Nubeva Technologies Ltd. — Interim / Quarterly Report 2021

Mar 27, 2021

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Nubeva Technologies Ltd.

Condensed Consolidated Financial Statements

For the Nine Months Ended January 31, 2021 and 2020

(Unaudited)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, Subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company ’ s management. The Company ’ s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity ’ s auditor.

Nubeva Technologies Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at January 31, 2021 and April 30, 2020

(Expressed in United States Dollars)

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January 31, 2021 April 30, 2020
Assets
Current assets:
Cash and money market instruments (note 4) $ 1,153,543 $ 1,873,375
Accounts receivable (notes 5 and 16) 638,060 44,389
Tax credit receivable (notes 6 and 14) 145,768 242,858
Digital currency (note 7) - 28,354
Prepaid expenses and deposits (note 8) 22,529 96,000
Total current assets 1,959,900 2,284,976
Total Assets $ 1,959,900 $ 2,284,976
Liabilities
Current liabilities:
Accounts payable and accrued liabilities (notes 9 and 11) $ 465,770 $ 603,545
Current portion of term loans payable (note 12) 8,709 234,228
Deferred revenue (note 10) 54,806 -
Total current liabilities 529,285 837,773
Term loans payable (note 12) 120,746 102,413
Total Liabilities 650,031 940,186
Shareholders’ Equity
Common share capital (note 13) 13,813,613 13,730,668
Reserves (note 13) 686,983 704,628
Deficit (13,090,367) (12,960,121)
Accumulated other comprehensive loss (100,360) (130,385)
Total Equity 1,309,869 1,344,790
Total Liabilities and Shareholders' Equity $ 1,959,900 $ 2,284,976
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Subsequent events - note 18

Approved by the directors:

“Randy Chou” “Greig Bannister”

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

2

Nubeva Technologies Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in United States Dollars)

	Three Months Ended January 31,		Nine Months Ended January 31,
	2021	2020	2021	2020
Revenue(note 15)	$766,709$	40,117$1,734,024$		117,784
Operating expenses:
General and administrative (notes 11 and 14)	176,727	196,061	550,764	574,137
Research and development (notes 11 and 14)	276,617	285,913	905,104	950,173
Sales and marketing (notes 11 and 14)	267,989	328,858	769,338	1,073,965
Share-based compensation(notes 11 and 13)	93,876	33,639	140,503	184,586
Total expenses	815,209	844,471	2,365,709	2,782,861
Other Items
Interest and other income	173	9,653	2,748	49,086
Interest expense (note 12)	(6,249)	-	(17,447)	-
Gain on digital currency (note 7)	11,469	494	28,180	13,098
Gain on debt settlement	96,236	-	96,236	-
Foreign exchange loss	(4,146)	(2,723)	(22,506)	(12,848)
Government assistance(note 12)	12,339	-	318,043	-
Net income (loss)	61,322	**(796,930) **	**(226,431) **	(2,615,741)
Other comprehensive income (loss), items that will be
recycled through profit and loss
Foreign currencytranslation adjustment	14,235	(16,817)	30,025	(22,475)
Total comprehensive income(loss)	$ 75,557 $	(813,747) $	(196,406) $	(2,638,216)
Earnings (loss) per share - basic and dliuted	$ 0.00 $	(0.01) $	(0.00) $	(0.05)
Weighted average number of common shares outstanding	56,666,833	55,973,270	56,431,644	55,830,979

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

3

Nubeva Technologies Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY For the Nine Months Ended January 31, 2021 and 2020

(Expressed in United States Dollars)

Balance April 30, 2019 Options exercised Share-based compensation RSU issued Forfeited options Foreign currency translation Net loss for theperiod BalanceJanuary 31, 2020	Common Shares Amount Obligation to Issue Shares 55,683,963 $ 13,597,652 $ - 43,548 2,019 - - - - 332,242 103,465 - - - - - - - - - - 56,059,753 $ 13,703,136 $ - Share capital	Share Based Payment Reserve Warrants Reserve Deficit Accumulated Other Comprehensive Loss Total 527,495 $ 101,346 $ (9,176,892) $ (88,349) $ 4,961,252 (363) - - - 1,656 180,858 - - - 180,858 (103,465) - - - - (282) - 282 - - - - - (22,475) (22,475) - - (2,615,741) - (2,615,741) 604,243 $ 101,346 $(11,792,351) $(110,824) $ 2,505,550 Reserves
Balance April 30, 2020 Share-based compensation (note 13) Options exercised (note 13) RSU issued (note 13) Forfeited options Foreign currency translation Net loss for theperiod	56,153,155 $ 13,730,668 $ $ - - - - 529,809 26,225 - 216,128 56,720 - - - - - - - - - -	603,282 $ 101,346 $ (12,960,121) $ (130,385) $ 1,344,790 140,503 - - - 140,503 (5,243) - - - 20,982 (56,720) - - - - (96,185) - 96,185 - - - - - 30,025 30,025 - - (226,431) - (226,431)
Balance January 31, 2021	56,899,092 $ 13,813,613 $ -	585,637 $ 101,346 $ (13,090,367) $ (100,360) $ 1,309,869

