Mobio Technologies Inc. — Interim / Quarterly Report 2021

Mar 26, 2021

==> picture [288 x 205] intentionally omitted <==

Mobio Technologies Inc.

Condensed Consolidated Interim Financial Statements (Unaudited)

(EXPRESSED IN CANADIAN DOLLARS)

For the Six Months Ended January 31, 2021 and 2020

Index

Condensed Consolidated Interim Statements of Financial Position Condensed Consolidated Interim Statements of Comprehensive Loss

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity (Deficit)

Condensed Consolidated Interim Statements of Cash Flows

Notes to Condensed Consolidated Interim Financial Statements

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The Company’s auditors have not reviewed or been involved in the preparation of these condensed consolidated 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 condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

In accordance with National Instrument 51-102 Section 4.3(3)(a) released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited condensed consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants Canada for a review of condensed consolidated interim financial statements by an entity’s auditor, for the six-month periods ended January 31, 2021 and 2020.

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

MOBIO TECHNOLOGIES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited - Expressed in Canadian dollars)

==> picture [468 x 458] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|As at|Note|January 31, 2021|July 31, 2020|
|ASSETS|
|Current Assets|
|Cash|$ 90,698|$ 51,070|
|Accounts receivable|3|17,355|18,011|
|Deposits and prepaid expenses|26,552|14,409|
|134,605|83,490|
|Non-Current Assets|
|Fixed assets|4|386|448|
|Investments|-|211,427|
|Assets from continuing operations|134,991|295,365|
|Assets held for distribution|-|6,778,580|
|TOTAL ASSETS|$ 134,991|$ 7,073,945|
|LIABILITIES|
|Current Liabilities|
|Accounts payable and accrued liabilities|5|$ 137,663|$ 181,162|
|Related party loans payable|6|362,281|345,898|
|499,944|527,060|
|Non-Current Liabilities|
|Term loan payable|7|22,833|20,768|
|Liabilities from continuing operations|522,777|547,828|
|Liabilities held for distribution|-|4,426,334|
|TOTAL LIABILITIES|$|522,777|$|4,974,162|
|EQUITY (DEFICIT)|
|Share capital|8|$ 26,159,313|$ 25,787,321|
|Warrant reserves|8|484,773|841,765|
|Equity portion of debt|72,738|238,722|
|Share-based payment reserve|72,091|84,722|
|-|
|Accumulated other comprehensive loss|(30,402)|
|Deficit|(27,176,701)|(25,995,776)|
|Equity (deficit) attributable to the shareholders of the Company|(387,786)|926,352|
|Interest of shareholders of Plank Ventures Ltd.|-|(71,995)|
|Non-controlling shareholders' interest|-|1,245,426|
|TOTAL EQUITY (DEFICIT)|(387,786)|2,099,783|
|TOTAL LIABILITIES AND EQUITY|$ 134,991|$ 7,073,945|
|Nature of operations and going concern uncertainty|1|

----- End of picture text -----

Approved on behalf of the board "Brian O'Neill" "Laurie Baggio" Brian O'Neill, Director Laurie Baggio, Chief Executive Officer

See accompanying notes to the condensed consolidated interim financial statements.

• 3 -

MOBIO TECHNOLOGIES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited - Expressed in Canadian dollars)

==> picture [486 x 425] intentionally omitted <==

----- Start of picture text -----

Three months ended January 31, Six months ended January 31,
Notes 2021 2020 2021 2020
REVENUE
Sales $ 4,437 $ 2,071 $ 4,437 $ 4,025
EXPENSES
Amortization - 107 62 231
- -
Hosting and computing services 31,065 64,259
Personnel 48,788 80,742 108,803 187,531
Professional fees 4,623 21,209 17,778 26,209
Office and administration 6,667 3,015 11,394 9,498
Regulatory and filing costs 5,943 2,822 5,943 4,553
Website and IT 5,901 1,839 5,901 3,696
Share-based payments (36) 753 - 1,619
Foreign exchange (1) 322 3,921 329
71,885 141,874 153,802 297,925
OTHER ITEMS
Interest income - (99) - (99)
Interest expense 9,248 4,178 18,448 6,473
Other income (17,695) - (17,695) -
Dividend income - - - -
Debt cancellation and forgiveness 1 - - 6,543,410 -
Gain on impaired investment - - 205 -
Loss on disposal of investment 1 - - 536,521 -
(8,447) 4,079 7,080,889 6,374
Net loss from continuing operations $ (59,001) $ (143,882) $ (7,230,254) $ (300,274)
Net loss from discontinued operations - (248,623) - (365,691)
Net loss and comprehensive loss for the period $ (59,001) $ (392,505) $ (7,230,254) $ (665,965)
Basic and diluted loss per share 9 $ (0.00) $ (0.01) $ (0.19) $ (0.02)
Weighted average number of common
shares outstanding, basic and diluted 9 38,297,546 38,147,546 38,297,546 38,147,546
----- End of picture text -----

See accompanying notes to the condensed consolidated interim financial statements.

