Plus Products Inc.

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PLUS PRODUCTS INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (Expressed in U.S. Dollars unless otherwise noted) (Unaudited)

Condensed Interim Consolidated Statements of Financial Position (Expressed in U.S. Dollars - Unaudited)

(Expressed in U.S. Dollars - Unaudited)
		As at September 30,	As at December 31,
	Note	2021	2020
		$	$
Assets
Current
Cash and cash equivalents		5,792,220	11,578,213
Trade receivables		1,623,992	1,932,986
Prepaids and deposits	5	475,432	290,076
Taxes recoverable		-	108,098
Note receivable	6	54,531	145,520
Inventory	7	2,826,061	2,225,331
		10,772,236	16,280,224
Non-current
Prepaids and deposits	5	504,360	867,495
Property and equipment	8	1,869,563	2,188,784
Intangible assets	9	625	40,441
Deferred tax asset		1,545,342	2,109,704
Total assets		14,692,126	21,486,648
Liabilities
Current
Accounts payable and accrued liabilities	10	1,463,407	1,304,848
Current portion of vehicle loans		29,524	28,751
Current portion of lease liabilities	11	272,395	242,125
Current portion of convertible debentures	12	-	19,331,949
		1,765,326	20,907,673
Non-current
Vehicle loans		86,415	108,688
Lease liabilities	11	211,989	420,305
Convertible debentures	12	14,044,414	-
Total liabilities		16,108,144	21,436,666
Shareholders' equity
Share capital	13	46,011,030	41,962,392
Reserves	13	12,563,627	9,362,064
Deficit		(59,240,439)	(50,594,383)
Accumulated other comprehensive loss		(750,236)	(680,091)
Total shareholders'equity		(1,416,018)	49,982
Total liabilities and shareholders' equity		14,692,126	21,486,648

Nature of operations and going concern (Note 1) Commitments (Note 19) Events after the reporting period (Note 20)

Approved on behalf of the Board of Directors on December 29, 2021:

"Craig Heimark" Director	"Jacob Heimark" Director

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

PLUS PRODUCTS INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in U.S. Dollars, except number of shares - Unaudited)

		Three Months Ended September 30,	Three Months Ended September 30,	Nine Months Ended September 30,	Nine Months Ended September 30,
	Note	2021	2020	2021	2020
		$	$	$	$
Revenue		3,205,860	3,650,028	10,581,973	12,715,331
Cost of sales		2,499,663	2,200,425	6,885,143	8,043,581
Gross margin		706,197	1,449,603	3,696,830	4,671,750
Operating expenses
Advertising and promotion		474,286	322,035	1,270,616	879,917
Depreciation and amortization	8,9	20,388	25,319	69,131	75,956
Consulting fees		300,643	151,504	749,367	446,091
General and administrative		321,915	277,719	986,016	1,121,244
Meals and travel expenses		63,229	14,806	164,650	152,701
Professional fees		290,275	201,208	901,603	998,443
Regulatory fees		4,601	20,184	6,810	34,219
Research and development		26,754	5,385	34,481	24,677
Salaries and benefits		1,384,745	1,296,287	4,340,576	4,451,068
Provision for expected credit
losses		391,749	-	419,465	-
Share-based compensation	13(f)(h)	78,567	618,590	731,244	1,395,097
Loss from operations		(2,650,955)	(1,483,434)	(5,977,129)	(4,907,663)
Other (income) expense
Interest and other income		(19,083)	(1,014)	(118,944)	(22,689)
Accretion finance income		-	(40,436)	(44,562)	(126,916)
Accretion expense	12	161,690	424,907	719,773	1,265,815
Interest expense		496,240	407,698	1,508,183	1,234,214
Foreign exchange loss (gain)		44,101	9,020	41,307	69,681
Gain on lease termination		-	-	-	(12,900)
Loss on sale of fixed assets		-	28,289	-	28,289
Impairment of property and
equipment		-	-	-	10,765
Loss before income taxes		(3,333,903)	(2,311,898)	(8,082,886)	(7,353,922)
Income tax (recovery) expense		102,367	118,585	563,170	(1,546,143)
Loss for theperiod		(3,436,270)	(2,430,483)	(8,646,056)	(5,807,779)
Currency translation adjustment		(382,524)	377,274	70,145	(430,878)
Loss and comprehensive loss for
theperiod		(3,053,746)	(2,807,757)	(8,716,201)	(5,376,901)
Weighted average shares outstanding:
Basic and diluted		64,712,911	49,056,135	56,447,893	39,254,970
Loss per share:
Basic and diluted		(0.05)	(0.05)	(0.15)	(0.15)

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

PLUS PRODUCTS INC.

Condensed Interim Consolidated Statement of Changes in Shareholder’s Equity (Expressed in U.S. Dollars, except number of shares - Unaudited)

	Class A Common Shares (Proportionate) Common Shares (Subordinate) Class B Common Shares (Subordinate B) Accumulated other comprehensive loss Total shareholders’ equity Number of shares Amount Number of shares Amount Number of shares Amount Reserves Deficit
Balance, December 31, 2019 Proportionate shares converted to subordinate (Notes 13(c)(d)) Subordinate shares converted to Class B Common shares (Notes 13(d)(e)) Proportionate shares issued for RSUs (Notes 13(c)(h)) Subordinate shares issued for RSUs (Notes 13(d)(h)) Subordinate shares and warrants issued for services (Notes 13(d)(g))1 Share-based compensation – options and RSUs vested (Notes 13(f)(h)) Restructuring of the GOOD earn-out shares held in escrow (Notes 3 and 13(h)) Loss and comprehensive loss for theperiod	# $ # $ # $ $ $ $ $ 95,866 2,427,311 33,650,120 39,355,400 - - 7,884,184 (41,138,127) (229,560) 8,299,208 (3,428) (88,702) 342,684 88,702 - - - - - - - - (75,500) (87,721) 15,100,000 87,721 - - - - 942 304,943 - - - - (304,943) - - - - - 12,500 42,678 - - (42,678) - - - - - - (299,321) - - - - - (299,321) - - - - - - 1,417,274 - - 1,417,274 - - - 153,077 - - (153,077) - - - - - - - - - - (5,807,779) 430,878 (5,376,901)
Balance, September 30, 2020 Proportionate shares converted to subordinate (Notes 13(c)(d)) Proportionate shares issued for RSUs (Notes 13(c)(h)) Subordinate shares issued for RSUs (Notes 13(d)(h)) Subordinate shares and warrants cancelled for services (Notes 13(d)(g))1 Share-based compensation – options and RSUs vested (Notes 13(f)(h)) Shares cancelled resulting from termination (Note 13(d)) Restructuring of the GOOD earn-out shares held in escrow (Notes 4 and 14(h)) Loss and comprehensivelossforthe period	93,380 2,643,552 33,929,804 39,252,815 15,100,000 87,721 8,800,760 (46,945,906) 201,318 4,040,260 (1,476) (41,828) 147,749 41,828 - - - - - - - - - - - - - - - - - - 6,000 27,161 - - (27,161) - - - - - (159,235) - - - - - - - - - - - - - 539,608 - - 539,608 - - (50,000) (57,844) - - 57,844 - - - - - - 8,987 - - (8,987) - - - - - - - - - - (3,648,477) (881,409) (4,529,886)
Balance December 31, 2020 Proportionate shares converted to subordinate (Notes 13(c)(d)) Subordinate shares issued for RSUs (Notes 13(d)(h)) Share-based compensation – options and RSUs vested (Notes 13(f)(h)) Shares cancelled resulting from termination (Notes 13(d)) Restructuring of the GOOD earn-out shares held in escrow (Notes 3 and 13(h)) Value of warrants and conversion option of convertible debentures amendment (Notes 12 and 13(g)) Conversion of convertible debt (Notes 12 and 13(d)) Loss and comprehensive loss for the period Balance September 30, 2021	91,904 2,601,724 33,874,318 39,272,947 15,100,000 87,721 9,362,064 (50,594,383) (680,091) 49,982 (5,145) (145,655) 514,518 145,655 - - - - - - - - 12,500 42,678 10,000,000 19,533 (62,211) - - - - - - - - - 771,048 - - 771,048 - - (37,062) (42,968) - - 42,095 - - (873) - - - 26,962 - - (26,962) - - - - - - - - - 3,095,598 - - 3,095,598 - - 5,252,631 4,002,433 - - (618,005) - - 3,384,428 - - - - - - - (8,646,056) (70,145) (8,716,201) 86,759 2,456,069 39,616,905 43,447,707 25,100,000 107,254 12,563,627 (59,240,439) (750,236) (1,416,018)

