PesoRama Inc. — Interim / Quarterly Report 2021

Aug 31, 2021

Skyscape Capital Inc.

(A Capital Pool Company) Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020

(In Canadian Dollars)

Notice of No Auditor Review of the Interim Consolidated Financial Statements

The accompanying unaudited condensed interim consolidated financial statements of Skyscape Capital Inc. (the “Corporation”) have been prepared by and are the responsibility of the Corporation’s management. The Corporation’s independent auditor has not performed a review of these consolidated financial statements in accordance with standards established by the CPA Canada for a review of interim consolidated financial statements by an entity’s auditor.

Skyscape Capital Inc. Unaudited Condensed Interim Consolidated Statements of Financial Position As at June 30, 2021 and December 31, 2020

(in Canadian Dollars)

		June 30,		December
		2021		31, 2020
Assets
Cash held in trust	$	39,050	$	237,992
	$	39,050	$	237,992
Liabilities
Accrued liabilities	$	200,299	$	129,951
Shareholder’s Equity
Share capital, net of issuance costs (Note 3)		651,354		651,354
Contributed surplus		101,363		101,363
Accumulated deficit		(913,966)		(644,676)
		(161,249)		108,041
	$	39,050	$	237,992

Approved by the Board	Paul Pathak Director(Signed)	James Walker
		Director(Signed)

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

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Skyscape Capital Inc. Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

		Three month	Three month	Six month	Six month
		period ended	period ended	period ended	period ended
		June 30, 2021	June 30, 2020	June 30, 2021	June 30, 2020
Expenses
Professional fees	$	175,870	$ 10,393	$ 246,744	21,060
Listing fees		20,588	3,850	22,546	10,700
Total expenses		196,458	$ 14,243	$ 269,290	31,760
Net loss and
comprehensive loss	$	(196,458)	$ (14,243)	$ (269,290)	(31,760)
Net loss per share	$	(0.12)	$ (0.01)	$ (0.21)	(0.03)
(basic and diluted)
Weighted average
number of shares
outstanding (basic
and diluted)		1,622,222	1,000,000	1,311,111	1,000,000

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

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Skyscape Capital Inc. Unaudited Condensed Interim Consolidated Statements of Changes in Cash Flows For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

	Six month period	Six month period
	ended June 30, 2021	ended June 30, 2020
Cash flows from operating activities
Net loss for the period	$ (269,290)	$ (31,760)
Change in accrued liabilities	70,348	7,711
Net cash used in operating activities	(198,942)	(24,049)
Net change in cash	(198,942)	(24,049)
Cash, beginning of period	237,992	273,098
Cash, ending of period	$ 39,050	$ 249,049

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

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Skyscape Capital Inc. Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

	Number	Share	Contributed	Accumulated	Shareholders’
	of Shares	Capital	surplus	Deficit	Equity
Balance at January 1,
2020	2,000,000	$ 651,354	$ 101,363	$ (485,346)	$ 267,371
Net loss for the period	-	-	-	(31,760)	(31,760)
Balance, June 30, 2020	2,000,000	$ 651,354	$ 101,363	$(517,106)	$ 235,611

	Number of	Share	Contributed	Accumulated	Shareholders’
	Shares	Capital	Surplus	Deficit	Equity
Balance, January 1, 2021	2,000,000	$ 651,354	$ 101,363	$ (644,676)	$ 108,041
Net loss for the period	-	-	-	(269,290)	(269,290)
Balance, June 30, 2021	2,000,000	$ 651,354	$ 101,363	$(913,966)	$(161,249)

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

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Skyscape Capital Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

1. INCORPORATION AND NATURE OF BUSINESS

Skyscape Capital Inc. (the "Corporation") was incorporated under the Business Corporations Act (Ontario) on January 9, 2018 and is a Capital Pool Corporation as defined in Policy 2.4 of the TSX Venture Exchange (the “Exchange”) Corporate Finance Manual. The principal business of the Corporation is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction ("QT"). The Corporation has not commenced commercial operations and has no assets other than cash held in trust. Given the nature of the activities, no separate segmented information is reported. The Corporation’s continuing operations, as intended, are dependent on its ability to secure equity financing with which it intends to identify and evaluate potential acquisitions of businesses, and once identified and evaluated, to negotiate an acquisition thereof or participation therein subject to receipt of regulatory and, if required, shareholders’ approval.