• 4 -

MOBIO TECHNOLOGIES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Unaudited - Expressed in Canadian dollars)

==> picture [685 x 287] intentionally omitted <==

See accompanying notes to the condensed consolidated interim financial statements.

• 5 -

MOBIO TECHNOLOGIES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in Canadian dollars)

Six months endedJanuary 31,	Note	2021	2020
OPERATING ACTIVITIES
Net loss from continuing operations		$ (7,230,254) $	(300,274)
Items not affecting cash:
Amortization		62	231
Accrued interest income		-	(99)
Accrued interest expense		18,448	6,473
Share-based payments		-	1,620
Debt cancellation and forgiveness	1	6,543,410	-
Accounts receivable		656	3,543
Deposits and prepaid expenses		(12,143)	5,524
Accounts payable and accrued liabilities		(43,499)	49,868
Net cash used in operating activities of continuing operations		(723,320)	(233,115)
INVESTING ACTIVITIES
Investment in subsidiary		-	(1,113,960)
Proceeds from sale of investments		-	(36,350)
Cash investments made		-	1,113,960
Sale of investment		211,427	41,882
Return of capital from investment		-	(5,532)
Loss on disposal of investment	1	536,521	-
Net cash provided by investing activities		747,948	-
FINANCING ACTIVITIES
Proceeds from related party loans		-	225,000
Advances related party loans		-	(292)
Issuance of common shares		15,000	-
Net cash provided by financing activities of continuing operations		15,000	224,708
Net cash used in operating activities of discontinued operations		-	(132,307)
Net cash used in investing activities of discontinued operations		-	(1,072,078)
Net cash provided by financing activities of discontinued operations		-	1,000,292
Net change in cash, discontinued operations		-	(204,093)
Net change in cash, continuing operations		39,628	(8,407)
Net change in cash, discontinued operations		-	(204,093)
NET CHANGE IN CASH		39,628	(212,500)
CASH, BEGINNING OF THE PERIOD		51,070	307,190
CASH, END OF THE PERIOD		$ 90,698 $	94,690

See accompanying notes to the condensed consolidated interim financial statements.

• 6 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

1. NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY

Mobio Technologies Inc. (“Mobio” or the “Company”) was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on November 19, 1998. Mobio is a public company whose shares are listed on the TSX Venture Exchange under the symbol “MBO”. The Company’s primary line of business is Strutta.com Media Inc. (“Strutta”), a social promotions platform that allows brands to run contests and sweepstakes across multiple social web channels. In addition, the Company invests in start-up technology companies.

These condensed consolidated interim financial statements have been prepared using the going concern assumption, which assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. During the period ended January 31, 2021, the Company generated a net loss of $7,230,254 and negative cash flow from operations of $723,320. These conditions raise significant doubt about the Company’s ability to continue as a going concern.

The continuing operations of the Company are dependent upon its ability to develop profitable operations in the future and to raise adequate financing, if necessary. The Company has generated operating losses since inception. The application of the going concern concept is dependent on the Company’s ability to achieve profitable operations and obtain necessary financing.

There can be no assurance that the Company will be successful in achieving profitability or raising additional cash to finance operations. These conditions indicate the existence of a material uncertainty that may raise doubt about the Company’s ability to continue as a going concern. The condensed consolidated interim financial statements do not include any adjustments relating to the recoverability of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

On August 20, 2020, the Company forgave the receivable amount of $6,543,410 owed to it by Plank. As a result of the forgiveness of the debt and disposal of the investment, the Company is no longer exposed to variable returns and therefore, as of August 20, 2020, no longer controls Plank. To account for this, the Company derecognized assets held for distribution totaling $6,778,580, liabilities held for distribution totaling $4,426,334 and the non-controlling interest of $1,143,029 for no consideration, resulting in a reduction to equity attributable to the shareholders of the Company of $1,209,217. This was recorded on August 20, 2020, being the date of distribution. During the period ended January 31, 2021, the Company recorded a loss on disposal of investment in Plank of $536,521.

Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from novel coronavirus (“COVID-19”). The Company continues to operate its business at this time. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on business operations, cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, results of operations, financial position and cash flows in future periods.

