Pioneering Technology Corp. — Interim / Quarterly Report 2021

Aug 31, 2021

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Pioneering Technology Corp. Unaudited Condensed Interim Financial Statements

For the three and nine months ended June 30, 2021 and 2020

Pioneering Technology Corp. For the three and nine months ended June 30, 2021 and 2020

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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

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 condensed interim financial statements, they must be accompanied by a notice indicating that the condensed interim financial statements have not been reviewed by an auditor.

The accompanying condensed interim financial statements of Pioneering Technology Corp. (the “Company”) have been prepared by and are the responsibility of the Company’s management. The condensed interim financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) and reflect management’s best estimates and judgment based on information currently available. The Company’s independent auditor has not performed a review of these condensed interim financial statements.

“Kevin Callahan”

“Richard Adair”

Kevin Callahan CEO

Richard Adair Chair – Audit Committee

August 30, 2021

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Pioneering Technology Corp. Condensed Interim Statements of Financial Position As at June 30, 2021 (Unaudited)

Expressed in Canadian Dollars

	Note		June 30, 2021		September30,2020
ASSETS
CURRENT ASSETS
Cash		$	1,604,804	$	2,157,373
Trade and other receivables	6		649,004		1,231,172
Inventories	7		2,527,161		2,229,899
Prepaid expenses and deposits			87,045		947,845
			4,868,014		6,566,289
Property and equipment	8		1,910,071		2,050,645
Patents andintangibles	9		210,282		201,097
TOTAL ASSETS		$	6,988,367	$	8,818,031
LIABILITIES
CURRENT LIABILITIES
Trade payables and accrued liabilities	11	$	1,015,899	$	1,731,888
Derivative liability	13(d)		-		1,236
Current portionof lease obligations	12		81,286		75,278
			1,097,185		1,808,402
Long-term lease obligations	12		1,533,336		1,594,942
TOTAL LIABILITIES		$	2,630,521	$	3,403,344
SHAREHOLDERS' EQUITY
Common share capital	13(a)	$	17,974,857	$	17,974,857
Preferred shares	13(a)		1		1
Contributed surplus	13(c)		1,367,022		2,086,442
Accumulated other comprehensive loss			(215,697)		(189,080)
Deficit			(14,768,337)		(14,457,533)
TOTALSHAREHOLDERS' EQUITY			4,357,846		5,414,687
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY		$	6,988,367	$	8,818,031

Commitments and contingencies 15

Approved by:

"Kevin Callahan"

"Richard Adair"

Kevin Callahan

Director

Richard Adair

Director

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

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Pioneering Technology Corp.

Condensed Interim Statements of Income (Loss) and Comprehensive Income (Loss) For three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

