NameSilo Technologies Corp. — Interim / Quarterly Report 2022

Nov 22, 2022

Condensed Interim Consolidated Financial Statements (Unaudited – Expressed in Canadian dollars)

For the Three and Nine Months Ended September 30, 2022 and 2021

Index

Notice of No Auditor Review of Interim Financial Statements

Condensed Interim Consolidated Financial Statements

Condensed Interim Consolidated Statements of Financial Position

Condensed Interim Consolidated Statements of Comprehensive Loss

Condensed Interim Consolidated Statements of Changes in Equity

Condensed Interim Consolidated Statements of Cash Flows

Notes to the Condensed Interim Consolidated Financial Statements

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102, Part 4, subsection 4.3(3) released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed these unaudited condensed interim consolidated financial statements as at and for the three and nine months ended September 30, 2022 and 2021.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited – Expressed in Canadian Dollars)

		September30,	December 31,
		2022	2021
	Notes	$	$
ASSETS
Current assets
Cash and cash equivalents		1,460,785	1,416,552
Receivables		88,154	152,071
Prepaid expenses		7,117	4,971
Registry deposits		3,069,174	2,413,265
Prepaid domain name registry fees, current portion		21,563,033	18,601,319
		26,188,263	22,588,178
Prepaid domain name registry fees, long-term portion		2,021,287	2,081,276
Digital currency	3	250,929	43,353
Investments	4	4,653,423	4,947,321
Equipment	5	80,306	81,997
Brand	6	150,656	265,048
Customer relationships	7	2,842,016	3,326,088
Goodwill	8	8,358,605	7,731,115
		44,545,485	41,064,376
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	9	3,293,417	3,481,955
Customer deposits		2,592,928	1,982,320
Deferred revenue, current portion	10	24,344,015	21,860,080
		30,230,360	27,324,355
Convertible debenture –liability portion	12	3,412,518	3,249,193
Deferred revenue, long-term portion	10	2,268,307	2,321,560
Deferred income tax liability		1,028,891	951,651
		36,940,076	33,846,759
SHAREHOLDERS'EQUITY
Share capital	13	35,013,486	35,013,486
Subscription advances		15,608	15,608
Convertible debt –equity portion	12	566,106	566,106
Contributed surplus		2,313,861	2,313,861
Accumulated other comprehensive loss		136,552	(138,836)
Deficit		(31,532,510)	(31,484,082)
Total equity attributable to shareholders of the Company		6,513,103	6,286,143
Attributable to non-controlling interest		1,092,306	931,474
		7,605,409	7,217,617
		44,545,485	41,064,376

Nature of operations and going concern (note 1) Subsequent event (note 18)

Approved on behalf of the Board

"Paul Andreola" Director "Colin Bowkett" Director

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

Condensed Interim Consolidated Statements of Comprehensive Loss For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

		For the three	For the three	For the nine	For the nine
		months ended	months ended	months ended	months ended
		September 30,	September 30,	September 30,	September 30,
	Notes	2022$	2021$	2022$	2021$
REVENUE	10	11,569,000	9,217,902	33,577,394	25,618,698
COST OF SALES	10	(9,582,615)	(7,869,303)	(27,170,422)	(21,863,144)
GROSS PROFIT		1,986,385	1,348,599	6,406,972	3,755,554
GENERAL AND ADMINISTRATION EXPENSES
Amortization	5, 6, 7	284,664	272,673	839,230	812,442
Consulting fees		471,601	642,855	1,365,758	1,045,997
Management fees	15	90,000	90,000	270,000	174,000
Merchant fees		324,730	280,819	1,042,857	901,522
Office and general		189,649	100,299	594,124	316,940
Professional fees	15	81,621	91,322	319,029	336,182
Salaries		49,021	40,093	151,338	137,508
Transfer agent and filing		4,116	5,325	13,252	18,735
		1,495,402	1,523,386	4,595,588	3,743,326
Income (loss) before other items		490,983	(174,787)	1,811,384	12,228
OTHER ITEMS
Foreign exchange gain (loss)		21,076	(55,004)	32,819	25,721
Gain on write-off of accounts payable		-	-	-	15,201
Interest and loan accretion expense	12	(173,296)	(102,053)	(513,363)	(378,326)
Other income		180	-	376	69
Realized loss on digital currency	3	(95,919)	(191,620)	(161,393)	(114,450)
Gain (loss) on investments	4	474,604	453,120	(804,622)	(6,272,564)
Share-based payment	13, 15	-226,645	(329,053)(224,610)	-(1,446,183)	(332,816)(7,057,165)
Income (loss)before income tax		717,628	(399,397)	365,201	(7,044,937)
Income tax expense		(1,132)	(103,681)	(1,132)	(189,003)
Net income (loss)		716,496	(503,078)	364,069	(7,233,940)
Other comprehensive income (loss)
Digital currency revaluation		(5,777)	(17,438)	1,303	(42,285)
Exchange difference on subsidiary translation		321,328	213,419	36,596	(51,511)
Total comprehensive income (loss)		1,032,047	(307,097)	701,968	(7,327,736)
Income (loss) attributable to:
Shareholders of the Company		613,035	(461,138)	(48,428)	(7,298,242)
Non-controlling interest		103,461	(41,940)	412,497	64,302
		716,496	(503,078)	364,069	(7,233,940)
Comprehensive income (loss) attributable to:
Shareholders of the Company		870,209	(301,413)	226,960	(7,374,686)
Non-controlling interest		161,838	(5,684)	475,008	46,950
		1,032,047	(307,097)	701,968	(7,327,736)
Basic and diluted loss per share		0.00	(0.01)	0.00	(0.08)
Weighted average number of shares
outstanding – basic and diluted		92,646,648	92,646,648	92,646,648	92,646,648