The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to $3,000 per month may be used for reasonable general and administrative expenses of the Corporation. These restrictions apply until completion of a QT.

On March 11, 2020, the Corporation was suspended from trading by the Exchange for failing to complete a QT within 24 months from the date of listing. On May 5, 2021, the Corporation held a “Special Meeting” in which disinterested shareholders approved the removal of the consequences of failing to complete a QT within 24 months of listing as set out in section 15.2(b)(i) of the New CPC Policy; as well as amend the escrow release conditions and certain other provisions of the Corporation’s CPC escrow agreement dated February 20, 2018.

The global outbreak of COVID-19 (coronavirus) has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Corporation as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus.

The head office and the registered head office of the Corporation is located at 77 King Street, Suite 700, Toronto, ON M5K 1G8.

On August 29, 2021, the Board of Directors approved the unaudited condensed interim consolidated financial statements for the three months ended June 30, 2021 and 2020.

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Skyscape Capital Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These unaudited condensed interim consolidated financial statements have been prepared on an accrual basis and are based on historical costs, modified where applicable, by the measurement at fair value of selected non-current assets, financial assets, and financial liabilities. These unaudited condensed interim consolidated financial statements are presented in Canadian dollars, which is the corporation’s functional and presentation currency.

The accounting policies applied by the Corporation in these Unaudited Condensed Interim Consolidated Financial Statements are the same as those applied by the Corporation in the audited consolidated financial statements for the years ended December 31, 2020 and 2019.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Corporation and its wholly owned subsidiary, 11518003 Canada Inc.

3. SHARE CAPITAL

Authorized Unlimited common shares

Issued	#	$
1,000,000 common shares (i)	1,000,000	$ 250,000
1,000,000 common shares (ii)	1,000,000	500,000
Issuance cost (cash)	-	(72,202)
Issuance cost (warrants)	-	(26,444)
Balance, June 30, 2021 and December 31, 2020	2,000,000	$ 651,354

(i) Escrowed Shares

During the period from incorporation (January 9, 2018) to December 31, 2018, the Corporation issued 1,000,000 common shares at $0.25 per share for gross proceeds of $250,000.

All common shares of the Corporation acquired in the secondary market prior to the completion of a QT by a Control Person, as defined in the policies of the Exchange, are required to be deposited in escrow. Subject to certain permitted exemptions, all securities of the Corporation held by principals of the resulting issuer will also be subject to escrow. 1,000,000 shares have been escrowed at June 30, 2021 and December 31, 2019.

All common shares acquired on exercise of stock options granted to directors and officers prior to the completion of a QT, must also be deposited in escrow until the Final Exchange Bulletin is issued.

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Skyscape Capital Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

3. SHARE CAPITAL – continued

(ii) Initial Public Offering

On March 6, 2018, the Corporation completed its Initial Public Offering (“IPO”) of 1,000,000 common shares at $0.50 per share ($500,000). The Corporation paid a commission of 10% of the gross proceeds to Canaccord Genuity Corp. (the “Agent”), and granted the Agent warrants to acquire 10% of the common shares issued in the IPO exercisable for a period ending twenty-four months from the closing of the IPO, exercisable at $0.50 per share. The Corporation also paid a corporate finance fee and reimbursed the Agent for legal fees and other reasonable expenses incurred pursuant to the Offering. Cash issuance costs of $72,202 were associated with these issuances and the value attributed to warrants granted to the Agent is $26,444.