Expressed in Canadian Dollars

Note June 30, 2021 $ REVENUE 2,981,799 COST OF GOODS SOLD 1,679,518 GROSS PROFIT 1,302,281 EXPENSES Sales and marketing 13(c) 922,191 Administration 13(c) 896,665 Warehousing, distribution and warranty costs 85,117 Foreign exchange loss (gain) 149,708 Research and development costs 13(c) 45,944 Depreciation of property and equipment 8 157,232 Amortizationofpatents andintangibles 9 13,315 TOTAL EXPENSES 2,270,172 OPERATING INCOME (LOSS) (967,891) Interest expense 12 (65,563) Fair valuemovement-derivativeliability 13(d) 1,236 INCOME (LOSS) BEFORE INCOME TAXES (1,032,218) Income taxexpense 14 - NET INCOME(LOSS) FOR THE PERIOD (1,032,218) OTHER COMPREHENSIVE INCOME (LOSS) Currency translationdifferences (may be subsequentlyreclassified tonetincome) (26,617) COMPREHENSIVE INCOME(LOSS) FOR THE PERIOD (1,058,835) Income(loss) per share - basic and diluted (0.02) $ Weighted average number of common shares outstanding Outstanding- basic and diluted 56,041,746	Nine Months Ended June 30, 2020 $ 5,538,263 3,221,827 2,316,436 1,170,816 1,138,123 101,920 (61,020) 164,829 163,716 18,296 2,696,680 (380,244) (81,843) (76,133) (538,220) - (538,220) 77,195 (461,025) (0.01) $ 56,041,746	Three Months Ended June 30, 2021 June 30, 2020 $ $ 837,929 822,321 487,774 521,483 350,155 300,838 185,694 360,054 234,146 284,886 26,338 19,918 21,849 91,442 12,510 36,105 52,411 54,628 4,438 6,282 537,386 853,315 (187,231) (552,477) (21,269) (26,870) - (23,592) (208,500) (602,939) - - (208,500) (602,939) (7,691) (84,277) (216,191) (687,216) (0.00) $ (0.01) $ 56,041,746 56,041,746	Three Months Ended June 30, 2021 June 30, 2020 $ $ 837,929 822,321 487,774 521,483 350,155 300,838 185,694 360,054 234,146 284,886 26,338 19,918 21,849 91,442 12,510 36,105 52,411 54,628 4,438 6,282 537,386 853,315 (187,231) (552,477) (21,269) (26,870) - (23,592) (208,500) (602,939) - - (208,500) (602,939) (7,691) (84,277) (216,191) (687,216) (0.00) $ (0.01) $ 56,041,746 56,041,746
			June 30, 2020
			$ 822,321 521,483
			300,838
			360,054 284,886 19,918 91,442 36,105 54,628 6,282
			853,315
			(552,477) (26,870) (23,592)
			(602,939) -
			(602,939)
			(84,277)
			(687,216)
			(0.01) $
			56,041,746

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

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Pioneering Technology Corp.

Condensed Interim Statements of Changes in Equity For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

Expressed in Canadian Dollars

Note	Accumulated other comp- Contributed rehensive Total Number Amount Number Amount surplus loss Deficit Equity Common shares Prefered shares
Balance, October 1, 2020 Stock-based compensation expense 13(c) Stock options forfeited and expired 13(c) Comprehensivelossforthe period	56,041,746 17,974,857 $ 20,533,133 1 $ 2,086,442 $ (189,080) $ (14,457,533) $ 5,414,687 $ - - - - 1,994 - - 1,994 - - - - (721,414) - 721,414 - - - - - - (26,617) (1,032,218) (1,058,835)
Balance, June 30, 2021	56,041,746 17,974,857 $ 20,533,133 1 $ 1,367,022 $ (215,697) $ (14,768,337) $ 4,357,846 $
Note	Accumulated other comp- Contributed rehensive Total Number Amount Number Amount surplus loss Deficit Equity Common shares Prefered shares
Balance, October 1, 2019 Stock-based compensation expense 13(c) Stock options forfeited 13(c) Comprehensiveincomeforthe period	56,041,746 17,974,857 $ 20,533,133 1 $ 2,060,719 $ (118,183) $ (13,651,552) $ 6,265,842 $ - - - - 133,197 - - 133,197 - - - - (77,286) - 77,286 - - - - - - 77,195 (538,220) (461,025)
Balance, June 30, 2020	56,041,746 17,974,857 $ 20,533,133 1 $ 2,116,630 $ (40,988) $ (14,112,486) $ 5,938,014 $

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

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Pioneering Technology Corp.

Condensed Interim Statements of Cash Flows For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