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

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited – Expressed in Canadian Dollars)

				ConvertibleDebenture
	Number ofShares	ShareCapital	Subscriptionadvances	–EquityComponent	ContributedSurplus	AOCI	Deficit	NCI	Total
	#	$	$	$	$	$	$	$	$
Balance, January 1, 2021	92,646,648	35,013,486	15,608	-	1,981,045	(44,475)	(22,689,370)	1,861,661	16,137,955
Share-based payment	-	-	-	-	332,816	-	-	-	332,816
Distributions	-	-	-	-	-	-	-	(657,771)	(657,771)
Net and comprehensive loss
for the period	-	-	-	-	-	(76,444)	(7,298,242)	46,950	(7,327,736)
Balance, September 30, 2021	92,646,648	35,013,486	15,608	-	2,313,861	(120,919)	(29,987,612)	1,250,840	8,485,264
Convertible debenture	-	-	-	566,106	-	-	-	-	566,106
Distributions	-	-	-	-	-	-	-	(180,863)	(180,863)
Digital currency revaluation	-	-	-	-	-	1,156	-	-	1,156
Net and comprehensive loss
for the period	-	-	-	-	-	(19,073)	(1,496,470)	(138,503)	(1,654,046)
Balance, December 31, 2021	92,646,648	35,013,486	15,608	566,106	2,313,861	(138,836)	(31,484,082)	931,474	7,217,617
Distributions	-	-	-	-	-	-	-	(314,176)	(314,176)
Net and comprehensive			-
income for the period	-	-		-	-	275,388	(48,428)	475,008	701,968
Balance, September30, 2022	92,646,648	35,013,486	15,608	566,106	2,313,861	136,552	(31,532,510)	1,092,306	7,605,409

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

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited – Expressed in Canadian Dollars)

	2022	2021
Ninemonths ended September30,	$	$
CASH FLOWS PROVIDED BY (USED IN):
Operating activities
Net income (loss) for the period	364,069	(7,233,940)
Adjustment for items not involving cash:
Amortization	839,230	812,442
Foreign exchange gain	-	(24,935)
Interest expense and loan accretion	163,325	377,593
Share-based payment	-	332,816
Loss on investments	804,622	6,272,564
Realized gain on digital currency	161,393	114,450
	2,332,639	650,990
Changes in non-cash working capital related to operations:
Receivables	63,917	(82)
Prepaid expenses	(2,146)	71,716
Registry deposits	(655,909)	900,581
Prepaid domain name registry fees	(2,901,725)	(4,193,845)
Digital currency	(367,666)	(66,927)
Accounts payable and accrued liabilities	(188,538)	(273,557)
Customer deposits	610,608	651,940
Deferred revenue	2,430,682	5,822,557
Net cash provided by operating activities	1,321,862	3,563,373
Investing activities
Purchaseof investments	(753,599)	(41,440)
Sale of investments	242,875	44,540
Net cash (used in) provided by investing activities	(510,724)	3,100
Financing activities
Repayment of loans payable	-	(2,249,207)
Distributions to NCI	(314,176)	(657,771)
Net cash used in financing activities	(314,176)	(2,906,978)
Foreign exchange on cash	(452,729)	(62,017)
Increase in cash during the period	496,962	659,495
Cash –beginning of the period	1,416,552	2,401,601
Cash –end of the period	1,460,785	2,999,079
Cash paid for interest	(350,038)	(352,011)
Cash paid for income tax	(338,993)	(189,003)

Supplemental cash flow information (Note 17)

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

NameSilo Technologies Corp. (the "Company") is a publicly listed company incorporated in Canada with limited liability under the legislation of the Province of British Columbia. On December 3, 2018, the Company changed its name from Brisio Innovations Inc. to NameSilo Technologies Corp. The Company's shares are listed on the Canadian Securities Exchange ("CSE"). The head office and principal address is 409 Granville Street, Suite 1052, Vancouver, BC, Canada, V6C 1T2. The Company is a provider of domain name registration services and marketplace services for the buying and selling of domain names.

These condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

For the nine months ended September 30, 2022, the Company had a working capital deficit of $4,042,097 and an accumulated deficit of $31,532,510. The Company's ability to continue as a going concern is dependent upon generating positive cash flows from operations, earning sufficient returns on its investments, and upon obtaining additional financing. The outcome of these matters cannot be predicted at this time. In March 2020 there was a global pandemic outbreak of COVID-19. The actual and threatened spread of the virus globally has had a material adverse effect on the global economy and specifically, the regional economies in which the Company operates. The Company's business financial condition and results of operations may be further negatively affected by economic and other consequences from Russia's military action against Ukraine and the sanctions imposed in response to that action in late February 2022. While the Company expects any direct impacts of the pandemic and the conflict in the Ukraine to the business to be limited, the indirect impacts on the economy could negatively affect the business and may make it more difficult for it to raise equity or debt financing. There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about on its business, results of operations, financial position and cash flows in the future. These material uncertainties lend significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business.

2. BASIS OF PREPARATION

(a) Statement of compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Accounting Standard 34, Interim Financial Reporting. They do not include all the information required for full annual financial statements.

These condensed interim consolidated financial statements were approved by the Board of Directors on November 21, 2022.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

(b) Basis of consolidation

These condensed interim consolidated financial statements include the financial statements of the Company and the following subsidiaries subject to control by the Company:

		Percentage owned
	Incorporated in	Sept30, 2022	Dec 31, 2021
Netco Argentina S.A.	Argentina	100%	100%
1155064 BC Ltd.	Canada	100%	100%
NameSilo, LLC("NameSilo LLC")	USA	81.5%	81.5%
NamePal.com, LLC("NamePal")	USA	81.5%	81.5%

Control is achieved when the Company has the power to, directly or indirectly, govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is obtained and continue to be consolidated until the date that such control ceases. Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.

(c) Functional and presentation currency

The functional currency of a company is the currency of the primary economic environment in which the Company operates. The presentation currency for a company is the currency in which the Company chooses to present its financial statements.

The functional currency of the Company, Netco Argentina S.A. and 1155064 BC Ltd. is the Canadian dollar. The functional currency of NameSilo LLC and NamePal is the US dollar. The presentation currency of the Company is the Canadian dollar.

Entities whose functional currencies differ from the presentation currency are translated into Canadian dollars as follows: assets and liabilities – at the closing rate as at the reporting date, and income and expenses – at the average rate of the period. All resulting changes are recognized in other comprehensive income as cumulative translation differences.

Transactions in foreign currencies are translated into the functional currency at exchange rates at the date of the transactions. Foreign currency differences arising on translation are recognized in profit or loss. Foreign currency monetary assets and liabilities are translated at the functional currency exchange rate at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary are reallocated between controlling and noncontrolling interests.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

(d) Basis of measurement

The condensed interim consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at their fair value.

In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

(e) Use of estimates and judgments

The preparation of financial statements in compliance with IFRS requires management to make certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

Estimates and underlying 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 years affected.

Significant accounting estimates:

• a. The judgment of indications of impairment of each asset and related determination of the net realizable value and write-down of these assets where applicable;
• b. Fair value for share-based compensation transactions;
• c. Fair value of investments;
• d. Estimate of indirect tax payable;
• e. Bifurcation of convertible debenture; and
• f. The tax basis of assets and liabilities and related deferred income tax assets and liabilities.

Significant accounting judgments:

• a. The determination of categories of financial assets and financial liabilities has been identified as an accounting policy which involves judgments or assessments made by management;
• b. The Company has used judgment in determining the currency of the primary economic environment in which each entity operates. In making such determination, the management has considered the currency that mainly influences the sale prices and the cost of providing goods and services in each jurisdiction in which the Company operates. The Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained;
• c. There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for digital currencies and management has exercised

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

significant judgement in determining appropriate accounting treatment. In making this determination on the accounting for the digital currencies the Company has reviewed the sources and uses of the digital currencies in the operations of its business. In the event authoritative guidance is enacted by the IASB, the Company may be required to change its policies which could result in a change in the Company's financial position and earnings; and

d. The going concern risk assessment (see note 1).

