LQWD Technologies Corp. — Interim / Quarterly Report 2020

Jan 29, 2021

Condensed Consolidated Interim Financial Statements

Nine Months ended November 30, 2020

Unaudited

(Expressed in Canadian dollars)

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

	November 30,2020	February 29,2020
Assets
Current:
Cash and cash equivalents	$1,274,717)	$985,162)
Amountsreceivable	45,733)	72,346)
Prepaid expenses	15,638)	23,715)
	1,336,088)	1,081,223)
Non-Current:
Intangible assets(Note 3)	598,721)	608,264)
Property and equipment (Note 4)	2,860)	3,690)
Restricted cash	39,644)	39,688)
	$1,977,313)	$1,732,865)
Liabilitiesand Equity
Current:	)	)
Accounts payable and accrued liabilities	$85,009)	$76,560)
	85,009)	76,560)
Shareholders' equity
Capitalstock(Note 5(b))	23,005,991)	22,224,731)
Contributed surplus (Note 5(d))	1,892,299)	1,828,577)
Deficit	(23,005,986)	(22,397,003)
	1,892,304)	1,656,305)
	$1,977,313)	$1,732,865)

Nature of operations and going concern (Note 1)

See accompanying notes.

These financial statements are authorized for issue by the Board of Directors on January 29, 2021.

"Giuseppe (Pino) Perone" …………………………………………………Director Giuseppe (Pino) Perone

"Ashley Garnot"

…………………………………………………Director

Ashley Garnot

Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited - Expressed in Canadian Dollars)

	ThreeMonths EndedNovember 30,			NineNovember 30,		Months Ended
		2020		2019	2020	2019
Revenue	$	22,590)	$	19,649)	$91,614)	$	32,905)
General and administrativeexpenses
Amortizationof intangible assets		45,409)		28,171)	132,554)		58,884)
Amortizationof property and equipment		276)		5,813)	830)		6,246)
Auditandaccounting		12,000)		1,155)	12,000)		25,213)
Bank charges		794)		4,710)	3,190)		9,774)
Business development		-)		416)	-)		123,241)
Consultingand milestone fees		71,500)		67,624)	197,000)		193,724)
Director fees		-)		500)	500)		1,000)
Insurance		-)		971)	-)		4,971)
Legal		41,638)		35,321)	42,997)		148,232)
Management fees		4,682)		6,099)	24,972)		54,387)
Marketing		2,639)		26,636)	38,872)		97,585)
Office and administration		46)		1,107)	2,625)		2,945)
Office rent		1,059)		19,051)	6,545)		38,645)
Platform administration		1,207)		34,877)	30,952)		51,563)
Research and development		21,466)		3,837)	45,028)		8,843)
Salaries and benefits		23,679)		28,128)	62,076)		57,255)
Share-based compensation		15,280)		84,326)	63,722)		201,557)
Shareholder relations		2,575)		7,850)	6,021)		15,546)
Transfer and filing fees		6,666)		56,155)	26,680)		109,822)
Travel and entertainment		631)		3,807)	964)		14,953)
		(251,547)		(416,554)	(697,528)		(1,224,386)
Other items
Foreign exchange		(1,738)		(256)	(4,596)		(245)
Interest and accretion income		570)(1,168)		2,484)2,228)	1,527)(3,069)		9,029)8,784)
Net loss and comprehensive loss for theperiod		$ (230,125)		$ (394,677)	$(608,983)	$	(1,182,697)
Loss per share, basic and diluted	$	(0.01)	$	(0.02)	$(0.02)	$	(0.07)
Weighted average number of common sharesoutstanding		27,287,965)		17,519,051)	26,179,285)		16,004,408)

See accompanying notes.