• 7 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

2. BASIS OF PRESENTATION

These condensed consolidated interim financial statements were authorized for issue on March 26, 2021, by the Board of Directors of the Company.

Statement of Compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB). These condensed consolidated interim financial statements do not include all of the information required for full annual audited consolidated financial statements and should be read in conjunction with the annual audited consolidated financial statements of the Company for the years ended July 31, 2020, and 2019.

Functional and Presentation Currency

The consolidated financial statements are presented in Canadian dollars, which is the functional currency of Mobio Technologies Inc.

Basis of Measurement

These consolidated financial statements have been prepared on a historical cost basis except for financial instruments classified as fair value through profit or loss, which are stated at their fair values. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting.

Use of estimates and judgments

The preparation of the 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, income and expenses. Actual results could differ from those estimates.

Management has applied judgments in the assessment of the Company’s ability to continue as a going concern when preparing its condensed consolidated financial statements for the period ended January 31, 2021. Management prepares the consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management considered a wide range of factors relating to current and expected profitability, current working capital levels, and potential sources of replacement financing.

As a result of the assessment and as described in Note 1 – Nature of Operations and Going Concern Uncertainty, management concluded the going concern basis of accounting is appropriate based on its profit and cash flow forecast and expectations with respect to access to financing for the next twelve months.

Significant estimates and assumptions were used with respect to the impairment of financial and non-financial assets, the fair value of investments, the determination of whether a business combination or an asset acquisition took place in the year and the impairment of goodwill.

Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

• 8 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

2. BASIS OF PRESENTATION (CONT’D)

Basis of Consolidation

These condensed consolidated interim financial statements consist of Mobio Technologies Inc. and Strutta.Com Media Inc.

Effective August 20, 2020, the Company deconsolidated Plank Ventures Ltd. as a result of the forgiveness of the $6,543,410 receivable from Plank. Accordingly, as of August 20, 2020, the Company is no longer subject to variable returns from Plank. As a result, because of the disposal of Plank, for the periods ending January 31, 2021 and July 31, 2020, the operations of Plank are presented as discontinued operations in the condensed consolidated statements of comprehensive loss and as assets and liabilities for distribution on the condensed consolidated statements of financial position. The Company’s continuing revenue, expenses and changes in cash do not include its discontinued operations related to Plank and its subsidiaries. For the period ending January 31, 2021 and July 31, 2020, operating results of the discontinued operations of Plank are separately reported on the Company’s condensed consolidated financial statements.

The condensed consolidated financial statements at January 31, 2021 and 2020 include the assets, liabilities, revenues and expenses of the Company’s controlled and wholly owned subsidiaries. All inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions are eliminated on consolidation.

Certain comparative figures have been reclassified to conform to the current period's presentation

3. ACCOUNTS RECEIVABLE

Accounts receivable consist primarily of amounts due from customers and GST recoverable. Amounts due from customers relate to the operations of Strutta.

		January 31,		July 31,
		2021		2020
Trade receivables	$	12,149	$	14,937
GST recoverable		5,206		3,075
Total accounts receivable	$	17,355	$	18,011

• 9 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

4. EQUIPMENT

==> picture [360 x 218] intentionally omitted <==

----- Start of picture text -----

Computer Equipment
Cost
Balance, July 31, 2020 $ 7,617
Disposals (723)
Balance, January 31, 2021 $ 6,894
Accumulated depreciation
Balance, July 31, 2020 $ 7,169
Amortization 62
Disposals (723)
Balance, January 31, 2021 $ 6,508
Net book value
As at July 31, 2020 $ 448
As at January 31, 2021 $ 386
----- End of picture text -----

5. TRADE PAYABLES AND ACCRUALS

==> picture [447 x 73] intentionally omitted <==

----- Start of picture text -----

January 31, July 31,
2021 2020
Accounts payable $ 17,159 $ 45,477
Accrued liabilities 120,504 135,685
Total Accounts payable and accrued liabilities $ 137,663 $ 181,162
----- End of picture text -----

Included in accrued liabilities at January 31, 2021 is $90,000 (July 31, 2020 - $30,000, July 31, 2019 - $60,000) owing to an officer of the Company.

6. RELATED PARTY LOANS PAYABLE

On August 14, 2019, the Company received a loan in the amount of $25,000 from a company controlled by an officer. The loan is unsecured, due on demand and bears interest at 10% per annum. During the period ended January 31, 2021, the Company recorded $1,260 (period ended January 31, 2020 - $1,171.23) (Note 10) in interest on the loan. The balance of the loan at January 31, 2021 is $28,678.