3. DIGITAL CURRENCY

The Company holds 9.42 bitcoins with a fair value of $250,929 (USD$183,066) as at September 30, 2022 (December 31, 2021 – 0.70 bitcoins with a fair value of $43,353 (USD$34,196)).

The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices or lack of an active market for the digital currencies would have a minimal impact on the Company's other comprehensive income and financial position. The Company uses Blockchain.info as the exchange to transact in bitcoin.

NAMESILO TECHNOLOGIES CORP. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

4. INVESTMENTS

September 30, 2022

		Namesilo Tech			Pioneering TechnologiesRenoworks Software Inc.		Allur Group				Total Telcom Inc.			Vigil Health Solutions
	Number	Amount		Number		Amount	Number	Amount	Number		Amount	Number			Amount Number		Amount
Balance, Dec 31 21	-	$	-	821,300	$	36,959	100,000	$46,000	523,332	$	78,500	45,000	$	5,850	362,500	$	184,875
Purchased	461,000		73,110	-		-	-	-	-		-	-		-	-		-
Redeemed	-		-	-		-	-	-	-		-	-		-	(362,500)		(242,875)
Gain (loss)	-		14,480	-		(16,426)	-	(17,500)	-		-	-		(1,350)	-		58,000
Balance, Sep 30 22	461,000	$	87,590	821,300	$	20,533	100,000	$28,500	523,332	$	78,500	45,000	$	4,500	-	$	-
	ImmunoPrecise Antibodies			West M ining Corp.			Atlas Engineered Products Ltd.			Yuansfer		Lawson West Capital Corp.			Erebus Capital Corp.
	Number	Amount		Number		Amount	Number	Amount	Number		Amount	Number		Amount	Number		Amount
Balance, Dec 31 21	560,000	$	3,858,400	180,000	$	20,700	921,079	$552,647	-	$	63,390	133,333	$	100,000	-	$	-
Purchased	-		-	-		-	50,000	28,821	-		-	312,500		250,000	800,000		200,000
Redeemed	-		-	-		-	-	-	-		-	-		-	-		-
Gain (loss)	-		(778,400)	-		(5,400)	-	(76,507)	-		-	-		-	-		-
Balance, Sep 30 22	560,000	$	3,080,000	180,000	$	15,300	971,079	$504,961	-	$	63,390	445,833		$ 350,000	800,000	$	200,000
	Number	Ceapro Inc.Amount		Sensus HealthcareNumber		Amount	Bomb BeveragesNumber	Amount			Total

	Number	Amount		Number	Amount	Number		Amount	Total
Balance, Dec 31 21	-	$	-	-	$-		-	$-	$ 4,947,321
Purchased	200,000		115,170	3,000	54,111		-	32,387	753,599
Redeemed	-		-	-	-		-	-	(242,875)
Gain (loss)	-		20,830	-	(2,349)		-	-	(804,622)
Balance, Sep 30 22	200,000	$	136,000	3,000	$51,762		-	$32,387	$ 4,653,422

NAMESILO TECHNOLOGIES CORP. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

December 31, 2021
	Lite Access Technologies Inc.		Pioneering Technologies		Renoworks Software Inc.		Allur Group			Total Telcom Inc.		Vigil Health Solutions
	Number	Amount	Number	Amount	Number	Amount	Number		Amount	Number		Amount Number	Amount
Balance, Dec 31 20	165,999	$22,410	821,300	$61,598	100,000	$60,000	523,332		$ 78,500	45,000	$5,400	362,500	$114,187
Purchased	-	-	-	-	-	-	-		-	-	-	-	-
Proceeds from sale	(165,999)	(28,730)	-	-	-	-	-		-	-	-	-	-
Gain (loss)	-	6,320	-	(24,639)	-	(14,000)	-		-	-	450	-	70,688
Balance, Dec 31 21	-	$	- 821,300	$36,959	100,000	$46,000	523,332		$ 78,500	45,000	$5,850	362,500	$184,875
	ImmunoPrecise Antibodies		West M ining Corp.		Atlas Engineered Products Ltd.			Yuansfer		Lawson West Capital Corp.
	Number	Amount	Number	Amount	Number	Amount	Number		Amount	Number	Amount		Total
Balance, Dec 31 20	560,000	$ 10,886,400	200,000	$72,000	821,079	$336,642	-	$	-	-	$-		$ 11,637,137
Purchased	-	-	-	-	100,000	41,440	-		63,390	133,333	100,000		204,830
Proceeds from sale	-	-	(20,000)	(15,810)	-	-	-		-	-	-		(44,540)
Gain (loss)	-	(7,028,000)	-	(35,490)		174,565	-		-	-	-		(6,850,106)
Balance, Dec 31 21	560,000	$3,858,400	180,000	$20,700	921,079	$552,647	-		$ 63,390	133,333	$100,000		$ 4,947,321

The investments in Yuansfer and Bomb Beverages are SAFE investments. The Company designated the SAFEs at fair value through profit or loss. The fair value of the SAFEs, at each reporting period, is estimated using Level 3 inputs of the fair value hierarchy.