Options

The Corporation has established a stock option plan for its directors, officers and consultants under which the Corporation may grant options from time to time to acquire a maximum of 10% of the issued and outstanding common shares. The exercise price of each option granted under the plan shall be determined by the Board of Directors.

Options may be granted for a maximum term of ten years from the date of the grant. They are nontransferable and are exercisable as determined by the Board of Directors when the option is granted. Options expire within 90 days of termination of employment or holding office as director or officer of the Corporation and, in the case of death, expire within a maximum period of one year after such death, subject to the expiry date of the option.

Any shares issued upon exercise of the options prior to the Corporation entering into a QT will be subject to escrow restrictions.

The following table reflects the continuity of stock options and warrants:

	Number of Stock	Weighted Average
	Options and Warrants	Exercise Price ($)
Balance, January 9, 2018	-	-
Granted (i)	100,000	$0.50
Granted to directors and officers (ii)	200,000	$0.50
Expiration of agents warrants (i)	(100,000)	($0.50)
Balance, December 31, 2020 and June 30, 2021	200,000	$0.50

i. On March 6, 2018, the Corporation granted 100,000 warrants to the Agent, which are exercisable within two years from the closing of the IPO at an exercise price of $0.50 per share. These warrants were valued on the date of issue using the Black-Scholes option pricing model with the following assumptions: dividend yield 0%, risk-free interest rate of 1.75%, expected volatility of 100% and an expected life of two years. The value attributed to these warrants was $26,444. On March 6, 2020, a total of 100,000 agent warrants expired unexercised.

ii. On March 6, 2018, the Corporation granted 200,000 options to its directors and officers, which are exercisable within five years from the date of grant at an exercise price of $0.50 per share. These options were valued on the date of issue using the Black-Scholes option pricing model with the following assumptions: dividend yield 0%, risk-free interest rate of 1.97%, expected volatility of 100% and an expected life of five years. The value attributed to these options was $74,919.

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Skyscape Capital Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

3. SHARE CAPITAL – continued

Options – continued

The following table reflects the actual stock options and warrants issued and outstanding as of June 30, 2021:

		Weighted Average	Number of Stock	Number of Stock
		Remaining	Options and	Options and
		Contractual Life	Warrants	Warrants Vested
Expiry Date	Exercise Price	(Years)	Outstanding	(Exercisable)
March 6, 2023	$0.50	1.68	200,000	200,000

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Capital Management

The Corporation's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Corporation includes equity, comprised of share capital and accumulated deficit, in the definition of capital.

The Corporation's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Corporation may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to $3,000 per month may be used for reasonable general and administrative expenses of the Corporation. These restrictions apply until completion of a QT.

Risk Disclosures and Fair Values

The Corporation's financial instruments, consisting of cash held in trust and accrued liabilities approximate fair value due to the relatively short-term maturity of the instruments. It is management’s opinion that the Corporation is not exposed to significant interest, currency or credit risks arising from these financial instruments.

5. RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2021, the Corporation incurred legal fees of approximately $237,439 (2020 - $21,059) for services provided by a law firm whose partner is a director of the Corporation. As at June 30, 2021, $198,499 (2020 - $13,438) is included in accrued liabilities for these services.

There were no other transactions with related parties and no remuneration was paid to key management personnel during the six months ended June 30, 2021 and 2020.

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Skyscape Capital Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended June 30, 2021 and 2020 (in Canadian Dollars)

6. QUALIFYING TRANSACTION

On March 8, 2021, the Corporation entered an amalgamation agreement between the Corporation, PesoRama Inc. (“PesoRama”) and 11518003 Canada Corp. (“Subco”), a wholly owned subsidiary of the Corporation, which sets forth the terms and conditions upon which the Corporation will acquire PesoRama by way of reverse takeover. PesoRama is a private company incorporated and existing under the Canada Business Corporations Act. It is intended that the Transaction will constitute the “Qualifying Transaction” of the Corporation, as such term is defined in the policies of the Exchange.

The transaction is subject to customary approvals of the shareholders and the Exchange.

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