Lightspeed Discoveries Inc. — Audit Report / Information 2021

May 1, 2021

LIGHTSPEED DISCOVERIES INC.

Financial Statements

Years Ended December 31, 2020 and 2019

(Expressed in Canadian dollars)

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Lightspeed Discoveries Inc.

We have audited the financial statements of Lightspeed Discoveries Inc. (the “Company”), which comprise the statements of financial position as at December 31, 2020 and 2019, and the statements of operations and comprehensive loss, changes in equity, and 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 December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the 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, and 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.

Management’s Responsibility for the Financial Statements

We draw attention to Note 1 in the financial statements, which indicates that the Company has not generated any revenues and has negative cash flow from operating activities during the year ended December 31, 2020 and, as of that date, the Company has a working capital deficit of $80,407 and an accumulated deficit of $21,178,944. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter

Other Information

Management is responsible for the other information. The other information comprises the information included in the Management’s Discussion and Analysis, but does not include the financial statements and our auditor’s report thereon.

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. If, based on the work we have performed, 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 International Financial Reporting Standards, 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 to cease operations, or has no realistic alternative but to do so.

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

Auditor’s Responsibilities for the Audit of the 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 the 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 judgment 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 risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

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

• Evaluate the overall presentation, structure and content of the 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 on the audit resulting in this independent auditors’ report is Lonny Wong.

==> picture [151 x 33] intentionally omitted <==

Saturna Group Chartered Professional Accountants LLP

Vancouver, Canada

April 30, 2021

LIGHTSPEED DISCOVERIES INC. Statements of Financial Position

(Expressed in Canadian dollars)

	December 31,	December 31,
	2020	2019
	$	$
Assets
Current assets
Cash	2,225	180,689
Amounts receivable	11,877	1,984
Total assets	14,102	182,673
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Notes 4 and 5)	70,509	110,754
Loans payable (Note 3)	24,000	24,000
Total liabilities	94,509	134,754
Shareholders’ equity (deficit)
Share capital	20,677,707	20,677,707
Share subscriptions received (Note 6)	16,000	16,000
Share-based payment reserve	404,830	404,830
Deficit	(21,178,944)	(21,050,618)
Total shareholders’equity (deficit)	(80,407)	47,919
Total liabilities and shareholders’ equity (deficit)	14,102	182,673

Nature of operations and continuance of business (Note 1) Subsequent event (Note 12)

Approved and authorized for issuance on behalf of the Board of Directors on April 30, 2021:

/s/ Nick Watters Nick Watters, Director	/s/ Kenneth Ralfs
	Kenneth Ralfs, Director

(The accompanying notes are an integral part of these financial statements)

3

LIGHTSPEED DISCOVERIES INC.

Statements of Operations and Comprehensive Loss (Expressed in Canadian dollars)

	Year ended	Year ended
	December 31,	December 31,
	2020	2019
	$	$
Expenses
Consulting fees	72,500	20,225
Management fees (Note 6)	–	30,000
Office and miscellaneous	235	374
Professional fees	16,525	12,654
Rent	30,000	7,500
Transfer agent and filing fees	9,066	8,367
Total expenses	128,326	79,120
Net loss and comprehensive loss for theyear	(128,326)	(79,120)
Lossper share,basic and diluted	(0.01)	(0.01)
Weighted average number of shares outstanding	10,495,516	5,655,401

(The accompanying notes are an integral part of these financial statements)

4

LIGHTSPEED DISCOVERIES INC.

Statements of Changes in Equity

(Expressed in Canadian dollars)

	Share capital Share subscriptions received $ Share-based payment reserve $ Deficit $ Total shareholders’ equity (deficit) $ Number of shares Amount $
Balance, December 31, 2018 Shares issued pursuant to settlement of debt Share issued for cash Share issuance costs Share subscriptions received Net loss for the year	3,294,516 20,249,584 – 402,561 (20,971,498) (319,353) 3,201,000 192,060 – – – 192,060 4,000,000 240,000 – – – 240,000 – (3,937) – 2,269 – (1,668) – – 16,000 – – 16,000 – – – – (79,120) (79,120)
Balance, December 31, 2019 Net loss for the year	10,495,516 20,677,707 16,000 404,830 (21,050,618) 47,919 – – – – (128,326) (128,326)
Balance,December 31,2020	10,495,516 20,677,707 16,000 404,830 (21,178,944) (80,407)

(The accompanying notes are an integral part of these financial statements)

3

LIGHTSPEED DISCOVERIES INC.