1 Subordinate shares were cancelled on June 30, 2020 and returned to treasury in December 2020.

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

PLUS PRODUCTS INC.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in U.S. Dollars - Unaudited)

PLUS PRODUCTS INC. Condensed Interim Consolidated Statements of Cash Flows (Expressed in U.S. Dollars - Unaudited)
		Nine Months Ended September 30,
	Note	2021	2020
		$	$
Cash flows used in operating activities
Loss for the period		(8,646,056)	(5,807,779)
Non-cash items:
Depreciation and amortization	8, 9	522,541	810,731
Accretion, net	4, 12	675,211	1,138,899
Interest expense		1,508,183	1,234,214
Income tax expense (recovery)		563,170	(1,564,917)
Shares issued for services	13(d)	-	(522,402)
Share-based compensation	13(f)(h)	771,048	1,417,274
Provision for expected credit losses		419,465	-
Gain recognized on convertible debt amendment		(73,707)	-
Impairment of property and equipment		-	10,765
Gain on lease termination		-	(12,900)
Loss on sale of fixed assets		-	28,289
Changes in operating assets and liabilities:
Trade receivables		113,598	494,369
Prepaids and deposits		(93,629)	646,849
Inventory		(600,730)	1,696,708
Note receivable		290,989	19,740
Accounts payable and accrued liabilities		148,592	(1,350,524)
Income taxes payable		1,191	-
Net cash used in operating activities		(4,400,134)	(1,760,684)
Cash flows provided by (used in) investing activities
Purchase of property and equipment	8	(153,489)	(54,158)
Proceeds from sale of equipment	8	-	313,639
Net cash provided by (used in) investing activities		(153,489)	259,481
Cash flows provided by (used in) financing activities
Common shares repurchased	13(d)	(873)	-
Repayments of vehicle payable		(21,500)	(20,913)
Payments for lease liabilities	11	(241,390)	(292,217)
Interest paid on vehicle loans and convertible debenture		(968,607)	(734,615)
Net cash provided by (used in) financing activities		(1,232,370)	(1,047,745)
Change in cash and cash equivalents		(5,785,993)	(2,548,948)
Cash and cash equivalents, beginning of the period		11,578,213	15,176,184
Cash and cash equivalents, end of theperiod		5,792,220	12,627,236

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

PLUS PRODUCTS INC. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

Plus Products Inc. (“Plus Products”, “Plus”, or the “Company”) was incorporated on March 29, 2018 under the laws of British Columbia. The Company’s head office is located at 1500 – 1055 West Georgia Street, Vancouver, BC V6E 4N7. On October 26, 2018, the Company completed an initial public offering whereby its subordinate voting shares became listed on the Canadian Securities Exchange (the “CSE”) under the symbol “PLUS” and then subsequently on the OTC Market Group (“OTCQB”) in the United States (“U.S.”) under the symbol “PLPRF”.

Plus Products is a Canadian-listed cannabis company with operations in the U.S. specializing in the development, manufacturing, marketing and sale of cannabis infused products in the state of California and Nevada. Its products consist of cannabis-infused edibles, which the Company sells to both the regulated medicinal and adult-use, or recreational markets.

In Q1 2020, there was a global outbreak of COVID-19, which continues to evolve. Plus has responded by reducing business travel while continuing core operations, which have remained relatively stable throughout 2020 and into 2021. The extent to which the COVID-19 coronavirus may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, continued travel restrictions, social distancing, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. As a precaution, Plus has required all of its employees to be vaccinated as of May 31[st] , 2021.

Going concern

The Company is currently in the product development and expansion stage with operations in California and Nevada for its cannabis line, along with a CBD line which can be shipped to most states in the U.S. The Company may seek additional capital, as well as consider mergers, acquisitions, joint ventures, partnerships and other business arrangements to expand its product offerings in the cannabis industry and grow its revenues.

These unaudited condensed interim consolidated financial statements (the “financial statements”) have been prepared on a going concern basis, which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses from inception and as at September 30, 2021, has not generated sufficient revenue to fund operations. The Company has an accumulated deficit of $59,240,439 as at September 30, 2021, (December 31, 2020 – $50,594,383) and during the three and nine months ended September 30, 2021, incurred net losses of $3,436,270 and $8,646,056, respectively, (three and nine months ended September 30, 2020 - $2,430,483 and $5,807,779, respectively). For the nine months ended September 30, 2021, the Company had net cash used in operating activities of $4,400,134 (nine months ended September 30, 2020 - $1,760,684).

During September 2021, the Company secured protection from its creditors under the Companies’ Creditors Arrangement Act (“CCAA”) to restructure its business and financial affairs. In conjunction with the CCAA proceedings, as of September 20, 2021 the Company’s shares and securities have been delisted from the CSE and OTC Markets Group. While the Company works to exit the CCAA proceedings in a favorable position, there is no guarantee that the Company will be able to evade its status as a going concern. However, at this time Plus is not planning on unwinding any of its business operations given the potential restructuring efforts.

The Company’s ability to continue as a going concern is dependent upon its ability in the future to restructure its business and to achieve profitable operations, to convert its debentures into shares, or obtain the necessary financing to meet its near and long term obligations such that it can repay its liabilities when they become due. Management plans to continue its efforts to consider additional external financing through the issuance of equity and debt to finance the operations, expansion, and capital expenditures of the Company; however, there can be no certainty that such funds will be available on a timely basis and on terms acceptable to the Company. These conditions indicate the existence of material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 – BASIS OF PRESENTATION

(a) Statement of compliance

These financial statements were approved by the Directors of the Company and authorized for issue on December 29, 2021.

These financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These financial statements follow the same accounting policies and methods of applications as the Company’s most recent annual financial statements. As such, these financial statements do not contain all the disclosures required by IFRS for annual financial statements and should be read in conjunction with the Company’s audited annual consolidated financial statements for the years ended December 31, 2020 and 2019.

(b) Basis of preparation and consolidation

These financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities which are measured at fair value, or amortized cost, as applicable. The presentation currency is the U.S. dollar; therefore, all amounts are presented in U.S. dollars unless otherwise noted. Balances presented in Canadian dollars are referenced as C$.

These financial statements include the accounts of the Company and its wholly owned subsidiaries, Plus Holdings Nevada, Plus Wonders LLC, Plus Products Services LLC, Carberry LLC, Plus Products Nevada LLC (“Plus Products Nevada”), Uplift Services LLC and Josiah Distribution LLC. All intercompany transactions and balances have been eliminated on these financial statements.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statements of loss and comprehensive loss from the effective date of acquisition up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of subsidiaries to bring their accounting policies into line with those used by the Company.

(c) Critical accounting judgments and estimates

The preparation of these financial statements in accordance with IFRS requires management to use judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgments are continuously evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Critical judgments exercised in applying accounting policies, apart from those involving estimates, that have the most significant effect on the amounts recognized in the financial statements are as follows:

i. Functional currency

The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the respective entity operates; the Company has determined the functional currency of each entity to be the U.S. dollar, except for the parent entity which has been determined to be the Canadian dollar. Such determination involves certain judgments to identify the primary economic environment. The Company reconsiders the functional currency of its subsidiaries if there is a change in events and/or conditions which determine the primary economic environment.

NOTE 2 – BASIS OF PRESENTATION (continued)

Estimates and assumptions exercised in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

ii. Impairment of long-lived assets

Property and equipment are tested for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or "CGU"). Management reviews indicators of impairment and uses judgments and estimates to consider discontinued use, idleness, costs above recoverable value and reduction in expected economic value. The recoverable value is the greater of an asset’s fair value less costs of disposal and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the asset. The recoverable amount of an asset or a CGU is the higher of its fair value, less costs of disposal, and its value in use. An impairment loss is recognized for the value by which the asset’s carrying value exceeds its recoverable value.

iii. Provisions

Provisions recognized in the financial statements involve judgments on the occurrence of future events, which could result in a material outlay for the Company. In determining whether an outlay will be material, the Company considers the expected future cash flows based on facts, historical experience and probabilities associated with such future events. Uncertainties exist with respect to estimates made by management and as a result, the actual expenditure may differ from amounts currently reported.