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

For the ninemonths endedNovember 30,	20202019
Operating activities
Net loss for the period	$	(608,983)	$	(1,182,697)
Items not involvingcash:
Amortizationof intangible assets		132,554)		58,884)
Amortizationof property and equipment		830)		6,246)
Accrued interest on loans receivable		-)		(13,913)
Milestoneshares		49,000)		78,600)
Interest and accretion		44)		(283)
Share-based compensation		63,722)		201,557)
		(362,833)		(851,606)
Changes non-cash working capital:
Amounts receivable		26,613)		61,598)
Prepaid expenses		8,077)		16,147)
Accounts payable and accrued liabilities		8,449)		(35,711))
		43,139)		42,034)
Cashused in operating activities		(319,694)		(809,572)
Financing activities
Cash received for shares subscribed		-)		350,000)
Cash received by private placement		735,632)		1,105,000)
Share issued costs		(38,372)		(14,820)
Cash provided by financing activities		697,260)		1,440,180)
Investing activities
Acquisition of intangible assets		-)		(528,419)
Additions to intangible assets		(88,011)		(95,263)
Purchase of property and equipment		-)		(1,753)
Cash acquired on acquisition of Skyrun		-)		56,387)
Restricted cash		-)		(10,000)
Cash used ininvesting activities		(88,011)		(579,048)
Net inflow of cashand cash equivalents		289,555)		51,560)
Cash and cash equivalents, beginning ofperiod		985,162)		741,360)
Cash and cash equivalents, end of period	$	1,274,717)	$	792,920)
Supplemental cash flow information
Interest received	$	1,572)	$	8,746)
Cash and cash equivalentsconsist of:
Cash	$	1,008,634)	$	528,784)
Short-term deposits		266,083)		264,136)
	$	1,274,717)	$	792,920)
See accompanyingnotes.

Condensed Consolidated Interim Statements of Changes in Equity (Expressed in Canadian Dollars)

		Common Shares
	Number(1)	Amount	SharesSubscribed	Contributedsurplus	Deficit	Total
Balance, March1, 2020	25,245,644)	$22,224,731	$-	$1,828,577	$ (22,397,003)	$ 1,656,305(
Share-based payments	-)	-	-	63,722	-)	63,722(
Acquisitionof intangible	233,333)	35,000	-	-	-)	35,000)
Milestone shares	300,000)	49,000	-	-	-)	49,000)
Private placement –net ofshare issue costs	4,904,212	697,260	-	-	-)	697,260
Net lossfor period	-)	-	-	-	(608,983)	(608,983)
Balance, November30, 2020	30,683,189	$23,005,991	$-	$1,892,299	$(23,005,986)	$ 1,892,304)
Balance, March1, 2019	12,925,644)	$20,277,801	$-	$1,657,109	$ (21,041,290)	$893,620(
Share-based payments	-)	-	-	201,557	-)	201,557(
Milestone shares	180,000)	78,600	-	-	-)	78,600)
Private placement –net of			-
share issue costs	4,420,000)	1,090,180		-	-)	1,090,180(
Shares subscribed	-)	-)	350,000	-	-)	350,000)
Net lossfor period	-)	-	-	-	(1,182,697)	(1,182,697)
Balance, November 30,2019	17,525,644)	$21,446,581	$ 350,000	$1,858,666	$ (22,223,987)	$ 1,081,260)

(1) On August 23, 2019, the Company's outstanding share capital was forward split on the basis of two (2) new common shares for each one (1) old common share.

See accompanying notes.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Unaudited - Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Interlapse Technologies Corp. (the "Company" or "Interlapse") is incorporated under the Business Corporations Act (British Columbia). Interlapse is a technology company that is focused on developing various web-based platforms, solutions and applications used to further advance the development of coincurve.com and planned international expansion. The Company's common shares trade on the TSX Venture Exchange ("TSX-V") under the symbol "INLA" and on the OTCQB market under the symbol "INLAF".

There is no assurance that the development of coincurve.com and planned international expansion will result in future profitable operations. The business is subject to risk, market conditions, supply and demand, and competition. The Company currently has cash available to meet its administrative overhead and maintain its assets. The recoverability of amounts shown in assets is dependent on several factors. These factors include the ability of the Company to obtain financing to complete the planned international expansion, and future cashflow from the Company's business.

However, there can be no assurance that the Company will be able to continue to raise funds in the future in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the statement of financial position.