On August 29, 2019, the Company received a loan in the amount of $100,000 from a company controlled by a significant shareholder. The loan is unsecured, due on demand and bears interest at 10% per annum. During the period ended January 31, 2021, the Company recorded $5,041 (period ended January 31, 2020 - $4,274) (Note 10) in interest on the loan. The balance of the loan at January 31, 2021 is $114,301.

• 10 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

6. RELATED PARTY LOANS PAYABLE (CONT’D)

On November 20, 2019, the Company received a loan in the amount of $50,000 from a company controlled by an officer. The loan is unsecured, due on demand and bears interest at 10% per annum. During the period ended January 31, 2021, the Company recorded $2,521 (period ended January 31, 2020 - $1,000) (Note 10) in interest on the loan. The balance of the loan at January 31, 2021 is $56,014.

On January 30, 2020, the Company received a loan in the amount of $50,000 from a company controlled by an officer. The loan is unsecured, due on demand and bears interest at 10% per annum. During the period ended January 31, 2021, the Company recorded $2,521 (period ended January 31, 2020 - $27) (Note 10) in interest on the loan. The balance of the loan at January 31, 2021 is $55,041.

On April 6, 2020, the Company received a loan in the amount of $100,000 from a company controlled by an officer. The loan is unsecured, due on demand and bears interest at 10% per annum. During the period ended January 31, 2021, the Company recorded $5,041 (period ended January 31, 2020 - Nil) (Note 10) in interest on the loan. The balance of the loan at January 31, 2021 is $108,247.

Loan transactions for the six months ended January 31, 2021 are summarized as follows:

==> picture [454 x 95] intentionally omitted <==

----- Start of picture text -----

Liability Equity
component component
Balance, July 31, 2020 $ 2,933,534 $ 238,722
Deconsolidation of subsidiary (2,587,636) (165,983)
Accrued interest and accretion 16,384 -
Balance, January 31, 2021 $ 362,281 $ 72,738
----- End of picture text -----

7. TERM LOANS PAYABLE

On May 4, 2020 (“disbursement date”), the Company received a loan for gross proceeds of $40,000 under the Canada Emergency Business Account (“CEBA”) as part of the Canadian government funded COVID-19 financial assistance programs. The CEBA term loan is due on December 25, 2025. The loan is interest free until December 31, 2022 and bears interest at 5% per annum thereafter. If at least 75% of the loan principal is paid on or before December 31, 2022, the balance of the loan will be forgiven.

The benefit of the government loan received at below market rate of interest is treated as a government grant. The loan was recognized at the fair value of $19,847, using the Company’s incremental borrowing rate of 20% per annum. The difference between the initial carrying amount and proceeds received of $20,152 is the value of the grant. During the six months ended January 31, 2021, the Company recorded interest of $2,064 on the loan (six months ended January 31, 2020- Nil). The balance of the loan at January 31, 2021 is $22,833 (July 31, 2020 - $20,768).

• 11 -

MOBIO TECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

8. SHARE CAPITAL

Authorized:

• Unlimited number of common shares without par value.

• Unlimited number of preferred shares without par value, non-voting and entitled to such dividends as may be set by the Board of Directors of the Company.

Issued and Outstanding:

• On January 26, 2021, the Company issued 150,000 common shares with a fair value of $0.10 per share, and an aggregate value of $15,000.

• 38,297,546 common shares (July 31, 2020 – 38,147,546)

Warrants

The Company extended the expiry date of 4,068,750 common share purchase warrants by twelve months from August 24, 2020 to August 24, 2021 and extended the expiry date of an aggregate of 1,666,670 common share purchase warrants by twelve months in March 26, 2020 to March 26, 2021.

There were no other share purchase warrant transactions for the period ended January 31, 2021

As at January 31, 2021, the following warrants were issued and exercisable:

==> picture [437 x 95] intentionally omitted <==

----- Start of picture text -----

Weighted
Number of Average
Warrants Exercise Price
Balance, July 31, 2020 13,602,086 0.18
Warrants expired (7,866,666) 0.10
Balance, January 31, 2021 5,735,420 $ 0.18
----- End of picture text -----

The weighted average life of the warrants is 0.44 years.

As at January 31, 2021, the following warrants were issued and exercisable:

Number of		Exercise	Expiry
Warrants		Price	Date
1,666,670	$	0.30	March 26, 2021
4,068,750	$	0.30	August 24, 2021
5,735,420

Stock Options

Under the Company’s stock option plan, options may be granted to directors, officers, employees and consultants of the Company. Options expire between two and five years after being issued or thirty days after an optionee ceases to be engaged in a bona fide manner with the Company. The Board of Directors has the discretion to extend the expiration period on cessation of engagement. The maximum number of common shares authorized for issuance by the Board of Directors under the plan is limited to 10% of the total issued and outstanding common shares of the Company and the aggregate number of common shares to be delivered upon exercise of the options to any one individual granted under the plan may not exceed 5% of the common shares issued and outstanding.