An expected credit loss (“ECL”) model applies to financial assets measured at amortized cost. In determining the ECLs management makes estimates related to the probability‐weighted amount of ECLs based on a range of outcomes, the discount rate that reflects the effective interest rate of the asset and other information available as of the reporting date relating to past events, current conditions and forecasts regarding future economic conditions.

iv. Estimated useful life, depreciation and amortization

Management estimates the useful lives of property and equipment, and intangible assets based on the period during which the assets are expected to be available for use. The amounts and timing of recorded expenses for depreciation of property and equipment or amortization of intangibles for any period are affected by these estimated useful lives. The estimates are reviewed at least annually and are updated if expectations change as a result of physical wear and tear, technical or commercial obsolescence and legal or other limits to use. It is possible that changes in these factors may cause significant changes in the estimated useful lives of the Company’s property and equipment, and intangible assets in the future.

v. Determination of share-based payments

The estimation of share-based payments (including stock options and warrants) requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The model used by the Company is the Black-Scholes valuation model at the date of the grant. The Company makes estimates as to the volatility, the probable life, dividend yield and the time of exercise, as applicable. The expected volatility is based on the average volatility of the Company shares in the public market to date. The expected life is based on Company estimates and historical data. These estimates may not necessarily be indicative of future actual patterns. The Company applies the proportionate method in allocating the fair value of share-based payments when issued in units with other equity or financial instruments.

NOTE 2 – BASIS OF PRESENTATION (continued)

vi. Income taxes

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.

The Company's effective income tax rate can vary significantly for various reasons, including the mix and volume of business in lower income tax jurisdictions and in jurisdictions for which no deferred income tax assets have been recognized because management believed it was not probably that future taxable profit would be available against which income tax losses and deductible temporary differences could be utilized.

NOTE 3 – GOOD CO-OP INC. ACQUISITION

On December 13, 2018, the Company completed the acquisition of all the assets of California-based cannabis-infused baked goods brand GOOD CO-OP, INC. (“GOOD”) for total consideration of $930,557.

The Company recorded the assets acquired at fair value based on an independent valuation and recorded the remaining amount as goodwill, following the guidelines of IFRS 3. During 2019, the Company fully impaired the full fair-value of the related goodwill. The original transaction included contingent consideration Subordinate Shares held in escrow (subject to repurchase criteria), a portion of which was subsequently cancelled. The remaining escrow shares (“the GOOD Escrow shares”) will be held against new RSUs that are granted with vesting and release periods through December 2021 (see Note 13(h)).

NOTE 4 – TAPROOT NEVADA

On May 24, 2019 (the “Effective Date”), the Company, through its wholly-owned subsidiary Plus Holdings Nevada entered into a Product Manufacturing and Distribution Agreement (“TapRoot Agreement”) with TapRoot Holdings NV, LLC (“TapRoot”). The TapRoot Agreement gives the Company access to TapRoot’s rights to engage in cultivation, production and distribution of medical and adult-use marijuana-infused products in the State of Nevada.

TapRoot has agreed to the dedication of approximately 1,800 square feet of its production facility (the “Facility”) to the exclusive manufacturing, and distribution of Plus branded products (the “Products”), including all services related to selling the Products in exchange for non-exclusive licensing rights to the Products, a 10% royalty on gross sales receipts of the Products and the Company has agreed to make certain capital expenditures to the Facility necessary to bring the Facility to an acceptable standard for production. On July 24, 2019, the Company advanced $1,250,000 (the "Royalty Advance") to TapRoot, as per the contract terms, which will be settled through future royalties, or will be repaid to the Company upon termination of the TapRoot Agreement. Additional advancements made will also be settled via future royalties. On inception of the Royalty Advance in 2019, the Company recognized a loss relating a deemed financing benefit when applying an estimate 15.5% market interest rate to the multi-year prepaid amount.

During the year ended December 31, 2020, the Company completed an assessment on collection/recovery difficulties on the Royalty Advance. After assessing for future outcomes and probabilities of at-risk amounts, including assumptions to probability weight loss scenarios, the Company recorded a provision of $137,072 for the year ended December 31, 2020 which brings the total provision balance to approximately 27% of the at-risk amount. An additional assessment was performed as of September 30, 2021 and an additional provision of $395,097 was recorded. The Company will continue to monitor the Royalty Advance and if applicable, adjust its value each period end based on updated expected credit loss assumptions.

Continuity of the TapRoot related advances is as follows:

	As at September 30,	As at December 31,
	2021	2020
	$	$
Opening balance	781,033	799,597
Royalty payments received	(12,601)	(42,795)
Accretion (finance income)	44,562	161,303
Provision	(395,097)	(137,072)
Total	417,897	781,033

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 5 – PREPAIDS AND DEPOSITS

	As at September 30,	As at December 31,
	2021	2020
	$	$
Prepaid expenses	190,222	215,742
Prepaid supplies	31,772	53,312
Royalty advance (see Note 4)	417,897	781,033
Deposits	339,901	107,484
Total	979,792	1,157,571
Less long-term Royalty Advance (see Note 4)	(417,897)	(781,033)
Less long-term deposits	(86,463)	(86,462)
Total long-term portion	(504,360)	(867,495)
Currentportion	475,432	290,076

NOTE 6 – NOTE RECEIVABLE

On June 5, 2019, the Company entered into a purchase option agreement (the “Emerald Purchase Option”) with Emerald Bay Wellness LLC (“Emerald Bay”) for the exclusive, irrevocable right, but not the obligation, to purchase substantially all the business assets of Emerald Bay Extracts from Emerald Bay. Concurrent with the Emerald Purchase Option, the Company advanced $400,000 to Emerald Bay via a secured term promissory note (the “Note Receivable”), which would be used towards the purchase price, or repaid at maturity on March 5, 2020. In October 2019, the maturity date was extended to June 5, 2020 with an annual interest rate of 3%. The Emerald Purchase Option had an expiry date of September 5, 2019, which the Company chose to let expire.

On April 16, 2020, the Company amended its note receivable with Emerald Bay. The new due date is extended three months to September 5, 2020 and the interest rate is increased to 8%. Emerald Bay can also reduce the note through discounts on THC and CBD distillate purchases that will be applied to the principal balance. As of December 31, 2020, the Company had received payments of $19,740 against the principal payment of the Note Receivable.

On September 4, 2020, the Company further amended its note receivable with Emerald Bay. Per the terms of the agreement, the new due date is extended to July 5, 2021 and the new interest rate is 12%. The Company has agreed to purchase cannabis product from Emerald Bay at no cost and the purchase price will be applied to the outstanding balance of the note. As of December 31, 2020, the Company purchased $34,740 of cannabis product at no cost and applied the purchase price to the outstanding balance.

During the nine months ended September 30, 2021, the Company purchased $290,989 of cannabis product at no cost and applied the purchase price to the outstanding balance of the note receivable. Additional purchases of cannabis product may continue to be applied to the remaining balance.

On inception, as the $400,000 short term advance was provided with the intent to acquire, the Company initially treated the Note Receivable as a financial asset with the face value equaling the fair value. During the year ended December 31, 2019, the Company determined there were potential collection difficulties on the Note Receivable and determined that circumstances existed that may result in a collection loss. After assessing for future outcomes and probabilities of at-risk amounts, including assumptions to probability weight loss scenarios, as at December 31, 2019, the Company recorded a $200,000 provision (approximately 50% of the at-risk amount) for expected credit loss against the Note Receivable. As of September 30, 2021, the Company re-evaluated the Note Receivable balance and determined that a provision was no longer necessary and that it was probable that the full outstanding balance was to be collected prior to the end of the year. Therefore, the provision for expected credit loss recorded in 2019 was released.

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 6 – NOTE RECEIVABLE (continued)

	As at September 30,	As at December 31,
	2021	2020
	$	$
Opening balance	145,520	200,000
Principal payment	(290,989)	(54,480)
Release of provision	200,000	-
Total	54,531	145,520

NOTE 7 – INVENTORY

	As at September 30,	As at December 31
	2021	2020
	$	$
Cannabis extract	455,723	443,914
Other raw material	229,046	256,576
Packaging	739,267	862,512
Work-in-progress	141,034	157,753
Finished goods	1,453,785	574,203
Inventory reserve	(192,794)	(69,627)
Total	2,826,061	2,225,331

During the three and nine months ended September 30, 2021, $1,759,508 and $5,495,667 (three and nine months ended September 30, 2020 - $2,068,225 and $7,530,277) of inventory was sold and recognized in cost of sales.

