granted	Expiry	Price	2021	2021	Life (years)	Price
May 14,		May 13,
2018	125,000	2028	$0.750	100,000	100,000	7.04years	$0.750

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Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

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JEMTEC INC.

8. Share capital and reserves (Continued)

c) Earnings per share

The following is a reconciliation of the denominator in calculating basic and diluted earnings per share:

Net income for the period Basic weighted average number of shares outstanding Effect ondilutive securitiesfromstockoptions	Three Months Ended April 30, 2021	Three Nine Nine Months Months Months Ended Ended Ended April 30, April 30, April 30, 2020 2021 2020
	$ 95,450 2,794,679 59,677	$ $ $ 86,847 384,407 284,577 2,716,874 2,757,499 2,716,874 149,079 52,229 154,445
Diluted weighted average number of shares outstanding	2,854,356	2,865,953 2,809,728 2,871,319
Earnings per share, basic Earningsper share,diluted	$ 0.03 $ 0.03	$ 0.03 $ 0.14 $ 0.10 $0.03 $ 0.14 $0.10

9. Dividend

On January 8, 2020, the Company declared a special dividend in the aggregate amount of $679,219 ($0.25 per share) payable to the holders of the issued and outstanding common shares in the capital of the Company. The dividend was payable on February 10, 2020 to the shareholders of record of the Company as of January 17, 2020 and distribution of the dividend to shareholders took place on February 10, 2020. As of April 30, 2020, $Nil of the dividend declared was recorded in accounts payable and accrued liabilities. The Company distributed the dividend of $679,219 to a third-party company to release the dividend to the shareholders.

On December 22, 2020, the Company declared a special dividend in the aggregate amount of $693,670 ($0.25 per share) payable to the holders of the issued and outstanding common shares in the capital of the Company. The dividend was payable on February 10, 2021 to the shareholders of record of the Company as of January 6, 2021 and the distribution of the dividend to shareholders took place on February 10, 2021. As of April 30, 2021, $Nil of the dividend declared was recorded in accounts payable and accrued liabilities. The Company distributed the dividend of $693,670 to a third-party company to release the dividend to the shareholders.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

10. Fair value of financial instruments

At April 30, 2021 and July 31, 2020, the Company held financial instruments carried at fair value on the Statement of Financial Position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and lease liability are valued using quoted market prices and have been included in Level 1 of the fair value hierarchy.

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly.

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

The following table illustrates the classification of the Company’s financial instruments within the fair value hierarchy as at April 30, 2021 and July 31, 2020:

April30, 2021 Level 1	Level 2 Level 3	Total
Financial assets Cash and cash equivalents $ 1,615,920 Accounts receivables 226,518 Financial liabilities Accounts payable and accrued liabilities 134,912 Lease liability 9,647	- - - - - - - -	$ 1,615,920 226,518 134,912 9,647
July 31, 2020 Level 1	Level 2 Level 3	Total
Financial assets Cash and cash equivalents $ 2,093,645 Accounts receivables 206,878 Financial liabilities Accounts payable and accrued liabilities 187,814 Lease liability 17,396	- - - - - - - -	$ 2,093,645 206,878 187,814 17,396

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

11. Related party transactions

The Company’s related parties consist of six officers and directors (and companies controlled by them), as follows:

	Position Nature of Transaction
	President, CEO and Director Management services Director Director and Chairman of the Board Director Director and Chair of Audit Committee Director Director and member of Audit Committee CFO Management services

There are standard compensation arrangements under which the directors of the Company are compensated for services in their capacity as directors (including any additional amounts payable for committee participation or special assignments). An annual payment of $20,000 (2020 - $10,000) is made to three directors, $25,000 (2020 - $15,000) is made to the Chairman and a fee of $1,000 (2020 - $1,000) is paid per Board meeting attended. In addition to these amounts, the Chair of the Audit Committee is paid an additional $4,000 (2020 - $4,000) per year for the review of interim and annual financial reports. The directors did not receive compensation for services as consultants during the quarters ended April 30, 2021 and 2020.

Three months ended April 30, Nature of expenditure 2021	Three months ended April 30, Nine months ended April 30, 2020 2021	Nine months ended April 30, 2020
Accounting and administrative fees $ 10,500 Directors’ fees 35,469 Salary and benefits 74,254 Share-based payments -	$ 9,000 $ 29,000 13,750 70,575 72,752 216,606 1,215 -	$ 27,000 56,250 212,159 5,496
$ 120,223	$96,717 $ 316,181	$300,905

During the quarter ended April 30, 2021, $35,469 (April 30, 2020 - $13,750) was accrued or paid to the directors of the Company as directors’ fees. At April 30, 2021, $6,986 (July 31, 2020 - $Nil) was due to the directors and was included in accounts payable and accrued liabilities.

During the quarter ended April 30, 2021, $10,500 (April 30, 2020 - $9,000) was accrued or paid to a Firm where a Partner in the Firm is an officer of the Company. At April 30, 2021, $3,675 (July 31, 2020 - $3,150) was owing to this officer and was included in accounts payable and accrued liabilities.

These transactions with related parties have been valued in these financial statements at the exchange amount, which is the amount of consideration established and agreed to by the parties. All amounts due to related parties are unsecured, non-interest bearing and have no specific repayment terms.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements For the nine month periods ended April 30, 2021 and April 30, 2020 (Unaudited)

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12. Key management compensation

Remuneration of key management comprises:

Accounting and administrative fees	Salaries & Benefits Directors’ fees Share-based payments	Total compensation
Three months ended April 30, 2021 $ 10,500 Three months ended April 30, 2020 $ 9,000 Nine months ended April 30, 2021 $ 29,000 Nine months ended April 30,2020 $27,000	$ 74,254 $ 7,919 $ - $ 72,752 $ 2,500 $ 243 $ 216,606 $ 15,028 $ - $212,159 $7,250 $1,099	$ 92,673 $ 84,495 $ 260,634 $247,508

Share-based payments represent the cost to the directors’ and officers’ participation in the incentive stock option plan, as measured by the fair value of instruments granted accounted for in accordance with IFRS 2 Share-based payments. Refer to note 8(b) for details of this plan.

13. Commitments

The Company is committed under an agreement to lease office facilities to September 30, 2022. The Company is committed to making minimum monthly payments of $970 for these office facilities.

The Company also has a commitment under a vehicle lease agreement. The remaining lease period is 11 months and monthly payment commitment is $887.

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