On November 23, 2020, the Company entered into a share exchange agreement (the "Agreement") with LQwD Financial Corp. ("LQwD") to acquire 100% of the issued and outstanding shares of LQwD (the "Transaction"). Under the Agreement, each outstanding LQwD share will be exchanged for one Interlapse share, resulting in an aggregate issuance of 22,400,001 Interlapse shares at a deemed price of $0.25 per share. Upon completion of the Transaction, LQwD will become a wholly owned subsidiary of Interlapse. The Transaction is subject to a number of terms and conditions, including Interlapse shareholder approval, the completion of a concurrent financing generating minimum proceeds of $3.0 million, and the approval of the TSX-V and other applicable regulatory authorities.

These condensed consolidated interim financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance and basis of presentation

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended February 29, 2020, which have been prepared in accordance with IFRS issued by the IASB.

The accounting policies applied by the Company in the condensed consolidated interim financial statements are the same as those applied by the Company in its most recent annual consolidated financial statements for the year ended February 29, 2020.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Unaudited - Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Significant accounting judgments, estimates and assumptions

The preparation of the Company's condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management judgements, estimates and assumptions include:

• The determination of the useful life of the intangible assets.
• The assessment of whether certain factors (both internal and external) would be considered an indicator of impairment and whether impairment testing is required on the intangible assets.
• The determination that the Company will continue as a going concern for the next year.

There are no other IFRS or International Financial Reporting Interpretations Committee interpretations that are not yet effective that are expected to have a material impact on the Company.

(c) Basis of consolidation

The condensed consolidated interim financial statements include the accounts of the Company and its wholly owned integrated subsidiaries.

The Company's subsidiaries are:

		Proportionof
	Place of	Ownership
Name of Subsidiary	Incorporation	Interest	Principal Activity
Coronado Resources USALLC	USA	100%	Holding Company
SkyrunTechnologyCorp.	Canada	100%	Technology
0980862 B.C.Ltd.	Canada	100%	Holding Company
0997680 B.C. Ltd.	Canada	100%	Holding Company
0997684 B.C. Ltd.	Canada	100%	Holding Company

(d) Intangible assets

Intangible assets consist of the Company's virtual currency software platform, coincurve.com, which was acquired in May of 2019 and buybitcoincanada.com, which was acquired March 31, 2020.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Unaudited - Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible assets acquired separately are initially recognized at cost. The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date that the Company can demonstrate all of the following: i) the technical feasibility of completing the intangible assets so that it will be available for use or sale; ii) its intention to complete the intangible asset and use or sell it; iii) its ability to use or sell the intangible asset; iv) how the intangible asset will generate probable future economic benefits; v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development. Until these criteria are met, expenditures are expensed as incurred. Costs incurred during the operating stage of the platform relating to upgrades and enhancements are capitalized to the extent that they result in the extended life of the product.

Intangible assets are measured at cost less accumulated amortization and accumulated impairment losses, if any.

The accounting for an intangible asset is based on its useful life. Intangible assets with a finite useful life are amortized over their estimated useful life. Intangible assets with an indefinite useful life are not amortized. Intangible assets under development which are not ready for use are not amortized. The amortization method, estimated useful life, carrying value and residual value are reviewed each financial year-end or more frequently if required, and are adjusted as appropriate.

The coincurve.com and buybitcoincanada.com were assessed as having a useful life of five and two years respectively based on management's estimate.

(e) Revenue recognition

IFRS 15 Revenue from Contracts with Customers provides a five-step model for the recognition of revenue when control of goods is transferred to, or a service is performed for, the customer. The five steps are to identify the contract(s) with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to each performance obligation and recognize revenue as each performance obligation is satisfied.

The Company's revenue consists of service fees earned from customers that use the platform. Revenue is recognized when it is probable that the economic benefits will flow to the Company, delivery of the service has occurred, and collectability is reasonably assured.

(f) Leases

IFRS 16, Leases ("IFRS 16") using the modified retrospective approach.