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 8 – PROPERTY AND EQUIPMENT

		Computer	Machinery
		and office	and	Leasehold	Right-of-use	Furniture and
	Vehicles	equipment	equipment	improvements	assets	fixtures	Total
	$	$	$	$	$	$	$
Cost
Balance at December 31, 2019	197,039	29,245	2,805,034	2,322,150	1,758,908	8,685	7,121,061
Additions	-	-	57,932	22,897	-	-	80,829
Disposals	-	-	(341,928)	-	(219,123)	-	(561,051)
Adjustments	-	-	-	-	(215,121)	-	(215,121)
Balance at December 31, 2020	197,039	29,245	2,521,038	2,345,047	1,324,664	8,685	6,425,718
Additions	-	-	137,002	26,502	-	-	163,504
Balance atSeptember 30, 2021	197,039	29,245	2,658,040	2,371,549	1,324,664	8,685	6,589,222
Accumulated depreciation
Balance at December 31, 2019	16,651	10,649	808,510	1,947,277	630,036	4,341	3,417,464
Depreciation	33,301	9,260	229,007	310,699	246,177	2,173	830,617
Disposals	-	-	-	-	(21,912)	-	(21,912)
Impairment	-	-	-	10,765	-	-	10,765
Balance at December 31, 2020	49,952	19,909	1,037,517	2,268,741	854,301	6,514	4,236,934
Depreciation	24,977	4,338	278,141	29,491	144,149	1,629	482,725
Balance atSeptember 30, 2021	74,929	24,247	1,315,658	2,298,232	998,450	8,143	4,719,659
Carrying values
At December 31, 2020	147,087	9,336	1,483,521	76,306	470,363	2,171	2,188,784
At September 30, 2021	122,110	4,998	1,342,382	73,317	326,214	542	1,869,563

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 8 – PROPERTY AND EQUIPMENT (continued)

During the three and nine months ended September 30, 2021, the Company recorded $nil impairment expense (three and nine months ended September 30, 2020 - $10,765) and there were no reversals of impairment.

During the three and nine months ended September 30, 2021, the Company did not sell any equipment (three months and nine months ended September 30, 2020 – sold equipment for net proceeds and carrying value of $161,927 and $341,928, respectively). During the nine months ended September 30, 2020, the Company disposed of (terminated) the Oregon facility right of use asset with a $197,211 carrying value. During the year ended December 31, 2020, the Company renegotiated the lease for right-of-use assets in the Adelanto facility. As a result, the Company recorded an adjustment reducing the right-of-use assets by $215,121.

During the three and nine months ended September 30, 2021, the Company included $173,006 and $453,410, respectively (three months and nine months ended September 30, 2020 - $280,780 and $734,775, respectively) of depreciation in cost of goods sold.

The Company’s right-of-use assets consist of the following:

		Sacramento	Sacramento	Adelanto	Oregon	Total
			facility	facility	facility
			$	$	$	$
Cost
Balance,December 31,2019		206,025		1,333,760	219,123	1,758,908
Disposals			-	-	(219,123)	(219,123)
Adjustments			-	(215,121)	-	(215,121)
Balance,December 31,2020		206,025		1,118,639	-	1,324,664
Disposals			-	-	-	-
Balance, September 30,	2021	206,025		1,118,639	-	1,324,664
Accumulated depreciation
Balance, December 31, 2019			74,305	544,775	10,956	630,036
Amortization			40,530	194,691	10,956	246,177
Disposal			-	-	(21,912)	(21,912)
Balance, December 31, 2020		114,835		739,466	-	854,301
Amortization			30,398	113,751	-	144,149
Balance, September 30,	2021	145,233		853,217	-	998,450
Carrying values
As at December 31,2020			91,190	379,173	-	470,363
As at September 30, 2021			60,792	265,422	-	326,214

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 9 – INTANGIBLE ASSETS

			Website	Total
			$	$
Cost
Balance at December 31, 2019			116,448	116,448
Additions			-	-
Balance at December 31, 2020			116,448	116,448
Additions			-	-
Balance at		September 30, 2021	116,448	116,448
Accumulated amortization
Balance at December 31, 2019			17,783	17,783
Amortization			58,224	58,224
Balance at December 31, 2020			76,007	76,007
Amortization			39,816	39,816
Balance at		September 30, 2021	115,823	115,823
Carrying values
At December 31, 2020			40,441	40,441
At	September 30, 2021		625	625

There was no impairment of intangibles or reversals of impairment during the three and nine months ended September 30, 2021, or 2020.

NOTE 10 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	As at September 30,	As at December 31,
	2021	2020
	$	$
Accounts payable	682,504	711,719
Accrued liabilities	780,903	593,129
Total	1,463,407	1,304,848

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 11 – LEASE LIABILITIES

NOTE 11 – LEASE LIABILITIES
	Sacramento		Adelanto	Oregon	Total
		facility	facility	facility
		$	$	$	$
Balance, December 31, 2019	157,931		937,626	217,249	1,312,806
Interest expense		21,010	110,693	7,871	139,574
Payments	(60,831)		(296,495)	(15,010)	(372,336)
Termination		-	-	(210,110)	(210,110)
Adjustments		-	(207,504)	-	(207,504)
Balance,December 31,2020	118,110		544,320	-	662,430
Less: non-currentportion	(69,739)		(350,566)	-	(420,305)
Currentportion,December 31,2020		48,371	193,754	-	242,125
Balance, December 31, 2020	118,110		544,320	-	662,430
Interest expense		11,520	51,824	-	63,344
Payments	(46,991)		(194,399)	-	(241,390)
Balance, September 30, 2021		82,639	401,745	-	484,384
Less: non-currentportion	(26,918)		(185,071)	-	(211,989)
Currentportion, September 30, 2021		55,721	216,674	-	272,395

On May 7, 2020, the Company terminated its Portland, Oregon facilities lease. Pursuant to the lease termination the Company paid a termination fee equal to 6 months’ rent and vacated the premises by June 30, 2020. The intended use of the leased property was for production of hemp-derived CBD products, which the Company will accommodate at an alternate facility to be identified at a future date.

During the year ended December 31, 2020, the Company signed on extension on its Adelanto, California manufacturing lease that included a reduction in monthly lease payments. As a result, the Company reduced the lease liability by $207,504.

The Company has obligations under its operating leases in Adelanto, California and Sacramento, California that expire during 2023. Under the agreements, the Company’s future lease commitments by year until expiration are as follows:

Year	$
2021	80,619
2022	324,054
2023	145,969
Total	550,642

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 12 – CONVERTIBLE DEBENTURES

NOTE 12 – CONVERTIBLE DEBENTURES
	As at September 30,	As at December 31,
	2021	2020
	$	$
Opening balance	19,331,949	17,188,223
Extinguished	(19,948,124)	-
Proceeds from issuance of convertible debentures units,
net of issuance costs and transaction fees	19,874,419	-
Amount allocated to warrants	(2,140,039)	-
Amount allocated to conversion options	(955,559)	-
Amount converted	(3,384,428)	-
Accretion and interest	1,196,051	1,701,370
Foreign exchange	70,145	442,356
Total	14,044,414	19,331,949

On February 25, 2021, the Company extended and amended the terms of its Convertible Notes. Under the new terms of the amendment, the maturity date of the debentures was extended to February 28, 2024, and the coupon rate was increased from 8% to 12% per annum, effective February 28, 2021. As part of the amendment, each holder of a Note Unit was granted a conversion right to convert outstanding debentures pro rata up to a maximum amount of C$6,250,000 of the principal amount to be converted at a conversion rate of C$0.95, exercisable up to March 31, 2021, and delete the debenture holder’s right to convert any part of the principal amount of a debenture into common shares at a price of C$6.50.

The Convertible Note amendment included a payment of a consent fee equal to C$499 for every C$1,000 principal amount of debentures held by such debenture holders and to be paid in the form of common share purchase warrants that consented to the debt amendment on or before February 22, 2021. In consideration of the consent fee, the Company issued one common share purchase warrant for every C$1.10 consent fee consideration received by Note Units held by debenture holders at the record date. Total aggregate consideration was 454 Warrants (each, an “Extension Warrant”) for every C$1,000 principal amount issued. As of September 30, 2021, the Company granted 8,463,922 Extension Warrants.

Based on a proportional allocation of the Residual Value after calculating the Black-Scholes fair value of each of the Extension Warrants and the conversion options, $2,140,039 (C$2,681,468) was allocated to the Extension Warrants and $955,559 (C$1,197,315) was allocated to the conversion option (see Note 13(g)). The Black-Scholes fair value of the Extension Warrants was calculated with the following assumptions: a three-year expected life, share price of C$1.12, exercise price of $1.10, 100% volatility, risk-free rate of 0.32% and an expected dividend yield of nil%. The Black-Scholes fair value of the conversion feature was calculated with the following assumptions: a three-year expected life, share price of C$1.12, conversion price of $6.50, 100% volatility, risk-free rate of 0.32% and an expected dividend yield of nil%.