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

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Nubeva Technologies Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended January 31, 2021 and 2020

(Expressed in United States Dollars)

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2021 2020
Operating activities
Net loss for the period $ (226,431) $ (2,615,741)
Items not involving cash:
Share-based compensation 140,503 180,858
Interest accrued 17,447 -
Gain on digital currency (28,180) (13,098)
Government assistance (269,267) -
Foreign exchange 34,830 11,238
Changes in non-cash working capital items related to operations:
Accounts receivable (593,671) 45,843
Prepaid expenses 67,446 97,844
Tax credit receivable 97,090 (57,403)
Accounts payable and accrued liabilities (143,174) (174,245)
Deferred revenue 54,806 1,462
Cash used in operating activities (848,601) (2,523,242)
Financing activities:
Term loans 42,600 -
Proceeds from sale of digital currency 56,565 -
Options exercised 20,982 1,656
Cash from financing activities 120,147 1,656
Effect of foreign exchange on cash 8,622 (22,475)
Net decrease in cash during the period (719,832) (2,544,061)
Cash and money market investments, beginning of the period 1,873,375 4,776,664
Cash and money market investments, end of the period $ 1,153,543 $ 2,232,603
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The accompanying notes are an integral part of these condensed consolidated interim financial statements

5

Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

1. NATURE OF OPERATIONS

Nubeva Technologies Ltd. (“the Company” or “Nubeva”) was incorporated under the provisions of The Business Corporations Act (British Columbia) on February 3, 2017. The Company was a Capital Pool Company and had no business operations prior to February 28, 2018. The Company’s shares trade on the TSX Venture Exchange (“TSX-V”). The Company’s registered and records office are located at Suite 1080, 789 West Pender Street, Vancouver, BC, V6C 1H2.

Nubeva develops software solutions to enable enterprises to run cybersecurity in the cloud.

These condensed consolidated interim financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at January 31, 2021, the Company had working capital of $1,430,615 (April 30, 2020 - $1,447,203) and incurred a net loss for the period ended January 31, 2021 of $226,431. Management estimates that its working capital position will provide the Company with sufficient financial resources to carry out planned operations through the six months following January 31, 2021. Realization values may be substantially different from carrying values as shown and these condensed consolidated interim financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material. The Company is dependent upon making sales or raising debt and equity financing to provide the funding necessary to meet its general operating expenses and will require additional financing to continue to develop and deploy its technology. The Company has incurred losses since inception and may incur further losses in the development of its business. These factors indicate a material uncertainty which may cast significant doubt upon the Company’s ability to continue as a going concern and, therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company.

Since January 31, 2020 several measures have been implemented in the United States, Canada and Australia in response to the increased impact from novel coronavirus (COVID-19). The Company continues to operate its United States office from remote work sites and is continuing software development and sales and marketing activities at this time. However, as the COVID-19 pandemic continues, the heightened economic uncertainty may have significant implications for the Company. Management is taking actions to ensure the Company has adequate financing to mitigate the impact on its business in the event that future economic conditions reduce its ability to secure financing in fiscal 2022.

2. STATEMENT OF COMPLIANCE

Basis of Preparation

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”) and interpretations of the International Financial Reporting Interpretation Committee (“IFRIC”). These consolidated financial statements were approved by the Board of Directors on March 26, 2021.

Basis of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries:

Nubeva Pty Ltd. registered in New South Wales, Australia; Nubeva, Inc., registered in Delaware USA; and

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Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

A subsidiary is an entity (including special purpose entities) controlled by the Company, where control is achieved by the Company having the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. The financial statements are consolidated from the date on which control is obtained by the Company and are deconsolidated from the date that control ceases. All intercompany transactions and balances have been eliminated.