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Unaudited - Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

• The contract involves the use of an identified asset this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
• The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
• The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either: (a) the Company has the right to operate the asset; or (b) the Company designed the asset in a way that predetermines how and for what purpose it will be used.

If the contract contains a lease, a right-of-use asset and a corresponding lease liability are set-up at the date at which the leased asset is available for use by the Company. The lease payments are discounted using either the interest rate implicit in the lease, if available, or the Company's incremental borrowing rate. Each lease payment is allocated between the liability and the finance cost so as to produce a constant rate of interest on the remaining lease liability balance. The Company accounts for the lease and non-lease components separately. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

The Company uses the following practical expedients permitted by the standard: a) low value leases and leases with a term of less than 12 months have been accounted for as short-term leases; and b) initial direct costs for the measurement of the right-of-use asset at the date of initial application have been excluded.

The Company has determined that IFRS 16 has no impact on its financial statements.

3. INTANGIBLE ASSETS

	BuyBitcoinCanada	Platform		Total
Cost
At February 28, 2019	$-)	$	-))	$-)
Assetacquisition	-)		563,506)	563,506)
Addition	-)		144,779)	144,779)
At February29, 2020	-)		708,285)	708,285)
Addition	35,000)		88,011)	123,011)
At November 30, 2020	$35,000)	$	796,296)	$831,296)
Accumulated depreciation
At February 28,2019	$-)	$	-)	$-)
Depreciation	-)		(100,021)	(100,021)
At February 29, 2020	-)		(100,021)	(100,021)
Depreciation	(11,667)		(120,887)	(132,554)
At November 30,2020	$(11,667)	$	(220,908)	$(232,575)
Net book value
February29, 2020	$-)	$	608,264)	$608,264)
November 30, 2020	$23,333)	$	575,388)	$598,721)

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Unaudited - Expressed in Canadian Dollars)

4. PROPERTY AND EQUIPMENT

	ComputerEquipment			Total
Cost
AtFebruary 28, 2019	$	-)	$	-)
Asset acquisition		3,269)		3,269)
Addition		1,753)		1,753)
At February29, 2020		5,022)		5,022)
At November 30, 2020	$	5,022)	$	5,022)
Accumulated depreciation
At February28,2019	$	-)	$	-)
Depreciation		(1,332)		(1,332)
At February29, 2020		(1,332)		(1,332)
Depreciation		(830)		(830)
At November 302020	$	(2,162)	$	(2,162)
Net book value
February 29,2020	$	3,690)	$	3,690)
November30, 2020	$	2,860)	$	2,860)

5. CAPITAL STOCK

(a) Authorized

Unlimited number of common shares without par value.

(b) Issued and outstanding

During the nine month period ended November 30, 2020:

On March 31, 2020, the Company acquired buybitcoincanada.com, a virtual currency brokerage platform from Canadian blockchain company, Bitaccess Inc., in exchange for 233,333 shares of the Company.

On April 22, 2020, the Company issued 200,000 shares to two officers of the Company at a price of $0.16 per share in accordance with the terms of the agreement to purchase Skyrun Technology Corp. ("Skyrun").

On June 2, 2020, the Company issued 100,000 common shares to two officers of the Company at a price of $0.17 per share in accordance with the terms of the agreement to purchase Skyrun.

On November 2, 2020, the Company completed a non-brokered private placement of 4,902,212 units at $0.15 per share for gross proceeds of $735,632. Each Unit comprises one common share of the Company and one share purchase warrant. Each warrant entitles the holder to subscribe for one additional share at a price of C$0.20 per share for a period of 18 months from the date of issuance.

During the year ended February 29, 2020:

On May 28, 2019, the Company completed a non-brokered private placement of 4,420,000 common shares at $0.25 per share for gross proceeds of $1,105,000.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Expressed in Canadian Dollars)

5. CAPITAL STOCK (Continued)

On June 19, 2019, the Company issued 120,000 shares to two officers of the Company at a price of $0.425 per share in accordance with the terms of the agreement to purchase Skyrun.

On August 29, 2019, the Company's outstanding share capital was forward split on the basis of two (2) new common shares for each one (1) old common share.