On March 31, 2021, the Company recorded the conversion of convertible notes with a face value of C$4,990,000 into 5,252,631 Subordinate shares with a carrying value of $3,384,428. The residual value of the conversion option of $618,005 (C$774,360) was reclassified from reserves to Subordinate Share amount. In conjunction with the conversion, the Company recorded $11,955 of foreign exchange gain.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 12 – CONVERTIBLE DEBENTURES (continued)

In recognizing the debt amendment, the Company re-valued the amended debt and allocated between a liability and equity component. The total fair value of the liability component of the amended debt was $16,841,047 (C$21,101,832) based on an estimated 18% market discount rate less $62,226 (C$77,969) of transaction costs. The Residual Value of $3,107,077 (C$3,893,168) including transaction costs of $11,479 (C$14,385) was allocated to the equity components as above. During the nine months ended September 30, 2021, $1,196,051 (year ended December 31, 2020 - $1,707,370) of accretion and interest expense was recorded on the Convertible Notes. In conjunction with the amendment, during the nine months ended September 30, 2021, the Company recorded foreign exchange impact of $70,145.

NOTE 13 – SHARE CAPITAL

(a) Authorized share capital

At the 2020 annual general and special meeting of the shareholders on June 15, 2020, the shareholders of the Company authorized the creation of a new Class B voting common share (the Subordinate B Shares as defined below). At a previous annual general and special meeting of the shareholders, the shareholders of the Company cancelled unused share classes including Class B preferred voting shares and Class C preferred voting shares.

The authorized share capital of the Company consists of the following:

i. An unlimited number of common voting shares (“Subordinate Shares”) without par value – non-redeemable and noncumulative (the listed shares);
ii. An unlimited number of Class A common voting shares (“Proportionate Shares”) without par value –nonredeemable and noncumulative, and convertible at the option of the holder, at any time and subject to the restrictions set out in the Company’s Articles, into 100 Subordinate Shares for each Proportionate Share; and
iii. An unlimited number of Class B common voting shares (“Subordinate B Shares”) without par value – nonredeemable and noncumulative, and convertible at the option of the holder, at any time and subject to the restrictions set out in the Company’s Articles, into 1/200[th] of one Subordinate Share for each Class B Subordinate voting share.

(b) Issued share capital

As at September 30, 2021, the Company had the following shares issued and outstanding:

i. 86,759 Proportionate Shares each convertible into 100 Subordinate Shares (December 31, 2020 – 91,904)
ii. 39,616,905 Subordinate Shares (December 31, 2020 – 33,874,318)
iii. 25,100,000 Subordinate B Shares each convertible into 1/200[th] Subordinate Shares (December 31, 2020 – 15,100,000)

(c) Proportionate Share transactions

During the nine months ended September 30, 2021, the Company had the following Proportionate Share transactions:

i. During the nine months ended September 30, 2021, the Company’s shareholders converted 5,145 Proportionate Shares into 514,518 Subordinate Shares resulting in a reclass of $145,655 from Proportionate Share amount to Subordinate Share amount, representing the fair value of the shares converted.

During the year ended December 31, 2020, the Company had the following Proportionate Share transactions:

NOTE 13 – SHARE CAPITAL (continued)

ii. In various tranches over the year ended December 31, 2020, the Company’s shareholders converted 4,904 Proportionate Shares into 490,433 Subordinate Shares resulting in a reclass of $130,530 from Proportionate Share amount to Subordinate Share amount, representing the fair value of the shares converted.
iii. In various tranches over year ended December 31, 2020, the Company issued 942 Proportionate Shares to settle fully vested RSUs. The $304,943 fair-value of the RSUs was transferred from reserves to Proportionate Share amount.

(d) Subordinate Share transactions

During the nine months ended September 30, 2021, the Company had the following Subordinate Share transactions:

i. During the nine months ended September 30, 2021, the Company’s shareholders converted 5,145 Proportionate Shares into 514,518 Subordinate Shares resulting in a reclass of $145,655 from Proportionate Share amount to Subordinate Share amount, representing the fair value of the shares converted.
ii. During March 2021, the Company issued 12,500 Subordinate shares to settle fully vested RSUs. The $42,678 fair value of the RSUs was transferred from reserves to share capital.
iii. During March 2021, 37,062 Subordinate shares were cancelled and returned to treasury relating to the termination of related GOOD RSUs. The $42,968 fair value of the shares was reclassified from Subordinate Share amount to contributed surplus reserves. The Company reflected a $873 payment within contributed surplus reserves that was paid to former employees for returning the shares.
iv. In March 2021, convertible debentures (see Note 12 for details) were converted into 5,252,631 Subordinate shares with a value of $3,384,428. The residual value of the conversion option of $618,005 was reclassified from reserves to Subordinate Share amount.
v. During the nine months ended September 30, 2021, the Company reclassified $26,962 from RSU reserve to Subordinate Share amount relating to 16,165 GOOD Escrow shares released from escrow (the repurchase criteria lapsed) pursuant to the vesting of the related RSUs (see Note 3 and 13(h) for details).

During the year ended December 31, 2020, the Company had the following Subordinate Share transactions:

vi. In various tranches over the year ended December 31, 2020, the Company’s shareholders converted 4,904 Proportionate Shares into 490,433 Subordinate Shares resulting in a reclass of $130,530 from Proportionate Share amount to Subordinate Share amount, representing the fair value of the shares converted.
vii. During the year ended December 31, 2020, the Company reclassified $162,064 from RSU reserve to Subordinate Share amount relating to 97,159 GOOD Escrow shares released from escrow (the repurchase criteria lapsed) pursuant to vesting of the related RSU’s (see Note 3 and 13(h) for details).
viii. On February 21, 2020, the Company and JLV Ventures terminated the promotion agreement capping the fees and shares at 50% of the original amount agreed. As a result of the termination 159,235 Subordinate Shares were cancelled and returned to treasury in December 2020. Pursuant to the termination $299,321 was reversed from Subordinate Share amount and advertising and promotion expense. The 318,471 Subordinate Share warrants remain outstanding.

NOTE 13 – SHARE CAPITAL (continued)

ix. In June 2020, the Company’s shareholders converted 75,500 Subordinate Shares into 15,100,000 Subordinate B Shares resulting in a reclass of $87,721 from Subordinate Share amount to Subordinate B Share amount representing the fair value of the shares converted. Fair value was determined based on the fair value at the time of the conversion.
x. In various tranches over the year ended December 31, 2020, the Company issued 18,500 Subordinate shares to settle fully vested RSUs. The $69,839 fair value of the RSUs was transferred from reserves to share capital.
xi. During December 2020, 50,000 Subordinate shares were cancelled resulting from a termination agreement with a former employee. The $57,844 fair value of the shares was reclassified from Subordinate Share amount to contributed surplus reserves.

(e) Subordinate B Share transactions

During the nine months ended September 30, 2021, the Company had the following Subordinate B Share transactions:

i. On June 30, 2021, the Company approved the cancellation of 170,214 outstanding, vested and unissued Subordinate Share RSUs. The Subordinate Share RSUs were replaced with a grant of 10,000,000 Subordinate B Share RSUs with immediate vesting. The fully vested Subordinate B Share RSUs were issued and the $19,533 fair value of the RSU was transferred from reserves to share capital.

During the year ended December 31, 2020, the Company had the following Subordinate B Share transactions:

ii. In June 2020, the Company’s shareholders converted 75,500 Subordinate Shares into 15,100,000 Subordinate B Shares resulting in a reclass of $87,721 from Subordinate Share amount to Subordinate B share amount, representing the fair value of the shares converted.

(f) Stock options

On July 23, 2018, the Board of Directors (the “Board”) approved the 2018 Stock and Incentive Plan, which reserved for issuance, on a rolling basis, an aggregate of 10% (amended to 15% on May 7, 2019 – see below), of the number of Subordinate Shares outstanding, including the number of Subordinate Shares issuable on conversion of the Proportionate Shares. The options vest at the discretion of the Board.

On May 7, 2019, the Board approved amendments to the Amended and Restated Stock Option Plan and on August 15, 2019, the Shareholders holding over 50% of the voting securities of the Company approved and consented in writing to a further amendment to the Amended and Restated Stock Option Plan to increase the number of Common Shares reserved for the issuance of stock options pursuant to the Amended and Restated Stock Option Plan to 15% percent of the issued and outstanding Common Shares (including the number of Common Shares issuable upon conversion of the Class A Shares) in the capital of the Company from time to time.

During the three and nine months ended September 30, 2021, the Company recorded $14,998 and $581,358 (three and nine months ended September 30, 2020 - $483,932 and $963,430, respectively) of share-based compensation relating to vesting of Proportionate and Subordinate Share purchase options, of which a credit of $1,782 and expense of $28,453, respectively (three and nine months ended September 30, 2020 – expense of $21,611 and a credit of $49,386) is included in cost of sales. The credits arose due to forfeitures.