There were no other stock option transactions for the period ended January 31, 2021

• 12 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

8. SHARE CAPITAL (CONT’D)

The weighted average life of the options is 6.97 years.

As at January 31, 2021 the following stock options were issued and exercisable:

==> picture [447 x 51] intentionally omitted <==

----- Start of picture text -----

Outstanding Exercisable Exercise Expiry
(#) (#) Price ($) Date
362,500 362,500 0.22 19-Jan-28
----- End of picture text -----

9. LOSS PER SHARE

The basic loss per common share is calculated using the weighted average number of common shares outstanding during the period. Any warrants and stock options outstanding as at January 31, 2021 and 2020 have not been included in the calculation of diluted loss per common share as the effect of their inclusion would be anti-dilutive.

==> picture [441 x 94] intentionally omitted <==

10. RELATED PARTY TRANSACTIONS

Payments to key management and directors during the periods ended January 31, 2021 and 2020 were as follows:

==> picture [444 x 75] intentionally omitted <==

----- Start of picture text -----

Six months ended January 31, 2021 2020
Management fees paid to current and former directors and/or
officers, or to companies controlled by directors and/or officers
$ 18,198 $ 52,500
Total compensation $ 18,198 $ 52,500
----- End of picture text -----

Fees paid to directors and officers are included in the line item “Personnel” in the Company’s condensed consolidated interim statements of comprehensive loss.

Interest and accretion recorded on related party loans is as follows:

Six months endedJanuary 31,	2021	2020
Interest and accretion on loans payable to companies with a
common director and officer or to companies controlled by
directors and/or officers or by significant shareholders	$ 16,384 $	6,473

• 13 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

11. FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, accounts receivable, investments, related party loans payable, and accounts payable and accrued liabilities. As at January 31, 2021, there were no significant differences between the carrying amounts of these items and their estimated fair values.

Fair Value

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy based on the degree to which the inputs used to determine the fair value are observable.

The three levels of the fair value hierarchy are:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

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

As of January 31, 2021, cash and restricted cash are classified as Level 1 and investments are classified as Level 3.

The Board of Directors approves and monitors the risk management processes. The Company has exposure to the following risks from its use of financial instruments:

• Interest rate risk

• Credit risk

• Liquidity risk

• Market risk

• Currency risk

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company manages its financial instruments with the objective of minimizing potential interest rate risk, which generally means avoiding interestbearing obligations other than in unusual circumstances. The Company is not exposed to significant interest rate risk.

Credit Risk

Credit risk is the risk of potential loss to the Company if the counter party to a financial instrument fails to meet its contractual obligations. The credit risk of the Company is associated with cash, restricted cash, and accounts receivable. Management believes that the credit risk with respect to cash and restricted cash is minimal as balances are held with a high-credit quality financial institution. Accounts receivable have historically been subject to very few bad debts.

Liquidity Risk

The Company’s exposure to liquidity risk is dependent on the collection of accounts receivable, purchasing commitments and obligations or raising funds to sustain operations. The Company controls liquidity risk by management of working capital and cash flows. The Company’s ability to meet its future obligations may depend in significant part on the extent to which the Company can raise sufficient funds or implement successfully its business growth and cost reduction strategies. The Company cannot provide any assurance that it will be able to implement its strategy fully or that the anticipated results of its strategy will be realized.

• 14 -

MOBIO TECHNOLOGIES INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) Six Months Ended January 31, 2021 and 2020

==> picture [77 x 58] intentionally omitted <==

11. FINANCIAL INSTRUMENTS (CONT’D)

Market Risk

The Company’s exposure to financial market risk is limited, as it presently does not have any investments where value fluctuates as a result of changes in prices quoted in open markets.

Currency risk

Currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company’s reporting currency is Canadian dollars and has not entered into any derivative instruments to manage foreign exchange fluctuations.

12. CAPITAL MANAGEMENT

The Company defines capital as an aggregate of cash, common shares, warrants and stock options. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company targets to meet this objective by managing working capital to provide for the possibility that cash flows from assets will not be sufficient to meet future cash flow requirements in the near term. The Board of Directors does not establish quantitative return on capital criteria for management. In recent years, the Company has relied on funds generated through the issuance of common shares and loans to supplement funds generated from operations.

• 15 -