On September 10, 2019, the Company issued 60,000 shares to two officers of the Company at a price of $0.46 per share in accordance with the terms of the agreement to purchase Skyrun.

On December 20, 2019, the Company completed a non-brokered private placement of 7,500,000 common shares at $0.10 per share for gross proceeds of $750,000.

On February 5, 2020, the Company issued 220,000 shares to two officers of the Company at a price of $0.145 per share in accordance with the terms of the agreement to purchase Skyrun.

(c) Incentive share options

The Company has a stock option plan (the "Plan") allowing for the reservation of common shares issuable under the Plan to a maximum 10% of the number of issued and outstanding common shares of the Company at any given time. The term of any stock option granted under the Plan may not exceed five years and the exercise price may not be less than the discounted market price on the grant date. Unless otherwise specified by the Board of Directors at the time of granting an option, and subject to other term limits on option grants set out in the Plan, all options must vest over a minimum of two years except options granted to consultants performing investor relations activities, which options must vest in stages over twelve months with no more than one quarter of the options vesting in any three-month period.

The purpose of the Plan is to provide directors, officers, key employees, and certain other persons who provided services to the Company and its subsidiaries with an increased incentive to contribute to the future success and prosperity of the Company.

No stock options granted during the period ended November 30, 2020.

The following is a continuity of outstanding share options:

	Number ofOptions	Weight AveragePrice per Share
Balance atFebruary 28,2019	-)	$-
Granted during the year	1,510,000)	0.35
Balance atFebruary 29, 2020	1,510,000)	$0.35
Cancelledduring the period	(600,000)	0.35
BalanceatNovember 30, 2020	910,000)	$0.35

The following summarizes information about share options that are outstanding on November 30, 2020:

Number ofOptions	Price perShare	ExpiryDate	OptionsExercisable
810,000	$0.35	May 28, 2024	607,500
100,000	$0.35	July 24, 2024	50,000
910,000			657,500

As of November 30, 2020, the weighted average contractual remaining life is 3.50 years.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Expressed in Canadian Dollars)

5. CAPITAL STOCK (Continued)

(d) Share-based compensation

During the nine months ended November 30, 2020, no stock options were granted. During the year ended February 29, 2020, the Company granted 1,510,000 share options, 600,000 of which were cancelled and during the nine months ended November 30, 2020, recorded compensation expense of $63,722.

The following assumptions were used for the Black-Scholes option pricing model calculations:

	May 28,2019	July 24, 2019
Risk-free interestrate	1.34%	1.33%
Expected stock price volatility	123.23%	131.29%
Expected option life inyears	5years	5 years
Dividendrate	Nil	Nil

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate.

(e) Share purchase warrants

The following table summarizes information about warrants that are outstanding at November 30, 2020:

Number of	Price per	Weighted Average Remaining	Expiry Date
Warrants	Share	Contractual Life
4,904,212	$0.20	1.42	May 2, 2022

6. RELATED PARTY TRANSACTIONS

The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:

	November 30,2020	November 30,2019
Business development	$-	$75,000
Consulting	133,000	90,000
Director fees	500	1,000
Share-based compensation	35,791	82,168
	$169,291	$248,168

During the nine month period ended November 30, 2020, the Company was charged $24,189 (2019 - $53,641) by a Canadian related company with similar key management personnel for management fees. At November 30, 2020, $nil (2019 - $24,115) is owing to the Canadian related company with similar key management personnel and is included in accounts payable and accrued liabilities.

During the nine month period ended November 30, 2020, the Company issued 300,000 shares (2019 – 120,000) to two officers of the Company at an average price of $0.163 (2019 - $0.425) per share in accordance with the terms of the agreement to purchase Skyrun.

All transactions and balances are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Expressed in Canadian Dollars)

7. FINANCIAL INSTRUMENTS RISK

The Company's financial instruments are exposed to the following risks:

Credit Risk

Credit risk is the risk of financial loss to the Company if counterparties do not fulfill their contractual obligations.