Basis of Measurement

These condensed consolidated interim financial statements have been prepared on a historical cost basis since inception, except for those assets and liabilities that are measured at fair value at the end of each reporting period. Additionally, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

3. ACCOUNTING STANDARDS AND AMENDMENTS ISSUED

Accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s condensed consolidated interim financial statements.

4. CASH AND MONEY MARKET INSTRUMENTS

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January 31, 2021 April 30, 2020
Cash $ 290,123 $ 605,901
Money market funds 863,420 1,267,474
$ 1,153,543 $ 1,873,375
See note 16.
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5. ACCOUNTS RECEIVABLE

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January 31, 2021 April 30, 2020
Trade receivables and contract assets $ 614,757 $ 11,630
Government assistance receivable - 15,204
GST receivable 9,680 12,346
Other receivable 13,623 5,209
$ 638,060 $ 44,389
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6. TAX CREDIT RECEIVABLE

The Company is eligible to receive tax credits from its eligible research and development expenditures. The Company records the anticipated tax credits as a reduction in the costs to which they apply, at such time that the amount of tax credits is estimable, and their receipt is reasonably assured.

the amount of tax credits is estimable, and their receipt is	reasonably assured.
Balance, April 30, 2020	242,858
Tax credits received	(324,015)
Tax credit accrual (note 14)	215,204
Foreign exchange	11,721
Balance,January31,2021	$ 145,768

See note 14.

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Nubeva Technologies Ltd.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

7. DIGITAL CURRENCY

During the period ended January 31, 2021, the Company sold 3.275 Bitcoin for proceeds of $56,535 and recognized a gain of $28,180.

8. PREPAID EXPENSES AND DEPOSITS

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January 31, 2021 April 30, 2020
Deposit and prepaid office rent $ 13,654 $ 24,800
Other 8,875 71,200
$ 22,529 $ 96,000
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9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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January 31, 2021 April 30, 2020
Accounts payable (note 11) $ 68,927 $ 108,685
Accrued liabilities (note 11) 396,843 494,860
$ 465,770 $ 603,545
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10. DEFERRED REVENUE

Deferred revenue of $54,806 at January 31, 2021 (April 30, 2020 - $Nil) is reported net of accounts receivable until the earlier of either (i) the date the payment becomes due and (ii) the date the goods or services are delivered.

11. RELATED PARTY TRANSACTIONS

The following amounts, included in accounts payable and accrued liabilities (note 9), are payable to related parties as at January 31, 2021 and April 30, 2020:

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January 31, 2021 April 30, 2020
Expenses incurred on behalf of Company $ 2,858 $ 14,827
Accrued payroll 29,210 17,013
Bonuses 267,291 288,188
Board Services 20,000 10,700
$ 319,359 $ 330,728
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These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

Key Management Compensation

The Company incurred the following expenses with directors, officers and companies that are controlled by directors of the Company, during the periods ended January 31, 2021 and 2020:

	Nine months ended	Nine months ended
	January 31, 2021	January 31, 2020
Salary	$ 648,600	$ 624,108
Bonus	-	101,739
Board services	45,000	45,000
Share-based compensation	103,879	176,376
	$ 797,479	$ 947,223

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Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

12. TERM LOANS PAYABLE

On April 21, 2020, the Company received funding from the Silicon Valley Bank in the amount of $307,885 under the Paycheck Protection Program (“PPP”), a program formed under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) guaranteed by the U.S. government. The loan bears interest at a rate of 1.0% per annum and matures in 24 months. Commencing September 21, 2021, the Company shall be responsible for equal monthly payments of principal and interest until the maturity date. Under the terms of the PPP, an amount up to the principal amount of funding was to be forgiven if the Company maintained a consistent number of full-time employees for a prescribed period of time and the funds were used for certain prescribed expenses. During the nine months ended January 31, 2021, the Company used the funds for the purposes set out in the CARES Act and has recorded government assistance of $197,399 for the amount of the loan to be forgiven in the condensed consolidated interim statement of comprehensive loss in the current period. The loan was discounted at a market rate of interest of 20% and the discount of $22,686 has also been recorded as government assistance in the condensed consolidated statement of comprehensive loss for the current period. During the period ended January 31, 2021, interest and accretion of $13,989 has been recorded on the loan and is included in interest expense in the condensed consolidated statement of comprehensive loss.