Expressed in Canadian Dollars

				Nine	Months Ended			Three	Months Ended
			June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
			$		$		$		$
OPERATING ACTIVITIES
Net income (loss) for the quarter			(1,032,218)		(538,220)		(208,500)		(602,939)
Items not affecting cash
Depreciation of property and equipment	8		157,232		163,716		52,411		54,628
Amortization of patents and intangibles	9		13,315		18,296		4,438		6,282
Interest expense on lease obligations	12		64,182		80,599		21,154		26,697
Fair value movement - derivative liability	13(d)		(1,236)		76,133		-		23,592
Unrealized foreign exchange loss			(69,108)		-		(40,335)		-
Stock-based compensation expenses	13(c)		1,994		133,197		665		34,436
			(865,839)		(66,279)		(170,167)		(457,304)
Change in non-cash working capital balances
Trade and other receivables			514,907		(181,956)		100,739		287,025
Inventories			(278,173)		2,446,592		290,119		397,030
Prepaid expenses and deposits			813,476		(480,957)		(16,778)		(470,440)
Trade payables and accrued liabilities			(581,168)		259,070		46,971		(266,443)
			(396,798)		1,976,470		250,885		(510,132)
INVESTING ACTIVITIES
Purchase of property and equipment	8		-		(76,422)		-		(2,326)
Purchase ofpatents andintangibles	9		(22,500)		(11,004)		-		-
			(22,500)		(87,426)		-		(2,326)
FINANCING ACTIVITIES
Repayment of leaseliability	12		(119,780)		(116,811)		(39,927)		(38,937)
			(119,780)		(116,811)		(39,927)		(38,937)
NET CHANGE IN CASH DURING IN THE PERIOD			(539,078)		1,772,233		210,958		(551,395)
Foreign currency movement in cash balances			(13,491)		77,195		72,689		(84,277)
CASH- BEGINNING OF PERIOD			2,157,373		1,930,945		1,321,157		4,416,045
CASH - END OF PERIOD			1,604,804		3,780,373		1,604,804		3,780,373
SUPPLEMENTAL DISCLOSURE
Interest paid		$	65,563	$	81,843	$	21,269	$	54,973

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

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS

Pioneering Technology Corp. (“Pioneering” or the “Company”) is incorporated under the laws of Ontario, Canada and is an energy smart technology and consumer products company focused on developing advanced thermo-based technology solutions for opportunities that exist to improve the safety and/or energy efficiency of some of the most common household products and appliances.

Pioneering is a public company listed on the Toronto Venture Stock Exchange (TSX-V: PTE). The Company’s principal place of business is located at 7-2400 Skymark Ave., Mississauga, Ontario, Canada, L4W 5K5. The Company`s website is www.pioneeringtech.com.

2. BASIS OF PREPARATION

The financial statements have been prepared on the historical cost basis except for financial instruments, which are measured at fair value, as explained in the accounting policies set out in Note 3.

2.1 Statement of compliance

These financial statements, including comparative balances for the period ended June 30, 2020, have been prepared in accordance with and using policies in compliance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), including IAS 34, Interim Financial Reporting. The financial statements were approved and authorized by the Board of Directors of the Company on August 30, 2021.

2.2 Functional currency

The Company’s functional currency is U.S. dollars based on the primary economic environment in which the Company operates. The Company’s presentation currency is Canadian dollars.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in the preparation of these condensed interim financial statements are consistent with those for the year ended September 30, 2020 financial statements.

Use of estimates and judgments

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are outlined below. Actual results may differ from those estimates.

The following are management’s key estimates and judgements:

• Inventory valuation – inventories are valued at the lower of cost, using FIFO, and net realizable value, which requires the Company to utilize estimates related to future sell-through of units and costs necessary to sell the inventory. The Company records a write-down to reflect management’s best estimate of the net realizable value of inventory based on the above factors;

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

• Trade receivable valuation – expected credit losses associated with accounts receivable require management to assess certain forward looking and macroeconomic factors to determine whether there is a significant increase in credit risk as well as the expected provision on the balance outstanding as at June 30, 2021 (refer to note 6);

• Functional currency – judgment is required in determining the Company’s functional currency based on the economic environment in which it primarily generates and expends cash;

• Determination of variable consideration – judgment is exercised in estimating variable consideration which is determined having regard to past experience with respect to the product returned to the Company where the customer maintains a right of return pursuant to the customer contract or where the product has a variable component. Revenue will only be recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved;

• Recovery of deferred income tax assets – assessing whether the realization of tax losses against future taxable income is probable (refer to note 14);

• Discount rate of lease liability - the lease liability is measured at the present value of expected lease payments and discounted using the interest rate implicit in the lease, unless this is not readily determinable, in which case the Company’s incremental borrowing rate on commencement of the lease is used. The Company determines its incremental borrowing rate as the rate of interest it would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment;

• Warranties – significant judgements and assumptions may be involved in the determination of future obligations associated with product sales recognized in the current year. Additionally, management has assessed that all warranties associated with products sold are “assurance-type” warranties, as defined within IFRS 15, and therefore, recognized and measured in accordance with IAS 37, Provisions, contingent liabilities and contingent assets;

• Useful lives of assets - significant estimates are involved in the determination of the useful lives of property and equipment and patents and intangible assets to determine their expected depreciation and amortization rates.