Cash and cash equivalents consist of cash bank balances and short-term deposits. The Company's shortterm investments are held with a Canadian chartered bank and are monitored to ensure a stable return. The Company's short-term investments currently consist of term deposits as it is not the Company's policy to utilize complex, higher-risk investment vehicles.

The carrying amount of accounts receivable and cash and cash equivalents represents the maximum credit exposure. The Company does not have an allowance for doubtful accounts. As of November 30, 2020, there were no significant amounts past due or impaired.

Market Risk

Market risk is the risk that changes in foreign exchange rates and interest rates will affect the Company's cash flows, net income and comprehensive income. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.

Foreign Exchange Risk

The Company currently does not have significant exposure to other currencies, but this may change in the foreseeable future as the capital commitments that are expected to be carried out in United States dollars and Philippine pesos will increase.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its purchases and capital commitments, and other financial obligations as they are due. The Company's approach to managing liquidity is to ensure, to the extent possible, that it will have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking harm to the Company's reputation.

The Company's liquidity is dependent upon maintaining its current working capital balances, operating cash flows and ability to raise funds. To forecast and monitor liquidity, the Company prepares operating and capital expenditure budgets which are monitored and updated as considered necessary. Considering these circumstances and the Company's cash balance liquidity risk is assessed as low.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash and cash equivalents. Most of these deposits have been in discounted instruments with pre-determined fixed yields. Interest rate movements will affect the fair value of these instruments so the Company manages maturity dates of these instruments to match cash flow needs, enabling realization at no loss in almost all cases.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Expressed in Canadian Dollars)

7. FINANCIAL INSTRUMENTS RISK (Continued)

Fair Value of Financial Instruments

The fair value of the Company's financial assets and liabilities approximates the carrying amount. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
• Level 3 Inputs that are not based on observable market data.

The fair value classification of the Company's financial instruments are as follows:

			November 30, 2020		February 29, 2020
	Fair	Fair value		Fair value
	Value	through	Amortized	through	Amortized
	Level	profit or loss	cost	profit or loss	cost
		$	$	$	$
Financial assets:
Cash and cash equivalents	1	1,274,717	-	985,162	-
Amounts receivable		-	40,688	-	65,455
Restrictedcash		-	39,644	-	39,688
		1,274,717	80,332	985,162	105,143
Financial liability:
Accounts payableandaccruedliabilities		-	85,009	-	76,560
		-	85,009	-	76,560

During the nine month period ended November 30, 2020 and year ended February 29, 2020, there were no transfers between level 1, level 2, and level 3.

8. ACQUISITION OF SKYRUN TECHNOLOGY CORP

On August 28, 2018, the Company entered into a binding share purchase agreement to acquire 100% of the outstanding common shares of Skyrun, a Vancouver-based company developing a virtual currency platform, coincurve.com. Under the terms of the share purchase agreement, the Company agreed to issue up to 1,320,000 common shares in exchange for 100% of the issued and outstanding shares of Skyrun. The shares of the Company will be released to the principals of Skyrun, Wayne Chen and Rod Hsu, when certain milestones are reached that are linked directly to the development, operations and overall success of the Company on or prior to December 31, 2020 (extended to December 31, 2021). As of the date of this document, the Company has issued 700,000 of the milestone shares.

On May 28, 2019, the TSX-V provided final approval for the Skyrun acquisition and change of business to a technology issuer.

The consolidated financial statements for the year ended February 29, 2020 reflect the assets, liabilities, and results of operations of the Company and Skyrun since May 28, 2019 being the date on which the Company formally became the sole shareholder.

Notes to the Condensed Consolidated Interim Financial Statements For the Nine Month Period Ended November 30, 2020 (Expressed in Canadian Dollars)

9. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support future development of the business and maintaining investor, creditor and market confidence.

The Company defines its capital as shareholders' equity and working capital. The Board of Directors does not establish a quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. If adjustments to the capital structure are required, the Company may consider issuing additional equity, raising debt or revising its capital investment programs.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements or restrictions. The Company has not paid or declared any dividends since the date of incorporation, nor are any contemplated. The Company may require equity issues to cover administrative and operating cost.