The Company holds investments where there is no quoted market price or active market for the investment. These investments are currently measured at the fair value equivalent to the fair value of the shares from the initial purchase. There are no indicators during the current or prior periods that the value of the shares might not be representative of fair value.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021 (Unaudited – Expressed in Canadian Dollars)

5. EQUIPMENT

	Furniture &	Server &
	Equipment	Domains	Total
	$	$	$
Cost:
Balance, December 31, 2020	8,517	-	8,517
Additions	-	82,973	82,973
Foreign exchange	-	946	946
Balance, December 31, 2021	8,517	83,919	92,436
Foreign exchange	-	6,812	6,812
Balance, September30, 2022	8,517	90,731	99,248
Accumulated Amortization:
Balance, December 31, 2020	3,566	-	3,566
Amortization	1,703	5,112	6,815
Foreign exchange	-	58	58
Balance, December 31, 2021	5,269	5,170	10,439
Amortization	1,278	6,367	7,645
Foreign exchange	-	858	858
Balance, September30, 2022	6,547	12,395	18,942
Net Book Value:
December 31, 2021	3,248	78,749	81,997
September30, 2022	1,970	78,336	80,306

6. BRAND

The brand was acquired as a result of the acquisition of NameSilo LLC. The brand is amortized using the straight-line method over the useful life of 5 years. The changes in the value of the brand during the nine months ended September 30, 2022 and year ended December 31, 2021 are as follows:

	$
Balance, December 31, 2020	434,494
Amortization	(165,713)
Foreign exchange	(3,733)
Balance, December 31, 2021	265,048
Amortization	(127,190)
Foreign exchange	12,798
Balance, September30, 2022	150,656

7. CUSTOMER RELATIONSHIPS

The customer relationships were acquired as a result of the acquisition of NameSilo LLC. The customer relationships are amortized using the straight-line method over the useful life of 7 years. The changes in the value of the customer relationships during the nine months ended September 30, 2022 and year ended December 31, 2021 are as follows:

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021 (Unaudited – Expressed in Canadian Dollars)

	$
Balance, December 31, 2020	4,272,420
Amortization	(917,741)
Foreign exchange	(28,591)
Balance, December 31, 2021	3,326,088
Amortization	(704,395)
Foreign exchange	220,323
Balance, September30, 2022	2,842,016

8. GOODWILL

The goodwill was acquired as a result of the acquisition of NameSilo LLC. The changes in the value of the goodwill during the nine months ended September 30, 2022 and the year ended December 31, 2021 are as follows:

	$
Balance, December 31, 2020	7,764,045
Foreign exchange	(32,930)
Balance, December 31, 2021	7,731,115
Foreign exchange	627,490
Balance, September30, 2022	8,358,605

The Company performs a goodwill impairment test annually and when circumstances indicate that the carrying value may not be recoverable. The recoverable amount of the CGU was based on value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The cash flows were projected over a five-year period based on past experience and actual operating results. The Company performed its annual goodwill impairment test in April 2022 and no impairment was indicated for the period tested. The values assigned to the key assumptions represented management's assessment of future trends in the industry and were based on historical data from both internal and external sources. The key assumptions applied in the impairment test include a weighted average cost of capital of 20%, average customer growth rate of 8% per year and terminal value growth rate of 5%.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company is subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which the Company conducts business. Laws and regulations attempting to subject communications and commerce conducted over the internet to various indirect taxes are becoming more prevalent, both in Canada and internationally, and may impose additional burdens on the Company in the future. Taxing authorities may impose indirect taxes on the internet-related revenue generated by the Company based on regulations currently being applied to similar, but not directly comparable, industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, Canadian and international indirect taxation laws are complex and subject to change. The Company may be audited in the future, which could result in changes to the indirect tax estimates.

As at September 30, 2022, an accrual for estimated indirect tax liabilities of $1,982,771 (December 31, 2021 – $1,833,922) has been included in accounts payable and accrued liabilities. This accrual reflects management's best estimate of the probable liability based on an analysis of the Company's business activities, revenues subject to indirect taxes and applicable regulations.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

Although the Company believes its indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits or settlements could be materially different than the amounts established for indirect tax contingencies. The current period effect of indirect tax is recognized as other expense in profit or loss.