The Company has also assessed the impact of the ongoing COVID-19 pandemic on the estimates and judgments described above. Although the Company expects pandemic related disruptions to continue during the future quarters, the Company believes that the long-term estimates and assumptions do not require significant revisions. However, given the uncertainty of the pandemic at this time, revisions may be required in future reporting periods to the extent that the negative impacts on the Company’s operations arising from the pandemic continue or worsen. Any such revisions could result in a material impact on the results of operations and financial condition of the Company.

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Pioneering Technology Corp. Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited) (Expressed in Canadian Dollars)

4. CAPITAL MANAGEMENT

The Company defines capital as total shareholders’ equity and long-term debt. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the growth and development of its operations and to bring new products to market. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company will continue to assess new opportunities and seek to acquire an interest in growth situations if it feels there is sufficient economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the period ended June 30, 2021.

5. FINANCIAL INSTRUMENTS

Financial instruments, by classification, comprise the following:

	Fair value hierarchy		June 30, 2021	September 30, 2020	September 30, 2020
Financial assets
Amortized cost
Cash		$	1,604,804	$	2,157,373
Trade and other receivables			649,004		1,231,172
Financial liabilities
Amortized cost
Trade payables and accrued liabilities			1,015,899		1,731,888
Fair value through profit or loss
Derivative liability	Level 2		-		1,236

A summary of the Company's risk exposures as it relates to financial instruments is reflected below:

Credit risk

Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily from trade receivable) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Credit risk relates to cash and trade receivable and arises from the possibility that any counterparty to an instrument fails to perform. The Company has adopted a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment terms and conditions are offered. The Company’s exposure to credit risk with its customers is influenced mainly by the individual characteristics of each customer. All of the Company’s customers are located in either Canada or the United States. When available, the Company reviews credit bureau ratings, bank accounts and financial information for each new customer. As at June 30, 2021, the Company's maximum exposure to credit risk was the carrying value of cash and trade receivables.

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

5. FINANCIAL INSTRUMENTS (CONT’D)

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The company establishes a representative estimate of expected credit losses using the simplified approach.

The Company’s trade receivables are concentrated among customers in the distribution and retail industry. As at June 30, 2021, four (2020 - two) customers accounted for greater than 10% of the Company’s accounts receivable balance. In total, these customers accounted for 78% of the Company’s accounts receivable balance as at June 30, 2021 (2020 – 65%).

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company's treasury function in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party.

Liquidity risk

Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they become due. The Company is growing and in order to meet its short and longer-term working capital requirements, the Company will attempt, if necessary, to secure further financing to ensure that those obligations are properly discharged.

Operationally, the Company manages its liquidity by continuously monitoring forecasted and actual gross profit, expenses, and cash flows from operations.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, commodity prices and/or stock market movements (price risk). Market risks material to Pioneering include the following:

Foreign currency risk

The Company is exposed to foreign currency risk on its Canadian dollar (CAD) denominated transactions and balances.

At present the Company has no plans in place to hedge its foreign exchange exposures. As the Company has expenditures and sales in both USD and CAD, the Company realizes the benefit of a partial natural hedge against this risk. The Company’s CAD monetary balances consist of the following:

		June 30, 2021	September 30, 2020	September 30, 2020
Cash	$	88,104	$	86,446
Trade and other receivables		144,663		167,239
Tradepayables and accrued liabilities		771,264		1,039,488

A sensitivity analysis is presented below on its exposure to foreign currency risk on the CAD.

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Pioneering Technology Corp. Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

5. FINANCIAL INSTRUMENTS (CONT’D)

Interest rate risk

The Company is exposed to interest rate risk arising from fluctuations in the bank’s prime rate related to its bank indebtedness. With all other factors held constant, a 1% fluctuation in the bank’s prime rate would not have a significant impact on the Company’s earnings.