Statements of Cash Flows

(Expressed in Canadian dollars)

	Year ended	Year ended
	December 31,	December 31,
	2020	2019
	$	$
Operating activities
Net loss for the year	(128,326)	(79,120)
Changes in non-cash operating working capital:
Amounts receivable	(9,893)	951
Accounts payable and accrued liabilities	(40,245)	59,035
Due to related party	–	(176,066)
Net cash used in operating activities	(178,464)	(195,200)
Financing activities
Proceeds from shares issued	–	240,000
Share subscriptions received	–	16,000
Shareissuance costs	–	(1,668)
Net cash provided by financing activities	–	254,332
Increase (decrease) in cash	(178,464)	59,132
Cash, beginning of year	180,689	121,557
Cash,end ofyear	2,225	180,689

(The accompanying notes are an integral part of these financial statements)

3

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

1. Nature of Operations and Continuance of Business

Lightspeed Discoveries Inc. (the “Company”) was incorporated under the laws of the province of British Columbia. The Company is in the exploration stage and is in the business of process of exploring and developing mineral properties. The Company’s registered address is 10[th] Floor, 595 Howe Street, Vancouver, BC, V6C 2T5.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant, but management continues to monitor the situation.

These financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2020, the Company has not generated any revenues, and incurred negative cash flow from operating activities. As at December 31, 2020, the Company has a working capital deficit of $80,407 and an accumulated deficit of $21,178,944. The Company’s ability to continue as a going concern is dependent upon its ability to generate and maintain future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company’s liabilities and commitments as they become due, although there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company. These factors indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. These financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.

2. Significant Accounting Policies

(a) Basis of Presentation

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board on a going concern basis.

These financial statements have been prepared on a historical cost basis and are presented in Canadian dollars, which is the Company’s functional currency.

(b) Use of Estimates and Judgments

The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the period. These estimates are, by their nature, uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant areas requiring the use of estimates include unrecognized deferred income tax assets.

The assessment of whether the going concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but is not limited to, 12 months from the end of the reporting period. The Company is aware that material uncertainties related to events or conditions may cast significant doubt upon the Company’s ability to continue as a going concern.

4

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies (continued)

• (c) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance, are readily convertible to known amounts of cash, and which are subject to insignificant risk of changes in value to be cash equivalents.

• (d) Exploration and Evaluation Expenditures

Exploration and evaluation expenditures include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and evaluation expenditures are capitalized. Costs incurred before the Company has obtained the legal rights to explore an area are charged to operations.

Exploration and evaluation assets are assessed for impairment if: (i) sufficient data exists to determine technical feasibility and commercial viability; and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of any exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Mineral Property Options

The Company does not record any expenditures made by the optionee in its accounts. It also does not recognize any gain or loss on its exploration and evaluation option arrangements but re-designates any costs previously capitalized in relation to the whole interest as relating to the partial interest retained and any consideration received directly from the optionee is credited against costs previously capitalized.

• (e) Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the respective instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are included in the initial carrying value of the related instrument and are amortized using the effective interest method. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the statement of operations.

Fair value estimates are made at the statement of financial position date based on relevant market information and information about the financial instrument. All financial instruments are classified into either: fair value through profit or loss (“FVTPL”) or amortized cost.

5

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies (continued)

• (e) Financial Instruments (continued)

The Company has made the following classifications:

Cash Amortized cost Amounts receivable Amortized cost Accounts payable and accrued liabilities Amortized cost Loans payable Amortized cost

Financial Assets

The classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets at FVTPL

Financial assets are classified as FVTPL when the financial asset is either held for trading or it is designated as FVTPL. A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

Financial assets at amortized cost

Financial assets at amortized cost are non-derivative financial assets which are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. Subsequent to initial recognition, financial assets are measured at amortized cost using the effective interest method, less any impairment.

Impairment of financial assets

Financial assets, other than those classified as FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been decreased.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are offset against the allowance account. Changes in the carrying amount of the allowance account are recognized in the statement of operations. Loss allowances are based on the lifetime ECL’s that result from all possible default events over the expected life of the trade receivable, using the simplified approach.

6

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies (continued)

• (f) Financial Instruments (continued)

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the statement of operations to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Financial Liabilities and Equity Instruments

Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized as the proceeds received, net of direct issue costs.