During the year ended April 30, 2020, as part of the Canadian government funded COVID-19 financial assistance programs, the Company received a loan in the amount of $29,842 (CAD $40,000) from the Bank of Montreal (CEBA term loan). 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 loan has been discounted at a market rate of interest of 20% and the discount and amount to be forgiven totaling $16,698 has been recorded as government assistance in the condensed consolidated statement of comprehensive loss for the current period. During the period ended January 31, 2021, interest and accretion of $2,180 has been recorded on the loan and is included in interest expense in the condensed consolidated statement of comprehensive loss.

During the period ended July 31, 2020, the Company received a loan in the amount of $42,700 under the Economic Injury Disaster Loan Program (“EIDL”) administered by the U.S. Small Business Administration (“SBA”). The program provides working capital to small businesses suffering substantial economic injury as a result of the Coronavirus. The loan bears interest at a rate of 3.75% per annum and is repayable in monthly payments of principal and interest over 30 years commencing one year after the date the loan was advanced. The loan has been discounted at a market rate of interest of 20% and the discount of $32,484 has been recorded as government assistance in the condensed consolidated statement of comprehensive loss for the current period. During the period ended January 31, 2021, interest and accretion of $1,211 has been recorded on the loan and is included in interest expense in the condensed consolidated statement of comprehensive loss.

13. SHARE CAPITAL AND RESERVES

(a) Authorized

Unlimited common shares without par value; and

Unlimited Restricted Voting Common Shares without par value. Restricted Voting Common Shares may be entitled to receive dividends as and when declared by the board of directors, only if the same dividend is declared or paid on the common shares. Restricted Voting Common Shares may be converted into common shares on a one-for-one basis without payment of additional consideration, at the option of the holder with consent of the board of directors, and at any time at the option of the board of directors.

• (b) Issued Share Capital

At January 31, 2021 there were 42,128,125 (April 30, 2020 – 41,382,188) common shares issued and fully paid and 14,770,967 (April 30, 2020 – 14,770,967) Restricted Voting Common Shares issued and fully paid.

9

Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

• (c) Shares Issued during the Period

During the period ended January 31, 2021 the following shares were issued:

The Company issued 529,809 common shares pursuant to the exercise of options for gross proceeds of $20,982.

The Company issued 216,128 common shares pursuant to the RSUs.

• (d) Share-Based Compensation

On January 31, 2021, the Company had 11,100,000 common shares reserved for issuance under all share compensation arrangements as follows:

• (i) 10,600,000 common shares are reserved for issuance under the Company’s Fixed Share Option Plan, and

• (ii) 500,000 common shares are reserved for issuance under the Company’s Restricted Share Unit Plan.

The following table summarizes the Company’s outstanding equity compensation as at January 31, 2021 and April 30, 2020:

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January 31, 2021 April 30, 2020
Weighted Weighted Weighted Weighted
average average average average
exercise remaining exercise remaining
price life price life
Units (CAD $) (years) Units (CAD $) (years)
Stock options (i) 7,454,374 0.33 8.20 5,144,119 0.24 7.73
RSUs (ii) - - - 247,702 - 0.76
Units outstanding 7,454,374 0.33 8.20 5,391,821 0.24 7.41
(i) Options
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Options to purchase common shares may be granted to directors, consultants, officers and employees of the Company and its subsidiary for terms up to ten years at a price at least equal to the market price prevailing on the date of the grant.

The continuity of stock options for the period ended January 31, 2021 is as follows:

		Weighted
	Number of	Average Exercise
	Options	Price(CAD$)
Balance, April 30, 2020	5,144,119	0.24
Issued	3,175,000	0.44
Exercised	(529,809)	0.05
Forfeited	(334,936)	0.52
Balance,January31,2021	7,454,374	0.33

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Nubeva Technologies Ltd.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

During the nine months ended January 31, 2021, 529,809 options were exercised for proceeds of $20,982.