Sensitivity analysis – foreign exchange risk

Based on management’s knowledge and experience of the financial markets, the Company believes the following movements are reasonably possible over a one-year period. The Company's operating activities are substantially denominated in both Canadian and US dollars. The Company's funds are kept in CAD and USD with a major Canadian Financial Institution.

The table below summarizes the effects on foreign exchange gains and losses as a result of a 10% change in the value of the foreign currencies where the Company has significant exposure. The analysis assumes that other variables remain constant.

remain constant.
	Income effect of a 10% increase in foreign	Loss effect of a 10% decrease in foreign
	exchange rates on translation of CAD monetary	exchange rates on translation of CAD monetary
	balances	balances
CAD	$62,500	$ (62,500)

6. TRADE AND OTHER RECEIVABLES

The Company’s trade and other receivables are from trade receivables and customer sales, government grants, and Harmonized Services Tax (“HST”) receivable due from government taxing authorities. The Company held no collateral for any receivable amounts outstanding as at June 30, 2021. The following comprises trade and other receivables:

receivables:
		June 30, 2021	September 30, 2020
HST recoverable	$	24,234	$	18,327
Government grants (note 18)		111,853		104,327
Trade accounts receivable, net of allowance		512,917		1,108,518
	$	649,004	$	1,231,172

Trade receivables greater than 30 days are considered past due. An aging analysis of the trade receivables is as follows:

follows:
		June 30, 2021	September 30, 2020
Less than 1 month	$	213,076	$	775,754
31-60 days		82,749		26,817
61-90 days		3,075		80,875
Over 90 days		219,017		230,072
Total trade accounts receivable		517,917		1,113,518
Less: Allowancefordoubtfulaccounts		5,000		5,000
Net trade accounts receivable	$	512,917	$	1,108,518

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

7. INVENTORIES

Inventories are comprised of finished goods only.

8. PROPERTY AND EQUIPMENT

Property and equipment are comprised of the following:

		Computer		Equipment
	hardware and			small tools		Fixtures				Leasehold	Right of use
Cost		software	andmoulds			andfittings	Automobiles		improvements				assets		Total
October 1, 2019	$	80,747	$	350,901	$	76,761	$	20,752	$	766,365	$		-	$	1,295,526
Adoption of IFRS 16		-		-		-		-		(405,826)		1,737,946			1,332,120
Additions		2,140		70,928		-		-		5,495			-		78,563
Disposals		-		-		-		-		-			-		-
Net currency translation		-		-		-		-		27,643			-		27,643
October 1, 2020		82,887		421,829		76,761		20,752		393,677		1,737,946			2,733,852
Additions		-		-		-		-		-			-		-
Disposals		-		-		-		-		-			-		-
Net currency translation		-		-		-		-		16,994			-		16,994
June 30, 2021	$	82,887	$	421,829	$	76,761	$	20,752	$	410,671	$	1,737,946		$	2,750,846

June 30, 2021	$	82,887	$	421,829	$	76,761	$	20,752	$	410,671	$	1,737,946	$	2,750,846
		Computer		Equipment
Accumulated	hardware and			small tools		Fixtures				Leasehold	Right of use
Depreciation		software	andmoulds			andfittings	Automobiles		improvements			assets		Total
October 1, 2019	$	58,559	$	262,799	$	31,618	$	16,810	$	99,168	$	-	$	468,954
Adoption of IFRS 16		-		-		-		-		(25,336)		-		(25,336)
Depreciation		10,185		47,708		13,543		1,183		33,653		125,635		231,907
Disposals		-		-		-		-		-		-		-
Net currency translation		-		-		-		-		7,682		-		7,682
October 1, 2020		68,744		310,507		45,161		17,993		115,167		125,635		683,207
Depreciation		4,773		25,047		7,110		621		25,455		94,226		157,232
Disposals		-		-		-		-		-		-		-
Net currency translation		-		-		-		-		336		-		336
June 30, 2021	$	73,517	$	335,554	$	52,271	$	18,614	$	140,958	$	219,861	$	840,775