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 13 – SHARE CAPITAL (continued)

Proportionate Share purchase options

During the nine months ended September 30, 2021, the Company did not have any Proportionate Share purchase option transactions.

During the year ended December 31, 2020, the Company had the following Proportionate Share purchase option transactions:

i. During the year ended December 31, 2020, 4,817 Proportionate Share purchase options were forfeited due to terminations.
ii. On March 26, 2020 and May 7, 2020, the Board approved the cancellation (forfeiture by active employees) of 1,250 and 1,500 Proportionate Share purchase options, respectively, which were replaced with modified Subordinate Share purchase options including modified performance terms, service terms, price, and number (see Subordinate Share purchase options below).

As at September 30, 2021, the Company had the following Proportionate Share purchase options outstanding and exercisable:

Expiry date	Exercise price	Options outstanding	Options exercisable
	C$	#	#
July 25, 2023	35.39	876	551
September 17, 2028	131.23	1,500	1,141
September 23, 2028	131.23	800	653
		3,176	2,345

The weighted average life of the options outstanding is 5.55 years. The following is a summary of the Company’s Proportionate Share purchase options activities:

	As at	Weighted average	As at
Proportionate Share options	September 30, 2021	exercise price	December 31, 2020
	#	$	#
Beginning	3,176	80.86	10,743
Forfeited	-	-	(4,817)
Cancelled (for replacement)	-	-	(2,750)
Outstanding	3,176	80.86	3,176

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 13 – SHARE CAPITAL (continued)

Subordinate Share purchase options

During the nine months ended September 30, 2021, the Company had the following Subordinate Share purchase option transactions:

i. During the nine months ended September 30, 2021, the Board approved the cancellation (forfeiture by active employees) of 800,911 Subordinate Share purchase options that were originally subjected to vesting based on performance terms. The performance terms were not met based off of tiered gross revenue dollars.
ii. During the nine months ended September 30, 2021, 436,050 Subordinate Share purchase options were forfeited due to terminations.

During the year ended December 31, 2020, the Company had the following Subordinate Share purchase option transactions:

iii. On February 27, 2020, the Board granted 3,750 Subordinate Share purchase options at an exercise price of C$0.95 which vest immediately.
iv. On March 26, 2020 and May 7, 2020, the Board approved the cancellation (forfeiture by active employees) of 1,446,214 and 160,000 Subordinate Share purchase options, respectively, which were replaced with modified Subordinate Share purchase options including modified performance terms, service terms, price, and number (see below).
v. On June 2, 2020, the Board granted 2,060,999 Subordinate Shares purchase options (of which 1,165,322 relates to the cancellation and modification of 1,606,214 Subordinate Share purchase options and 2,750 Proportionate Share purchase options, and 895,677 were new or additional grants) with an exercise price of C$0.86 of which the majority vest 50% in 9 months and 50% subject to performance terms.
vi. On June 10, 2020, the Board granted 50,000 Subordinate Share purchase options with an exercise price of C$0.86 of which 50% vest in 9 months and 50% subject to performance terms.
vii. On July 8, 2020, the Board granted 202,128 Subordinate Share purchase options with an exercise price of C$0.65 which vest quarterly over 12 months.
viii. On July 17, 2020, the Board granted 72,000 Subordinate Share purchase options with an exercise price of C$0.56 which immediately vested.
ix. On September 29, 2020, the Board granted 325,000 Subordinate Share purchase options with an exercise price of C$0.56 of which 50% vest in 6 months and 50% subject to performance terms.
x. On November 24, 2020, the Board granted 15,000 Subordinate Share purchase options with an exercise price of C$0.56 of which 50% vest in four months and 50% subject to performance terms.
xi. During the year ended December 31, 2020, 1,102,000 Subordinate Share purchase options were forfeited due to terminations.

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 13 – SHARE CAPITAL (continued)

As at September 30, 2021, the Company had the following Subordinate Share purchase options outstanding and exercisable:

Expiry date	Exercise price	Options outstanding	Options exercisable
	$	#	#
July 25, 2022	0.27	150,000	150,000
April 30, 2029	C$4.59	4,000	2,428
August 6, 2029	C$4.35	4,500	2,360
September 11, 2029	C$4.50	9,000	9,000
February 27, 2030	C$0.95	3,750	3,750
June 2, 2030	C$0.86	1,056,338	1,056,338
June 10, 2030	C$0.86	25,000	25,000
July 8, 2030	C$0.65	202,128	202,128
July 17, 2030	C$0.56	72,000	72,000
September 29, 2030	C$0.56	112,500	112,500
		1,639,216	1,635,504

The weighted average life of the options outstanding is 7.99 years. The following is a summary of the Company’s Subordinate Share purchase option activities:

	As at	Weighted average	As at
Subordinate Share options	September 30, 2021	exercise price	December 31, 2020
	#	$	#
Beginning	2,876,177	0.58	2,855,514
Granted	-	-	2,728,877
Forfeited	(436,050)	0.60	(1,102,000)
Cancelled (for replacement)	(800,911)	0.59	(1,606,214)
Outstanding	1,639,216	0.58	2,876,177

NOTE 13 – SHARE CAPITAL (continued)

The Company did not grant any Subordinate Share options during the nine months ended September 30, 2021. The following are the weighted average assumptions used for the Black-Scholes option pricing model valuation of the Subordinate Share purchase options granted during the year ended December 31, 2020:

	December 31,
	2020
Risk-free interest rate	0.45%
Expected life of options	10.0 years
Annualized volatility	100.00%
Dividend rate	nil%

For the nine months ended September 30, 2021 and the year ended December 31, 2020, the Company applied a variable forfeiture rate estimate to stock options based on the remaining vesting life of the tranches, taking into consideration the history of stock option forfeitures. For the year ended December 31, 2020, the forfeiture rate on options granted ranges from 0% to 10%.

(g) Warrants

Subordinate Share warrants issued on Convertible Note

On February 28, 2019, the Company completed a private placement of 25,000 Note Units comprised of one C$1,000 Convertible Note and 77 Warrants (see Note 12). Each 1,925,000 Warrant Share entitles the holder thereof to acquire one subordinate voting share in the capital of the Company for an exercise price of $8.00 per Warrant Share for a period of five years following the closing date. If exercised during the first 12 months after the closing date, the underlying shares shall be subject to a 365-day contractual hold from the closing date.

The Warrants were determined to have a fair value of $943,308 on the issuance date (see Note 12). The agents received 100,823 Compensation Warrant Shares, each carrying the right to purchase one subordinate voting share in the capital of the Company at a price of $8.00 per Compensation Warrant Share for a period of two years from the closing date. The Compensation Warrant Shares were determined to have a fair value of $211,660 (C$278,735) based on the BlackScholes model with the following assumptions: a two year expected average life, share price of C$6.64; exercise price of C$8.00; 100% volatility; risk-free interest rate of 1.8%; and an expected dividend yield of nil%.

Subordinate Share warrants issued on JLV services agreement

On September 9, 2019, the Company issued 318,471 warrants to JLV Ventures in exchange for promotion services for the launch of the hemp-based CBD line at an exercise price of C$4.32 per share which expire September 6, 2024 with a fair value of $446,164. On February 21, 2020, the Company and JLV Ventures terminated the promotion agreement capping the fees and shares at 50% of the original amount. The 318,471 Subordinate Share warrants remain outstanding.

Subordinate Share warrants issued on amended Convertible Note

On February 25, 2021, the Company amended and extended the terms of its Convertible Notes. Total aggregate consideration in the amendments was 454 Extension Warrants for every C$1,000 principal amount issued. Each 8,463,922 Extension Warrant entitles the holder thereof the acquire one subordinate voting share in the capital of the Company for an exercise price of C$1.10 for a period of three years following the amendment date.

The Extension Warrants were determined to have a fair value of $2,140,039 (C$2,681,468) based on the Black-Scholes model assumptions disclosed in Note 12.

NOTE 13 – SHARE CAPITAL (continued)

Proportionate Share warrants

As at September 30, 2021 and December 31, 2020, the Company had nil Proportionate Share warrants outstanding.

Subordinate Share warrants

On October 24, 2020, 179,301 of Subordinate Share warrants related to the Convertible Notes expired. On February 28, 2021, 100,823 Subordinate Share warrants related to the Convertible Notes expired.

For the nine months ended September 30, 2021, the Company granted 8,463,922 Subordinate Share warrants in conjunction with the amended convertible debt (see Note 12 for details).