10. DEFERRED REVENUE

Deferred revenue consists of the following as at September 30, 2022 and December 31, 2021:

	September30,	December 31,
	2022	2021
	$	$
Current	24,344,015	21,860,080
Non-current	2,268,307	2,321,560
	26,612,322	24,181,640

The increase in the deferred revenue balance is primarily driven by payments received in advance of satisfying our performance obligations, affected by $31,806,303 of revenue recognized during the nine months ended September 30, 2022. The changes in the value of deferred revenue during the nine months ended September 30, 2022 and the year ended December 31, 2021 are as follows:

	$
Balance, December 31, 2020	17,856,522
Additions	40,180,920
Transferred to revenue	(33,855,802)
Balance, December 31, 2021	24,181,640
Additions	34,236,985
Transferred to revenue	(31,806,303)
Balance, September30, 2022	26,612,322

Revenue consists of the following types of services for nine months ended September 30, 2022 and the year ended December 31, 2021:

	September30,December 31,
	2022	2021
	$	$
Domain Services	31,806,303	33,855,802
Market Place Transactions	883,268	1,452,700
Other	887,823	1,118,385
	33,577,394	36,426,887

Costs of sales are the direct costs incurred by the Company in connection with selling an incremental product to its customers. Substantially all cost of sales relates to domain registration fees paid to the various domain registries, payment processing fees, and third-party commissions.

11. LOANS PAYABLE

On May 1, 2018, the Company received a bridge loan financing in the principal amount of $5,000,000. The loan bore interest at a rate of 8% per annum and was due on November 1, 2018.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021 (Unaudited – Expressed in Canadian Dollars)

On June 21, 2018, the Company entered into an amended loan agreement which extended the maturity date to June 21, 2019.

On June 21, 2018, the Company received another bridge loan financing in the principal amount of $6,347,916 (USD$4,770,000). The loans bore interest at a rate of 8% per annum and were due on June 21, 2019.

As an incentive for the lenders entering into the loan agreements, the Company issued as a bonus a total of 3,750,000 common shares to the lenders. The fair value of the common shares issued ($1,312,500) was recorded as transaction costs against the value of the loans payable and amortized over the term of the loans.

On June 17, 2019, the Company entered into amended loan agreements to restructure the loans. As a result of the restructuring, the Company repaid $1,293,978 of the principal and the maturity date of the loans was extended to December 17, 2020. Each loan bore interest at a rate of 11% per annum which was payable quarterly. The Company was required to pay 25% of each loan by July 17, 2020 and the balance by December 17, 2020. The loans were pre-payable at any time without penalties.

On July 17, 2020, the Company entered into the First Extension and Amendments to Loan Agreements to further amend the loans. As a result of the amendments, the Company paid total extension fee of $50,000, repaid $650,000 of the principal plus interest, and the first payment date of July 17, 2020 was first extended to September 17, 2020 and later extended to September 23, 2020 pursuant to the Second Extension and Amendments to Loan Agreements. The Company also granted to the lenders a first-ranking security interest over all of the present and after-acquired assets of the Company. The security interest provided to the lenders would cease once the Company fully repaid the loans.

On December 17, 2020, the Company entered into the Third Extension and Agreements to Loan Agreements, which extended the maturity date of the loan to February 15, 2021. The maturity date was extended again to March 1, 2021 pursuant to the Fourth Extension Letter signed on February 15, 2021 and to June 10, 2021 pursuant to the Fifth Extension and Agreements to Loan Agreements signed on April 6, 2021.

On October 29, 2021, the Company repaid the loans in full.

	$
Balance, December 31, 2020	5,793,818
Repayment	(6,120,361)
Interest expense	411,144
Foreign exchange	(84,601)
Balance, December 31, 2021 and September30, 2022	-

12. CONVERTIBLE DEBENTURE

On October 19, 2021, the Company entered into a loan agreement with a third party lender (the "Lender") whereby the Lender advanced to the Company a total of $3,900,000 (the "Loan"). The Loan is for a term of three years and accrues interest at a rate of 12% per annum. The Loan was used to refinance the Company's existing loans.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

Under the terms of the loan agreement, the Lender may convert, at its option, all or any portion of the principal to common shares of the Company at a price of $0.25 per share. The Company will have the right to cause a forced conversion of 50% of the outstanding principal amount into common shares if the weighted average price of the common shares is equal to or greater than $0.50 per share over twenty consecutive trading days.