		Computer		Equipment
	hardware and			small tools		Fixtures				Leasehold	Right of use
Net book value		software	andmoulds			andfittings	Automobiles		improvements			assets		Total
October 1,2019	$	22,188	$	88,102	$	45,143	$	3,942	$	667,197	$	-	$	826,572
October 1,2020	$	14,143	$	111,322	$	31,600	$	2,759	$	278,510	$	1,612,311	$	2,050,645
June 30, 2021	$	9,370	$	86,275	$	24,490	$	2,138	$	269,713	$	1,518,085	$	1,910,071

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

9. PATENTS AND INTANGIBLES

Patents and intangible assets are comprised of the following:

Cost	Safe-T-Sensor	Safe-T-Sensor	Development	Development	Trademarks	Trademarks		Patents		Website		Total
October 1, 2019	$	66,681	$	-	$	44,235	$	45,688	$	48,384	$	204,988
Additions		-		141,919		-		-		11,000		152,919
Disposals		-		-		-		-		-		-
October 1, 2020		66,681		141,919		44,235		45,688		59,384		357,907
Additions		-		22,500		-		-		-		22,500
Disposals		-		-		-		-		-		-
March 31, 2021	$	66,681	$	164,419	$	44,235	$	45,688	$	59,384	$	380,407
Accumulated amortization	Safe-T-Sensor		Development		Trademarks			Patents		Website		Total
October 1, 2019	$	66,681	$	-	$	14,045	$	40,578	$	10,932	$	132,236
Amortization		-		-		9,057		1,533		13,984		24,574
Disposals		-		-		-		-		-		-
October 1, 2020		66,681		-		23,102		42,111		24,916		156,810
Amortization		-		-		4,755		805		7,755		13,315
Disposals		-		-		-		-		-		-
March 31, 2021	$	66,681	$	-	$	27,857	$	42,916	$	32,671	$	170,125
Net book value	Safe-T-Sensor		Development		Trademarks			Patents		Website		Total
October 1,2019	$	-	$	-	$	30,190	$	5,110	$	37,452	$	72,752
October 1,2020	$	-	$	141,919	$	21,133	$	3,577	$	34,468	$	201,097
March 31, 2021	$	-	$	164,419	$	16,378	$	2,772	$	26,713	$	210,282

10. BANK INDEBTEDNESS

The company has a $500,000 (2020 - $500,000) revolving demand facility with a Canadian chartered bank bearing interest at the lender‘s prime rate plus 2% per annum. The Company has provided a general security to the lender over its personal property. No amounts have been drawn on the facility at June 30, 2021 (2020 - $Nil).

11. TRADE PAYABLES AND ACCRUED LIABILITIES

Trade payables and accrued liabilities are principally comprised of amounts outstanding for trade purchases relating to products sold and for amounts relating to operating activities. The following comprises trade payables and accrued liabilities:

		June 30, 2021	September 30, 2020	September 30, 2020
Trade payables	$	699,776	$	1,142,205
Other accrued liabilities		316,123		589,683
	$	1,015,899	$	1,731,888

The standard maturity terms of the Company’s trade payables are 30 to 60 days.

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

12. LEASE OBLIGATIONS

12. LEASE OBLIGATIONS
		June 30, 2021		September 30, 2020
Property and office space lease bearing interest at an
estimated rate of 5.2%. The lease extends through fiscal
2033.	$	1,614,622	$	1,670,220
Less: current portion		(81,286)		(75,278)
	$	1,533,336	$	1,594,942

Included in interest expense is $64,182 (2020 - $88,598) of interest expense on lease obligations. Total cash outflows relating to leases consist of payments in the amount of $119,780 (2020 - $116,811). Included in administration expense is $46,627 (2020 - $44,462) relating to variable lease payments not included in the measurement of lease liabilities.