Share-based compensation of $116,314 (Period ended January 31, 2020 - $88,251) was recorded for options vested during the period ended January 31, 2021. The fair value of stock options at the grant date was measured based on the Black-Scholes option-pricing model. Expected volatility is estimated by considering historic average share price volatility for similar companies. The weighted-average assumptions used for the Black-Scholes option-pricing model of stock options granted during the period are as follows:

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Period ended January Period ended January
31, 2021 31, 2020
Expected life of options 5 years 5 years
Annualized volatility 110% 110%
Risk-free interest rate 0.780% 1.45%
Dividend rate 0.00% 0.00%
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Details of options outstanding at January 31, 2021 are as follows:

Number of		Weighted	Weighted Average
Options	Expiry Date	Average Exercise	Remaining Life
Outstanding		Price (CAD$)	(Years)
38,710	12-Apr-26	0.05	5.20
58,065	14-Apr-26	0.05	5.20
38,710	05-May-26	0.05	5.26
77,419	04-Jun-26	0.05	5.34
77,419	14-Jun-26	0.05	5.37
38,710	20-Jun-26	0.05	5.39
42,581	21-Jun-26	0.05	5.39
11,613	08-Sep-26	0.05	5.61
13,548	17-Sep-26	0.05	5.63
38,710	06-Oct-26	0.05	5.68
30,968	25-Nov-26	0.05	5.82
1,167,096	09-Jan-27	0.05	5.94
38,710	17-Jan-27	0.05	5.96
7,742	29-May-27	0.05	6.33
282,580	19-Jun-27	0.05	6.38
500,821	05-Sep-27	0.05	6.60
139,355	01-Nov-27	0.80	6.75
386,000	23-Mar-28	1.52	7.15
95,000	15-Jan-29	0.42	7.96
550,200	16-Apr-29	0.27	8.21
20,000	28-Sep-29	0.10	8.66
60,000	10-Oct-29	0.10	8.70
420,000	09-Mar-30	0.05	9.11
145,417	23-Apr-30	0.08	9.23
50,000	16-Sep-30	0.25	9.63
125,000	09-Dec-30	0.28	9.86
3,000,000	28-Dec-30	0.45	9.91
7,454,374		0.33	8.20

At January 31, 2021, there were 3,551,414 stock options exercisable (April 30, 2020 – 3,307,740).

11

Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

(ii) RSUs

RSUs are equity settled only and may be granted to directors, consultants, officers and employees of the Company. Compensation expense is recognized based on the share price of the Company’s common shares on the grant date multiplied by the number of RSUs expected to vest and recognized ratably over the vesting period, with a corresponding credit to the share-based compensation reserve. Adjustments to the number of RSUs expected to vest are recognized in the current period. Share-based compensation of $24,189 was recorded for RSUs during the period ended January 31, 2021 (Period ended January 31, 2020 - $92,607).

The continuity of RSUs for the period ended January 31, 2021 is as follows:

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||||
|---|---|---|
|Weighted|
|Number of|Average Grant|
|RSUs|Price (CAD$)|
|Balance, April 30, 2020|247,702|0.34|
|Vested and released|(216,128)|0.35|
|Forfeited|(31,574)|0.28|
|Balance, January 31, 2021|-|-|

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(iii) Warrants

There were no warrants outstanding at January 31, 2021 or April 30, 2020.

(f) Reserves

Reserves comprised of items recognized as stock-based compensation expense include RSUs and stock options. Upon exercise of options or vesting of RSUs the corresponding amount will be transferred from the reserve to share capital. In the event that stock-based compensation is cancelled or expires unexercised, the corresponding amount is removed from the reserve and credited to retained earnings.

14. EXPENSES BY NATURE

For the three months ended January 31, 2021

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||||
|---|---|---|
|General and|Research and|Sales and|
|Administration|Development (1)|Marketing|
|Office expense and operations|$ 32,305 $ 60,483 $ 20,462|
|Personnel|144,422 216,134 247,527|
|Totals|$ 176,727 $ 276,617 $ 267,989|

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(1) Research and development expenses are reported net of refundable tax credits in the amount of $82,756.

12

Nubeva Technologies Ltd.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

For the three months ended January 31, 2020

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General and Research and Sales and
Administration Development (1) Marketing
Office expense and operations $ 17,577 $ 53,819 $ 94,386
Personnel 169,622 229,532 233,641
Travel 8,862 2,562 831
Totals $ 196,061 $ 285,913 $ 328,858
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(1) Research and development expenses are reported net of refundable tax credits in the amount of $126,746.