The Company will have the right to prepay all or any portion of the principal at any time. If the Company elects to repay any portion of the Loan, the Lender will be entitled to a fee equal to one year of interest on the principal amount repaid by the Company. The Lender has been granted certain security interests in the business of the Company.

During the nine months ended September 30, 2022, the Company recorded interest expense of $350,038 (December 31, 2021 - $93,600) on the Loan.

The changes in the value of the convertible debenture during the nine months ended September 30, 2022 and year ended December 31, 2021 are as follows:

	LiabilityComponent($)	EquityComponent($)
Balance, December 31, 2020	-	-
Proceeds	3,314,571	585,429
Transaction costs	(109,402)	(19,323)
Accretion	44,024	-
Balance, December 31, 2021	3,249,193	566,106
Accretion	163,325	-
Balance, September30, 2022	3,412,518	566,106

13. SHARE CAPITAL

(a) Authorized

Unlimited number of common shares without par value. Unlimited number of preferred shares without par value.

(b) Issued

On February 23, 2022, the Company announced its intention to initiate a normal course issuer bid ("NCIB") through the facilities of the CSE. Under the NCIB, the Company intends to acquire up to 4,500,000 common shares of the Issuer, representing approximately 4.85% of its issued and outstanding common shares. The NCIB commenced on March 2, 2022 and will end no later than March 2, 2023. The Company may terminate the NCIB earlier if it feels it is appropriate to do so and has appointed Canaccord Genuity Corp. to conduct the NCIB. All shares acquired will be returned to treasury and cancelled. During the nine months ended September 30, 2022, the Company repurchased 461,000 common shares at a price of $0.15 per share. However, the 461,000 common shares have not been canceled yet as of September 30, 2022.

During the year ended December 31, 2021 no shares were issued.

(c) Stock options

NAMESILO TECHNOLOGIES CORP. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021 (Unaudited – Expressed in Canadian Dollars)

The Company has a stock option plan in accordance with the policies on the Canadian Securities Exchange whereby, from time to time at the discretion of the Board of Directors, stock options are granted to directors, officers and certain consultants.

Under the plan up to 10% of the total number of issued common shares of the Company, calculated on a non-diluted basis, at the time an option is granted are available for the issuance of stock options. The exercise price of each option is based on the market price of the Company's common stock at the date of the grant less an applicable discount. The options can be granted for a maximum term of 10 years. The maximum number of options that may be granted to any one person must not exceed 5% of the common shares issued and outstanding at the time of grant unless disinterested shareholder approval is obtained. Any options granted to consultants or persons performing Investor Relations under the Amended Stock Option Plan shall vest to the optionee as follows: 25% at date of grant, 25% six months from date of grant, 25% nine months from date of grant and the remaining 25% twelve months from the date of grant. All other options granted under the Amended Stock Option Plan shall have vesting terms set at the discretion of the Board of Directors.

A summary of the stock option activity is as follows:

	September	30, 2022	December 31, 2021
		Weighted		Weighted
		Average		Average
		Exercise		Exercise
	Number	Price	Number	Price
Balance, beginning of period/ year	5,625,000	$0.28	3,475,000	$0.30
Granted	-	-	2,750,000	0.22
Expired	(250,000)	0.45	(600,000)	0.16
Balance, end of period / year	5,375,000	$0.27	5,625,000	$0.28

As at September 30, 2022, the Company has outstanding directors' and employees' incentive stock options enabling the holders to acquire additional common shares as follows:

Number of optionsoutstanding	Number of optionsexercisable	Exercise Price	Expiry Date
1,000,0001,300,000325,0002,750,000	1,000,0001,300,000325,0002,750,000	$0.23$0.35$0.42$0.22	December 20, 2022August 8, 2023September 16, 2024September 17, 2027
5,375,000	5,375,000		2.40years remaining

In September 2021, the Company granted a total of 2,750,000 stock options to its officers, directors and consultants. The options are exercisable at a price of $0.22 per share for a period of five years from the date of grant. The fair value of the options granted was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: share price at the time of issuance $0.22; risk-free interest

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

rate of 0.80%; expected life of 5 years; dividend yield of 0%; forfeiture rate of 0% and annualized volatility of 65%.

For the three and nine months ended September 30, 2022, $nil and $nil (2021 - $329,053 and $332,816) has been recorded as share-based payment relating to options granted during the period.