Other financial liabilities

Other financial liabilities (including loans and borrowings and trade payables and other liabilities) are initially measured at fair value, net of transaction costs. Subsequently, other financial liabilities are measured at amortized cost 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 (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

• (g) Income Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in the statement of operations. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax

Deferred income tax is provided using the statement of financial position method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

7

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies (continued)

(h) Flow-through Shares

The resource expenditure deductions for income tax purposes related to exploration and development activities funded by flow-through share arrangements are renounced to investors in accordance with Canadian tax legislation. On issuance, the premium recorded on the flowthrough share, being the difference in price over a common share with no tax attributes, is recognized as a liability. As expenditures are incurred, the deferred income tax liability associated with the renounced tax deductions is recognized through the statement of operations with a pro-rata portion of the deferred premium.

(i) Foreign Currency Translation

The functional and reporting currency is the Canadian dollar. Transactions denominated in foreign currencies are translated using the exchange rate in effect on the transaction date or at an average rate. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange in effect at the statement of financial position date. Non-monetary items are translated using the historical rate on the date of the transaction. Foreign exchange gains and losses are included in the statement of operations.

(j) Loss Per Share

Basic loss per share is computed using the weighted average number of common shares outstanding during the period. The treasury stock method is used for the calculation of diluted loss per share, whereby all “in the money” stock options and share purchase warrants are assumed to have been exercised at the beginning of the period and the proceeds from their exercise are assumed to have been used to purchase common shares at the average market price during the period. When a loss is incurred during the period, basic and diluted loss per share are the same as the exercise of stock options and share purchase warrants is considered to be anti-dilutive. As at December 31, 2020, the Company had nil (2019 - 7,140,000) potentially dilutive shares outstanding.

(k) Comprehensive Loss

Comprehensive loss is the change in the Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that are not included in the statement of operations.

(l) Share-based Payments

The grant date fair value of share-based payment awards granted to employees is recognized as stock-based compensation expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Where equity instruments are granted to parties other than employees, they are recorded by reference to the fair value of the services received. If the fair value of the services received cannot be reliably estimated, the Company measures the services received by reference to the fair value of the equity instruments granted, measured at the date the counterparty renders service.

All equity-settled share-based payments are reflected in share-based payment reserve, unless exercised. Upon exercise, shares are issued from treasury and the amount reflected in sharebased payment reserve is credited to share capital, adjusted for any consideration paid.

8

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

2. Significant Accounting Policies (continued)

• (m) Accounting Standards Issued But Not Yet Effective

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended December 31, 2020, and have not been early adopted in preparing these financial statements. These new standards, and amendments to standards and interpretations are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

3. Loans Payable

• (a) As at December 31, 2020, the amount of $4,000 (2019 - $4,000) is owed to an unrelated party which is non-interest bearing unsecured, and due on demand.

• (b) As at December 31, 2020, the amount of $20,000 (2019 - $20,000) is owed to an unrelated party which is non-interest bearing unsecured, and due on demand.

4. Accounts Payable and Accrued Liabilities

	2020	2019
	$	$
Trade payables	33,509	73,754
Related party payables (Note 5(a))	30,000	30,000
Accrued professional fees	7,000	7,000
	70,509	110,754

5. Related Party Transactions

• (a) As at December 31, 2020, the amount of $30,000 (2019 - $30,000) was owed to the CEO of the Company, which is non-interest bearing, unsecured, and due on demand. The amount is included in accounts payable and accrued liabilities.

• (b) During the year ended December 31, 2020, the Company incurred management fees of $nil (2019 - $30,000) to the CEO of the Company.

• (c) As at December 31, 2020, the Company is owed $8,760 (2019 - $nil) from a company with a common director. The amount owing is unsecured, non-interest bearing, and due on demand.

6. Share Capital

Authorized: Unlimited common shares without par value

• (a) As at December 31, 2020, the Company has share subscriptions received of $16,000 (2019 - $16,000) pursuant to the exercise of 200,000 share purchase warrants by a former director of the Company.

• (b) On September 5, 2019, the Company issued 4,000,000 units at $0.06 per unit for gross proceeds of $240,000. Included in this private placement were 500,000 units issued for proceeds of $30,000 to each of the CEO and a former director of the Company. Each unit consisted of one common share and one share purchase warrant entitling the holder to acquire an additional common share at an exercise price of $0.08 per share expiring on September 5, 2020. The Company incurred $3,937 in share issuance costs in connection with this private placement, inclusive of the issuance of 139,000 finder’s warrants with a fair value of $2,269. Each finder’s warrant is exercisable at $0.20 per share expiring on September 5, 2020.

• (c) On August 30, 2019, the Company issued 3,201,000 units with a fair value of $192,060 to settle debt. Each unit consisted of one common share and one share purchase warrant entitling the holder to acquire an additional common share at $0.15 per share expiring on August 30, 2020.