For the nine months ended January 31, 2021

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General and Research and Sales and
Administration Development (1) Marketing
Office expense and operations $ 180,770 $ 154,051 $ 56,892
Personnel 369,994 751,053 712,446
Totals $ 550,764 $ 905,104 $ 769,338
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(1) Research and development expenses are reported net of refundable tax credits in the amount of $215,204.

For the nine months ended January 31, 2020

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General and Research and Sales and
Administration Development (1) Marketing
Office expense and operations $ 233,705 $ 199,124 $ 241,910
Personnel 318,328 737,395 823,623
Travel 22,104 13,654 8,432
Totals $ 574,137 $ 950,173 $ 1,073,965
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(1) Research and development expenses are reported net of refundable tax credits in the amount of $327,256.

15. REVENUE

	Period ended January 31, 2021 Period ended January 31, 2020
Licenses	$ 1,551,341 $ 117,784
Software services, support andmaintenance	182,683 -
Totals	$1,734,024 $117,784

During the nine months ended January 31, 2021 and 2020 two customers comprised 66% and 19% of revenue respectively.

16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment

13

Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

policies, counterparty limits, and controlling and reporting structures. The following provides information with respect to the Company’s exposure to certain financial risks:

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company attempts to manage liquidity risk by maintaining sufficient cash. Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital in order to meet short-term obligations. As at January 31, 2021, the Company had cash and marketable securities of $1,153,543 (April 30, 2020 - $1,873,375) to settle current liabilities of $529,285 (April 30, 2020 - $837,773). The Company estimates it has adequate working capital to continue operations for six months from January 31, 2021. There is substantial uncertainty that the Company will be able to continue to meet its financial obligations as they come due if it cannot general sales or raise additional capital, and there is no assurance that the Company will be able to raise sufficient capital or raise capital on terms advantageous to the Company.

The Company’s business is subject to the effects of general global and regional economic conditions. If global and/or regional economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate, the Company may experience material adverse impacts on its business. Unfavorable and/or uncertain economic and market conditions may result in lower capital spending or delayed spending by customers on cyber security and network monitoring, despite the higher incidence of cyber fraud, and may adversely impact revenue and increase credit risk.

Foreign Exchange Risk

Foreign 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 sales are in US Dollars and although the majority of its operating expenses are denominated in US Dollars, a portion of general and administrative costs are denominated in Canadian Dollars and a portion of Research and Development costs are denominated in Australian Dollars exposing the Company to foreign exchange risk. The Company monitors its exposure to foreign exchange risk and converts any surplus funds to US Dollars to provide a natural hedge.

As at January 31, 2021 and April 30, 2020, the Company was exposed to foreign currency risk through the following financial assets and liabilities denominated in foreign source currencies, converted to US Dollars at the prevailing rate at the end of each of the reporting periods:

	January 31, 2021	January 31, 2021	April 30, 2020
	Australian	Canadian	Australian Canadian
	Dollars	Dollars	Dollars	Dollars
Cash	$ 202,035	$ 11,929	$ 45,111 $	59,645
Accounts receivable	5,333	4,347	21,005	1,335
Income tax receivable	145,768	-	241,458	-
Accounts payable and accrued
liabilities	(101,562)	(151,430)	(88,146) (128,358)
Term loan	-	(16,239)	-	(28,756)
Total	$ 251,574 $ (151,393)		$ 219,428 $	(96,134)

Based on the above net exposures, as at January 31, 2021, a 10% change in the Canadian Dollar to the US Dollar exchange rate would impact the Company’s net gain or loss by $15,139 and a 10% change in the Australian Dollar to the US Dollar exchange rate would impact the Company’s net gain or loss by $25,157.

As a result of the coronavirus pandemic, the Company has witnessed increased volatility in currencies, which may have a future impact on operating results. Although the Company’s functional currency is United States dollars the Company has operations in Canada and Australia. Increases in the Canadian and Australian dollars could result in foreign exchange losses and result in an adverse effect on operating results.

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Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

Credit risk and Credit Concentration

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of loss and comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

To measure the expected credit losses, trade accounts receivable and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled license fees and support and maintenance fees and have substantially the same risk characteristics as the trade accounts receivable for the same type of contracts. As at January 31, 2021 accounts receivable was comprised 77% of trade accounts receivable and 23% of contract assets. As at January 31, 2021, two customers comprised 21% and 59% of accounts receivable and contract assets respectively.