As at September 30, 2021, the Company had the following Subordinate Share warrants outstanding:

		Warrants exercisable
Expiry date	Exercise price	and outstanding
	C$	#
February 28, 2024	8.00	1,925,000
February 28, 2024	1.10	8,463,922
September 6, 2024	4.32	318,471
		10,707,393

The weighted average life of the warrants outstanding is 2.43 years.

The following is a summary of the Company’s Subordinate Share warrant activities:

	As at	Weighted average	As at
Subordinate Share warrants	September 30, 2021	exercise price	December 31, 2020
	#	$	#
Beginning	2,344,294	5.70	2,523,595
Issued	8,463,922	0.88	-
Expired	(100,823)	6.07	(179,301)
Outstanding	10,707,393	1.88	2,344,294

The fair value and Black-Scholes option pricing model assumptions for the Subordinate Share warrants outstanding are identical to those for Subordinate Share purchase options granted as disclosed in Note 13(f).

NOTE 13 – SHARE CAPITAL (continued)

(h) Restricted stock units

During the three and nine months ended September 30, 2021, the Company recorded $64,127 and $189,690 (three and nine months ended September 30, 2020 – $166,631 and $453,844, respectively) of share-based compensation relating to vesting of Proportionate and Subordinate Share RSUs of which $2,340 and $11,351, respectively (three and nine months ended September 30, 2020 - $10,362 and $71,563) is included in cost of sales.

Proportionate Share Restricted Stock Units

During the nine months ended September 30, 2021, the Company did not have any Proportionate Share RSU transactions.

During the year ended December 31, 2020, the Company had the following Proportionate Share RSU transactions:

i. In various tranches over year ended December 31, 2020, the Company issued 942 Proportionate Shares to settle fully vested RSUs. The $304,943 fair-value of the RSUs was transferred from reserves to Proportionate Share amount.

As at September 30, 2021, the Company had nil (December 31, 2020 – nil) Proportionate Share RSUs outstanding. The following is a summary of the Company’s Proportionate RSU activities:

Proportionate Share RSUs	RSUs at December 31, 2020
	#
Beginning	942
Granted	-
Issued Proportionate Shares	(942)
Forfeited	-
Outstanding	-

Subordinate Share Restricted Stock Units

During the nine months ended September 30, 2021, the Company had the following Subordinate Share RSU transactions:

i. On June 30, 2021, the Company approved the cancellation of 170,214 outstanding, vested and unissued Subordinate Share RSUs. The Subordinate Share RSUs were replaced with a grant of 10,000,000 Subordinate B Share RSUs with immediate vesting. The fully vested Subordinate B Share RSUs were issued and the $19,533 fair value of the RSU was transferred from reserves to share capital.
ii. On March 2, 2021, the Company issued 12,500 Subordinate Shares to settle fully vested RSUs. The $42,678 fair value of the RSUs was transferred from reserves to share capital.
iii. During the nine months ended September 30, 2021, the Company reclassified $26,962 from RSU reserve to Subordinate Share amount relating to 16,165 GOOD Escrow shares released from escrow (the repurchase criteria lapsed) pursuant to the vesting of the related RSUs. Of the original 155,797 GOOD Escrow shares (Note 3), 5,411 continued to be subject to repurchase criteria as at September 30, 2021.
iv. In September 2021 the Company granted 715,426 Subordinate Share RSUs with a grant date fair value of $0.35 per Subordinate Share. Of these RSUs, 340,426 vest quarterly over 9 months, 125,000 vest over 44 months and 250,000 vest subject to performance terms.

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 13 – SHARE CAPITAL (continued)

During the year ended December 31, 2020, the Company had the following Subordinate Share RSU transactions:

v. In June 2020, the Company granted 41,667 Subordinate Share RSUs with a grant date fair value of $0.64 per Subordinate Share which vest fully in 7 months.
vi. In July 2020, the Company granted 510,639 Subordinate Share RSUs with a grant date fair value of $0.44 per Subordinate Share which vest quarterly over 12 months. During the year ended December 31, 2020, the Company expensed $171,952 (2019 - $nil) as share-based compensation relating to these RSUs.
vii. During the year ended December 31, 2020, 212,389 Subordinate Share RSUs were forfeited due to termination with no reclass to reserves as all were unvested.
viii. As of December 31, 2020, 97,159 of the GOOD Escrow shares were released from escrow (the repurchase criteria lapsed) relating to vesting of GOOD RSUs which resulted in a reclass of $162,064 from RSU reserve to Subordinate Share amount. During the year ended December 31, 2020, the Company expensed $35,405 (2019 - $126,661) related to these releases from escrow.
ix. In 2020, the Company issued 18,500 Subordinate Shares to settle fully vested RSUs. The $69,839 fair value of the RSUs was transferred from reserves to share capital.

As at September 30, 2021, the Company had 1,252,928 (December 31, 2020 – 736,381) Subordinate Share RSUs outstanding, of which 529,006 (December 31, 2020 – 306,708) were vested and unissued. The following is a summary of the Company’s Subordinate Share RSU activities:

	RSUs at September	RSUs at December
Subordinate Share RSUs	30, 2021	31, 2020
	#	#
Beginning	736,381	549,185
Granted	715,426	552,306
Cancelled	(170,214)	-
Forfeited	-	(249,451)
Issued Subordinate Shares	(12,500)	(18,500)
Subordinate Shares Released from Escrow	(16,165)	(97,159)
Outstanding	1,252,928	736,381

The following is a summary of the Company’s Subordinate B Share RSU activities:

	RSUs at September 30,
Subordinate B Share RSUs	2021
	#
Beginning	-
Granted	10,000,000
Issued Subordinate B Shares	(10,000,000)
Outstanding	-

PLUS PRODUCTS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

NOTE 14 – RELATED PARTY TRANSACTIONS

Summary of key management personnel compensation:

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company's Board of Directors and corporate officers. The remuneration of directors and key management personnel made during the nine months ended September 30, 2021 and 2020, is set out below:

	Three months ended September 30,	Three months ended September 30,	Nine months ended September 30,	Nine months ended September 30,
	2021	2020	2021	2020
	$	$	$	$
Salaries and benefits	246,875	297,708	824,240	861,250
Share-based compensation	64,782	345,639	311,903	709,225
Total	311,657	643,347	1,136,143	1,570,475

During the nine months ended September 30, 2021, there was $nil share-based compensation recovery recorded by the Company (three and nine months ended September 30, 2020 - $nil share-based compensation expense and $526,822 of share-based compensation recovery, respectively. The recovery related to forfeited stock options by related parties not included in the amounts above).

NOTE 15 – FINANCIAL INSTRUMENT RISK MANAGEMENT

Classification of financial instruments

Financial assets include cash and cash equivalents, trade receivables, note receivable, royalty advance and deposits. Financial liabilities include accounts payable and accrued liabilities, vehicle loans, and convertible debentures.

Fair value:

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.

The carrying value of Company’s financial assets and liabilities as at September 30, 2021 and December 31, 2020, approximate their fair values, due to their short-term nature or because the effective interest rate applied to the balance approximates the market rate. During the nine months ended September 30, 2021 there were no transfers of amounts between levels (year ended December 31, 2020 – none).

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 15 – FINANCIAL INSTRUMENT RISK MANAGEMENT (continued)

Financial assets and liabilities, at their amortized costs, are shown below:

Financial Assets- Amortized Cost	As at September 30, 2021	As at December 31, 2020
	$	$
Cash and equivalents	5,792,220	11,578,213
Trade receivables	1,623,992	1,932,986
Note receivable	54,531	145,520
Royalty advance	417,897	781,033
Total	7,888,640	14,437,752
Financial Liabilities- Amortized Cost	As at September 30, 2021	As at December 31, 2020
	$	$
Accounts payable and accrued liabilities	1,463,407	1,304,848
Vehicle loans	115,939	137,439
Convertible debentures	14,044,414	19,331,949
Total	15,623,760	20,774,236

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 policies, counterparty limits, and controlling and reporting structures.

Credit risk:

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to cash and cash equivalents, trade receivables, note receivable, and prepaid royalties with customers. Cash is held with reputable banks in the United States and Canada which are closely monitored by management. Collection and credit risk relating to trade receivables, deposits with suppliers, note receivables, and prepaid royalties is assessed by the Company’s management based on prior experience, an assessment of the current economic environment, credit worthiness of suppliers and counter parties, and an estimation of future outcomes and probabilities of at-risk amounts, as applicable.