9

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

7. Stock Options

Pursuant to the Company’s stock option plan, the Company may grant stock options to directors, officers, employees and consultants. The options are granted with an exercise price equal to market price of the Company’s stock on the date of the grant and vest when granted. The maximum aggregate number of common shares which may be reserved for issuance as optioned shares at any time is 10% of the outstanding common shares. Stock options can be exercisable for a maximum of five years from the effective date. As at December 31, 2020 and 2019, the Company had no outstanding stock options.

8. Share Purchase Warrants

The following table summarizes the continuity of the Company’s share purchase warrants:

		Weighted
		average
		exercise
	Number of	price
	warrants	$
Balance, December 31, 2018	–	–
Granted	7,340,000	0.11
Exercised	(200,000)	0.08
Balance, December 31, 2019	7,140,000	0.11
Expired	(7,140,000)	0.11
Balance,December 31,2020	–	–

9. Financial Instruments and Risk Management

• (a) Fair Values

Fair value measurements are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair values of financial instruments, which include cash, amounts receivable, accounts payable and accrued liabilities, and loans payable approximate their carrying values due to the relatively short-term maturity of these instruments.

(b) Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

• (c) Foreign Exchange Rate Risk

Foreign exchange risk is the risk that the Company’s financial instruments will fluctuate in value as a result of movements in foreign exchange rates. The Company is not exposed to any significant foreign exchange rate risk.

10

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

9. Financial Instruments and Risk Management (continued)

(d) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as it does not have any assets or liabilities that are affected by changes in interest rates.

(e) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company currently settles its financial obligations out of cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs.

• (f) Price Risk

The Company is exposed to price risk with respect to commodity prices. The Company’s ability to raise capital to fund exploration and development activities is subject to risks associated with fluctuations in the market price of commodities.

10. Capital Management

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital and share-based payment reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issues or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2019.

11. Income Taxes

The tax effect (computed by applying the Canadian federal and provincial statutory rate) of the significant temporary differences, which comprise deferred income tax assets and liabilities, are as follows:

follows:
	2020	2019
	$	$
Canadian statutory income tax rate	27%	27%
Income tax recovery at statutory rate	(34,648)	(21,362)
Tax effect of:
Permanent differences and other		567
Change in unrecognized deferred income tax assets	34,648	20,795
Income taxprovision	–	–

11

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

11. Income Taxes (continued)

The significant components of deferred income tax assets and liabilities are as follows:

	2020	2019
	$	$
Deferred income tax assets
Capital losses carried forward	36,113	36,113
Non-capital losses carried forward	765,581	730,843
Resource properties	1,969,343	1,969,343
Share issuance costs	271	361
Total gross deferred income tax assets	2,771,308	2,736,660
Unrecognized deferred income tax assets	(2,771,308)	(2,736,660)
Net deferred income tax asset	–	–

As at December 31, 2020, the Company has non-capital losses carried forward of $2,835,486, which are available to offset future years’ taxable income. These losses expire as follows:

	$
2026	18,442
2027	306,733
2028	534,473
2029	339,108
2030	241,076
2031	253,369
2032	185,951
2033	115,537
2034	136,870
2035	65,896
2036	314,946
2037	52,419
2038	58,952
2039	83,054
2040	128,660
	2,835,486

The Company also has available mineral resource related expenditure pools totalling $7,293,863 which may be deducted against future taxable income on a discretionary basis.

12. Subsequent Event

Share Exchange Agreement

On January 29, 2021, the Company entered into a definitive share exchange agreement with Genomica Bioinformatics Ltd. (“Genomica”) and the shareholders of Genomica, pursuant to which the Company will acquire all of the outstanding shares of Genomica in exchange for 37,500,000 common shares of the Company. Genomica is a private British Columbia company that is developing proprietary technology that utilizes artificial intelligence to greatly improve the process of molecular protein design, enabling new commercial applications that address global bioscience challenges.

On closing, the Company intends to change its name to Genomica Bioinformatics Ltd. and will carry on the business presently being conducted by Genomica.

12

LIGHTSPEED DISCOVERIES INC. Notes to the Financial Statements Years Ended December 31, 2020 and 2019 (Expressed in Canadian dollars)

12. Subsequent Event (continued)

Share Exchange Agreement (continued)

Prior to closing of the transaction, the Company will consolidate its common shares on a one-forthree basis. In addition, the Company intends to complete a non-brokered private placement (the “Concurrent Financing”) of a minimum of 10,000,000 post-consolidation common shares to be priced in the context of the market as determined by the parties for aggregate gross proceeds of not less than $2,500,000.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance, completion of the consolidation, and the Concurrent Financing. There can be no assurance that the transaction will be completed as proposed or at all.

13