(d) Warrants

	September	30, 2022		December 31, 2021
		WeightedAverage		WeightedAverage
	Number	ExercisePrice	Number	ExercisePrice
Balance, beginning of period/ year	16,107,475	$0.30	16,107,475	$0.30
Expired	(10,475,520)	0.30	-	-
Balance, end of period / year	5,631,955	$0.30	16,107,475	$0.30

As at September 30, 2022, the Company has outstanding share purchase warrants enabling the holders to acquire additional common shares as follows:

Number of warrantsoutstanding	Exercise Price	Expiry Date
5,631,955(1)	$0.30	October 6, 2022
5,631,955		0.02year remaining

(1) These warrants expired unexercised subsequent to September 30, 2022.

14. DISTRIBUTIONS FROM NAMESILO LLC

In March, May, July, August, October and December 2021, NameSilo LLC made cash distributions to all its members. The total amount of distributions made to the 18.5% non-controlling interest were $838,634 (US$669,035) during the year ended December 31, 2021.

In February, March and July 2022, NameSilo LLC made cash distributions to all its members. The total amount of distributions made to the 18.5% non-controlling interest were $314,176 (US$244,914) during the nine months ended September 30, 2022.

15. RELATED PARTY TRANSACTIONS

The aggregate amount of expenditures made to parties not at arm's length to the Company for the three and nine months ended September 30, 2022 and 2021 are:

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

	Three months endedSeptember	Ninemonths endedSeptember30,
	2022$	30,2021$	2022$	2021$
Professional fees	16,266	16,576	77,177	85,820
Management fees	90,000	90,000	270,000	174,000
	106,266	106,576	347,177	259,820

During the three and nine months ended September 30, 2022, Paul Andreola, President and Director was paid or accrued management fees of $45,000 and $135,000 (2021 - $45,000 and $87,000), Colin Bowkett, Director was paid or accrued management fees of $45,000 and $135,000 (2021 - $45,000 and $87,000), Daniel Nanson, Director was paid or accrued professional fees of $nil and $nil (2021 - $nil and $15,750), and Malaspina Consultants Inc., a company in which Natasha Tsai, Chief Financial Officer is a shareholder, was paid or accrued professional fees of $16,266 and $77,177 (2021 - $16,576 and $70,070).

Included in accounts payable and accrued liabilities at September 30, 2022 is $12,075 (December 31, 2021 - $9,384) due to officers and directors for unpaid management fees.

These transactions 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, unless otherwise noted.

There were no post-employment benefits, termination benefits or other long-term benefits paid to key management personnel for the nine months ended September 30, 2022 and 2021.

16. DETERMINATION OF FAIR VALUES

The Company's financial assets were classified into the following categories:

• FVTPL Cash and cash equivalents, and investments
• FVOCI None
• Amortized Cost Receivables

Estimates of the fair value of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgement, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

At September 30, 2022, the Company's financial instruments include cash and cash equivalents, receivables, registry deposits, investments, accounts payable and accrued liabilities, customer deposits, and convertible debenture. Receivables, registry deposits, accounts payable and accrued liabilities, and customer deposits, convertible debenture are recognized on the consolidated statement of financial position at their carrying values which approximated their fair value.

All financial instruments measured at fair value are categorized into a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are described below:

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

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 (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table sets forth the Company's financial assets measured at fair value by level within the fair value hierarchy.

September30, 2022	Level 1	Level 2		Level 3	Total
Assets:
Cash and cash equivalents	$1,460,785	$		-	$	-	$	1,460,785
Investment -shares	$4,479,146	$		-	$	78,500	$	4,557,646
Investment –SAFE	$-	$		-	$	95,777	$	95,777
December 31, 2021	Level 1		Level 2			Level 3	Total
Assets:
Cash and cash equivalents	$1,416,552	$		-	$	-	$	1,416,552
Investment -shares	$4,805,431	$		-	$	78,500	$	4,883,931
Investment –SAFE	$-	$		-	$	63,390	$	63,390

17. SUPPLEMENTAL CASH FLOW INFORMATION

The following changes in liabilities arose from financing activities:

	December31, 2021$	CashFlows$	Bifurcationto Equity$	Accretion$	Foreignexchangemovements$	September30, 2022$
Convertible
debenture	3,249,193	-	-	163,325	-	3,412,518
					Foreign
	December31, 2020	CashFlows	Bifurcationto Equity	Accretion	exchangemovements	December31, 2021
	$	$	$	$	$	$
Loans payable	5,793,818	(5,709,217)	-	-	(84,601)	-
Convertible
debenture	-	3,771,275	(566,106)	44,024	-	3,249,193

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2022 and 2021

(Unaudited – Expressed in Canadian Dollars)

18. SUBSEQUENT EVENT

Subsequent to September 30, 2022, the Company has granted a total of 2,350,000 stock options to its officers, directors, employees and consultants. Each option is exercisable at a price of $0.18 per share for a period of five years from the date of grant.