During the nine months ended September 30, 2021, and for the year ended December 31, 2020 the Company recorded the following provision for expected credit losses:

	September 30, 2021	December 31, 2020
	$	$
Royalty advance (Note 4) (within prepaids
and deposits)	395,097	137,072
Trade receivable	195,395	538,892
Total	590,492	675,964

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 (Expressed in U.S. Dollars unless otherwise noted - Unaudited)

PLUS PRODUCTS INC.

NOTE 15 – FINANCIAL INSTRUMENT RISK MANAGEMENT (continued)

The Company’s aging of trade receivables, net of reserves, was approximately as follows:

		As at		As at
	September 30,	2021	December 31,	2020
		$		$
0 to 60 days	1,450,476		1,755,867
Over 61 days	173,516		177,119
Total	1,623,992		1,932,986

During the nine months ended September 30, 2021, the Company booked and additional loss allowance of $195,395 for expected credit losses on trade receivables with one distributor, Calyx Brands, Inc. Combined with the December 31, 2020 and 2019 loss allowances, the total allowance against Calyx receivables as of September 30, 2021 is $1,875,989. As part of the assessment, the Company assessed future outcomes and probabilities of the at-risk amount, including assumptions to probability weight loss scenarios. The total at-risk amount is 100% of the original trade receivable. The Company will continue to monitor the receivable each reporting period, and if applicable, adjust its value based on updated expected credit loss assumptions.

Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and financial commitments (Note 19).

Historically, the Company's primary source of funding has been private placements of equity and public offerings of equity and convertible debentures for cash. The Company’s access to financing is always uncertain. As of September 2021 the Company has secured protection from its creditors under CCAA to restructure its business and financial affairs. As the Company evaluates its options throughout CCAA, there can be no assurance of continued access to significant equity or debt funding.

The Company has C$20,005,000 in convertible debentures (Note 12) due February 28, 2024. There is no assurance that the Company will be able to raise additional capital to pay off these debentures or otherwise restructure these debentures prior to the due date. The Company has $124,367 in vehicle lease commitments and $550,642 in facility lease obligations due over the next five years. There is no assurance that the Company will have sufficient working capital to fulfill these lease obligations through their respective maturities.

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 does not have material foreign exchange risk as the majority of the financial instruments are denominated in the functional currency of the respective entity.

NOTE 15 – FINANCIAL INSTRUMENT RISK MANAGEMENT (continued)

Interest rate risk:

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in interest rate. The Company pays interest on its convertible debenture at a fixed rate of 12% per annum. The Company does not have any material variable interest rates and is not exposed to any material interest rate risk on its cash and debt instruments.

NOTE 16 – CAPITAL MANAGEMENT

In order to support its operations and business development the Company manages its capital structure, and adjusts it, based on the funds available to the Company. 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 has losses and negative cash flows from operations since its inception. The capital structure of the Company currently consists of common and preferred shares. The Company manages the capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through private placements. 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 was no change to the Company’s management of capital during the year. The Company is not subject to any externally imposed capital requirements.

NOTE 17 – ECONOMIC DEPENDENCE

During the nine months ended September 30, 2021, sales through one distributor represented 97% of total revenue (nine months ended September 30, 2020 - one customer represented 90% of total revenue).

NOTE 18 – SEGMENTED INFORMATION

The Company operates primarily in one reportable operating segment, being the development, manufacturing, marketing and sale of cannabis infused products in the state of California and Nevada. All property and equipment is held within the United States of America.

NOTE 19 – COMMITMENTS

During the year ended December 31, 2019, the Company entered in to six vehicle loans, all of which are to be repaid over 72 months.

The Company’s future vehicle loan commitments by year as follows:

Year	$
2021	8,290
2022	33,165
2023	33,165
2024	33,165
2025	16,582
Total	124,367

NOTE 20 – EVENTS AFTER THE REPORTING PERIOD

On December 1, 2021 the Company purchased $54,531 of cannabis product from Emerald Bay at no cost. The purchase price was applied to the outstanding balance of the note receivable.

On December 17, 2021 the Company entered into an Acquisition Agreement (“the Agreement”) with Glass House Brands Inc. (“the Purchaser”) pursuant to which, the Purchaser will become the sole shareholder of the Company’s wholly owned subsidiaries and all business assets. Terms of the agreement include a payment of $32,951,894 that will be paid by the Purchaser by issuance of 20,005 unsecured convertible debentures notes with an aggregate face value C$20,504,851 equal to 100% of the principal value and accrued interest of the convertible debentures, issuance of 2,102,654 common shares in the capital of the Purchaser and restricted stock units in the capital of the Purchaser. Consideration is to be delivered on the closing date of the Agreement which is contingent on due diligence investigations by the Purchaser and approval by the majority shareholders of the convertible debentures. The deal is expected to close during the first quarter of 2022.

The Agreement includes a mutual termination and limited due diligence clause. The Agreement can be terminated by mutual agreement of both the Company and the Purchaser and is subject to approval by the Court in conjunction with the CCAA proceedings. The agreement includes a termination fee of C$600,000 that is payable by the Company if the Court approves an alternate transaction from the Agreement and such alternative transaction is completed.

Subsequent to the end of the period, the Company has filed for multiple stays of proceedings with the Court. The current period is extended through January 31, 2022.

AI assistant

Plus Products Inc. — Interim / Quarterly Report 2021

47664_rns_2021-12-29_efe6d3f4-732f-47dc-bdf9-ea77f5e29e14.pdf

PLUS PRODUCTS INC.

Approved on behalf of the Board of Directors on December 29, 2021:

PLUS PRODUCTS INC.

PLUS PRODUCTS INC.

PLUS PRODUCTS INC.

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

Going concern

NOTE 2 – BASIS OF PRESENTATION

(a) Statement of compliance

(b) Basis of preparation and consolidation

(c) Critical accounting judgments and estimates

i. Functional currency

NOTE 2 – BASIS OF PRESENTATION (continued)

ii. Impairment of long-lived assets

iii. Provisions

iv. Estimated useful life, depreciation and amortization

v. Determination of share-based payments

NOTE 2 – BASIS OF PRESENTATION (continued)

vi. Income taxes

NOTE 3 – GOOD CO-OP INC. ACQUISITION

NOTE 4 – TAPROOT NEVADA

PLUS PRODUCTS INC.

NOTE 5 – PREPAIDS AND DEPOSITS

NOTE 6 – NOTE RECEIVABLE

PLUS PRODUCTS INC.

NOTE 6 – NOTE RECEIVABLE (continued)

PLUS PRODUCTS INC.

NOTE 8 – PROPERTY AND EQUIPMENT

PLUS PRODUCTS INC.

NOTE 8 – PROPERTY AND EQUIPMENT (continued)

PLUS PRODUCTS INC.

NOTE 9 – INTANGIBLE ASSETS

NOTE 10 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

PLUS PRODUCTS INC.

NOTE 11 – LEASE LIABILITIES

PLUS PRODUCTS INC.

NOTE 12 – CONVERTIBLE DEBENTURES

PLUS PRODUCTS INC.

NOTE 12 – CONVERTIBLE DEBENTURES (continued)

NOTE 13 – SHARE CAPITAL

(a) Authorized share capital

(b) Issued share capital

(c) Proportionate Share transactions

NOTE 13 – SHARE CAPITAL (continued)

(d) Subordinate Share transactions

NOTE 13 – SHARE CAPITAL (continued)

(e) Subordinate B Share transactions

(f) Stock options

PLUS PRODUCTS INC.

NOTE 13 – SHARE CAPITAL (continued)

Proportionate Share purchase options

PLUS PRODUCTS INC.

NOTE 13 – SHARE CAPITAL (continued)

Subordinate Share purchase options

PLUS PRODUCTS INC.

NOTE 13 – SHARE CAPITAL (continued)

NOTE 13 – SHARE CAPITAL (continued)

(g) Warrants

Subordinate Share warrants issued on Convertible Note

Subordinate Share warrants issued on JLV services agreement

Subordinate Share warrants issued on amended Convertible Note

NOTE 13 – SHARE CAPITAL (continued)

Proportionate Share warrants

Subordinate Share warrants

NOTE 13 – SHARE CAPITAL (continued)

(h) Restricted stock units

Proportionate Share Restricted Stock Units

Subordinate Share Restricted Stock Units

PLUS PRODUCTS INC.

NOTE 13 – SHARE CAPITAL (continued)

PLUS PRODUCTS INC.

NOTE 14 – RELATED PARTY TRANSACTIONS

Summary of key management personnel compensation:

NOTE 15 – FINANCIAL INSTRUMENT RISK MANAGEMENT

Classification of financial instruments

Fair value:

PLUS PRODUCTS INC.

Plus Products Inc. Interim / Quarterly Report 2021