Capital Management

The Company’s objective in managing capital is to ensure sufficient liquidity to fund research and development, engage in sales and marketing activities, and undertake selective acquisitions, while at the same time taking a conservative approach toward financial leverage and management of financial risk. The Company’s capital is composed entirely of equity. The Company uses capital to finance its operating losses. There is substantial uncertainty that the Company will be able to continue to finance its operating losses. The Company currently funds these requirements from cash raised through the issuance of common shares. There is a risk that the Company will not be able to raise funds through the issuance of shares or on terms advantageous to the Company or its shareholders. The Company’s objectives when managing capital are to ensure that the Company will continue to have enough liquidity help build its portfolio of cloud-based security solutions from which it will obtain returns on investment.

The Company monitors its capital on the basis of the adequacy of its cash resources to fund its business plan. In order to maximize flexibility to finance growth, the Company does not currently pay a dividend to holders of its common shares. There is no external restriction on the Company’s capital. The Company did not institute any changes to its capital management strategy during the period.

Investment Risk

As at January 31, 2021 the Company’s cash and marketable securities were comprised of cash in the amount of $290,123 (April 30, 2020 - $605,901), and money market funds in the amount of $863,420 (April 30, 2020 - $1,267,474).

At January 31, 2021 money market funds were comprised as follows:

i) 42% of Blackrock BLF FedFund, AAA rated with investments in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Government; and ii) 58% Morgan Stanley Institutional Liquidity Funds (MSILF) Government Portfolio, AAA rated, liquid, high-quality debt securities issued by the U.S. government.

Although certain money market fund investments may be guaranteed, the funds themselves are not insured or guaranteed and the Company could lose money. An investment in the funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The prices of fixed income securities respond to economic developments, including interest rate changes. Prices may be inversely affected by changes in interest rates. Accordingly, money market funds are subject to interest rate risk, and in a rising interest rate environment, portfolio shares can decline in value.

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Nubeva Technologies Ltd. Notes to the Unaudited Condensed Consolidated Interim Financial Statements. For the nine months ended January 31, 2021 and 2020 (Expressed in United States Dollars)

17. SEGMENT REPORTING

At January 31, 2021, the Company operates in one operating segment, the development and commercialization of software to support the provision of cloud-based security.

18. SUBSEQUENT EVENTS

• (a) In March 2021 the Company entered into an agreement for a financing facility with Alumina Partners (Ontario) Ltd (“Alumina”). Alumina will provide the Company with up to CAD $8.0 million over a 24-month period to finance its working capital needs as well as accelerate its product development. Each tranche shall be a private placement of units, to be comprised of one common share and one half of a Common Share purchase warrant (“Warrant”). Each full Warrant will entitle the holder to purchase one Common Share of the Company at a price of 25% over the Unit price and will have a term of three years. If the volume weighted average closing price of the Common Shares on the TSX-V is equal to or greater than 2 times the exercise price of the Warrants at any time during which they are eligible for exercise for a period of 20 consecutive trading days, the Company may at its option elect to accelerate the expiry of the Warrants by providing notice (by news release) within 10 calendar days following the end of such 20 consecutive trading day period, in which case the Warrants will expire on the date specified in such notice. Each tranche of Units issued under the Investment Agreement will be subject to the acceptance of the TSX Venture Exchange, and the securities issued will be subject to the customary 4-month hold period.

• (b) In March 2021 subject to regulatory approval, the Company entered into a non-brokered private placement of 1,111,110 units, each unit comprised of one common share and one common share purchase warrant (“Warrant”). Each unit was issued for a price of CAD $0.45 for gross proceeds of CAD $500,000. Each Warrant entitles the holder to purchase one common share at a price of CAD $0.65 per share for a period of three years, or earlier if the common shares close at a price of CAD $1.00 for an agreed period of time.

• (c) In March 2021 the Company received a second Payroll Protection Loan in the amount of $240,652 from Silicon Valley Bank under the PPP. The loan bears interest at a rate of 1% per annum and is repayable net of the forgiveness amount, if any, in 5 years. Under the terms of the PPP, an amount up to the principal amount of funding may be forgiven if the Company maintained a consistent number of full-time employees for a prescribed period of time and the funds were used for certain prescribed expenses.

(c) In March 2021, the Company granted ten-year stock options to employees, officers and advisors as follows:

• 230,000 incentive stock options exercisable at a price of $0.42 per share and vesting over four years.

• 100,000 stock options exercisable at a price of $0.42 per share and vesting over two years.

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