The lease is secured by the underlying asset. Future minimum lease payments for the next five years and thereafter are as follows:

2021	$	40,586
2022		164,340
2023		168,421
2024		172,671
2025		176,997
Thereafter		1,474,549
		2,197,564
Less: imputedinterest		582,942
	$	1,614,622

13. SHARE CAPITAL

a) Authorized

Unlimited number of voting common shares and non-voting series 1 preferred shares that are issuable in series. The series 1 preferred shares can be redeemed, at the sole discretion of the Company, upon payment to the holder of $0.06 per preferred share (a maximum aggregate redemption price of $1,231,988) and are not entitled to dividends. The statement of changes in equity details the number and value of the common shares and series 1 preferred shares outstanding as at the reporting date.

b) Stock option plan

The Company has a stock option plan in place under which the Board of Directors may grant options to acquire common shares of the Company to qualified directors, officers, employees and other service providers. The stock options vest according to the provisions of the underlying directors’ resolution approving the issuance and have a maximum life of five years. The plan allows for the issuance of up to 11,208,349 (2020 - 11,208,349) common shares of the Company.

At June 30, 2021, the Company had 7,183,349 (September 30, 2020 – 4,063,349) stock options available for issuance.

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

13. SHARE CAPITAL (CONT’D)

c) Contributed surplus

Contributed surplus is comprised of the following:

		June 30, 2021	September 30, 2020	September 30, 2020
Stock options	$	1,237,510	$	1,956,930
Broker warrants		129,512		129,512
	$	1,367,022	$	2,086,442

Stock option activity for the nine months ended June 30, 2021 and 2020 were as follows:

	Weighted Weighted Average Average Exercise Number of Exercise Number of Price Options Price Options June 30, 2021 June 30, 2020
Balance, beginning of period Transactions during the period Granted Forfeited Expired	0.30 $ 7,145,000 - $ - 0.30 $ (1,050,000) 0.24 $ (2,070,000) - - 3,425,000 3,720,000 - $ - $ 0.14 $ 0.54 $
Outstanding, end ofperiod	0.32 $ 4,025,000 7,145,000 0.30 $
Exercisable, end ofperiod	0.33 $ 3,875,000 5,370,000 0.35 $

The following table provides additional information about the outstanding stock options as at June 30, 2021 and September 30, 2020:

		June 30, 2021		September 30, 2020	September 30, 2020	September 30, 2020
		Weighted			Weighted
	Number of	Average		Number of	Average
Exercise	Options	Remaining	Number of	Options	Remaining	Number of
Price	Outstanding	Life (Years)	Exercisable	Outstanding	Life (Years)	Exercisable
$0.14	3,225,000	3.65	3,075,000	3,825,000	4.40	3,675,000
$0.22	-	-	-	1,870,000	0.50	1,870,000
$0.29	-	-	-	200,000	0.62	200,000
$0.33	-	-	-	300,000	0.36	300,000
$1.07	800,000	1.16	800,000	950,000	1.91	950,000
	4,025,000	3.16	3,875,000	7,145,000	2.77	6,995,000

Stock-based compensation expense was allocated to the financial statements as follows:

	June	30, 2021		June 30, 2020
Administration	$	-	$	68,523
Sales and marketing		1,994		38,213
Research and development		-		26,461
	$	1,994	$	133,197

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

14. INCOME TAXES

As at June, 2021, the Company has accumulated non-capital losses for income tax purposes which can be carried forward to be applied against future taxable income for income tax purposes. At June 30, 2021, the Company has not recognized $10,611,029 of the tax losses. These non-capital losses expire as follows:

2027	$	313,370
2028		1,424,300
2029		579,685
2031		106,628
2032		813,981
2033		1,269,404
2034		854,465
2038		2,462,781
2039		2,015,608
2040		770,807
	$	10,611,029

15. COMMITMENTS AND CONTINGENCIES

Pioneering leases its premises under a non-cancellable operating lease that expires in July 2028. Under the terms of the lease, the Company is responsible for its proportionate share of common area maintenance costs, including realty taxes.

In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with customers, suppliers and former employees. Management believes that adequate provisions have been recorded in the accounts where required. During 2016, a former supplier has commenced an action against the Company relating to a contractual dispute. The Company intends to vigorously defend itself against such claim. As at June 30, 2021, no provision has been recorded in connection with this claim.

16. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION

Related party transactions and balances are as follows:

Related party transactions and balances are as follows:
		June 30, 2021		June 30, 2020
Type of payment:
Compensation	$	56,250	$	97,250
Short-term employee benefits		5,826		11,652
Post-employment benefits		1,688		1,688
Stock based compensation		-		12,372
Directors fees		683		2,250
		64,447		125,212
Amounts due to relatedparties atquarter end	$	1,966	$	11,802

The amounts due to related parties are included in the trade payables and accrued liabilities. The Company defines Key Management as its CEO, President and its Board of Directors.

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

17. SEGMENTED INFORMATION

The Company operates in one business segment being the development, manufacture and sale of products intended to save energy and offer consumer convenience and safety. In addition, the Company operates in only one geographical segment, Canada, although it does service its U.S. clients by shipping and invoicing from its facilities in Mississauga, Ontario. Some deliveries are routed through an independent warehouse in the United States. The breakdown of the Company’s revenues by geographic areas for the periods ended June 30, 2021 and 2020 are as follows:

	June 30, 2021	June 30, 2020
Canada	16%	4%
United States	84%	96%
	100%	100%

The Company’s long-lived assets are located in Canada.

18. COVID-19 PANDEMIC & GOVERNMENT GRANTS

The outbreak of COVID-19 has resulted in worldwide emergency measures to combat the spread of the virus. These measures, including significant restrictions on commercial activity, have caused massive disruption to businesses globally, resulting in a broad-based and global economic slowdown.

The Company has also introduced its own measures, procedures, and protocols to foster the health and safety of its employees, vendors, and customers. These measures are based on the Company’s health and safety policies as well as the recommendations from public health authorities. These enhanced protocols include travel restrictions, workplace hygiene practices, employee case tracking, additional personal protective equipment, limited access to facilities, and alternative work options for employees where possible.

The Pandemic has exposed the Company’s operations to various risks which include but are not limited to, delay in customer shipments, increase in operating costs, interruption of project work, credit risk associated with customer non-payment, access to financing and change in the timing of cash flows.

During the period ended June 30, 2021, the Company’s operations continued to be significantly impacted. The extent to which COVID-19 may further impact the Company’s operations, its financial position, and performance remains uncertain, and will depend on further developments, including the duration and spread of the outbreak, its impact on the Company’s customers, suppliers and employees and actions taken by governments. Management continues to closely monitor the situation in the jurisdictions in which the Company operates.

Canada Emergency Wage Subsidy (“CEWS”)

In April 2020, the Government of Canada announced CEWS in order to help employers keep and/or return Canadianbased employees to payrolls in response to challenges posed by the COVID-19 pandemic.

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Pioneering Technology Corp.

Condensed Interim Notes to the Financial Statements For the three and nine months ended June 30, 2021 and June 30, 2020 (Unaudited)

(Expressed in Canadian Dollars)

18. COVID-19 PANDEMIC & GOVERNMENT GRANTS (CONT’D)

During the period ended June 30, 2021, the Company determined that it met the employer eligibility criteria and applied for CEWS between October 2020 and June 2021 and as a result, recognized $189,605 in government grants under the payroll support program, which has been allocated to the financial statements as follows:

		June 30, 2021		June 30, 2020
Administration	$	42,514	$	20,328
Sales and marketing		111,827		40,656
Research and development		31,268		10,164
	$	185,609	$	71,148

As at June 30, 2021, $66,223 of the amount recognized was recorded as a receivable within trade and other receivables (note 6).

Canada Emergency Rent Subsidy (“CERS”)

In September 2020, the Government of Canada announced CERS in order to provide relief for commercial tenants in response to challenges posed by the COVID-19 pandemic.

During the period ended June 30, 2021, the Company determined that it met the tenant eligibility criteria and applied for CERS for the program between October 2020 and June 2021 and as a result, recognized $111,168 in government grants under the rent subsidy program, which has been recorded within administration expenses on the statement of income (loss) and comprehensive income (loss).

As at June 30, 2021, $45,630 of the amount recognized was recorded as a receivable within trade and other receivables (note 6).

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