Pontus Protein Ltd. - Interim / Quarterly Report 2021

PONTUS PROTEIN LTD. (FORMERLY AMWOLF CAPITAL CORP.) UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Month Period Ended February 28, 2021

(Expressed in Canadian dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements. The accompanying unaudited condensed interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management and have been approved by the Board of Directors of the Company.

These condensed interim consolidated financial statements have not been reviewed by the Company’s auditors.

PONTUS PROTEIN LTD. (FORMERLY AMWOLF CAPITAL CORP.) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT FEBRUARY 28, 2021 (Expressed in Canadian dollars) (Unaudited)

S ATFEBRUARY 28, 2021 xpressed in Canadian dollars) Unaudited)
	February 28 November 30 2021 2020
CURRENT ASSETS CURRENT LIABILITIES Accounts payable and accrued liabilities_(Note 6) Current portion of obligations under capital lease(Note 8) CONVERTIBLE PROMISSORY NOTES(Note 7) CAPITAL LEASE LIABILITY(Note 8) LOAN PAYABLE(Note 9) DUE TO RELATED PARTIES(Note 11) SHAREHOLDERS' EQUITY SHARE CAPITAL(Note 10) RESERVE - WARRANTS(Note 10) EQUITY PORTION OF CONVERTIBLE DEBT(Note 7) DEFICIT Cash Sales tax receivable Deposit and prepaid expense(Note 3) PLANT AND RIGHT-OF USE ASSET(Net of accumulated_ amortization) (Note 4) INTANGIBLE ASSET_(Net of accumulated amortization) (Note 5)_ DUE FROM RELATED PARTIES	$ 2,099,421 $ 111,796 113,690 77,077 31,822 112,323
	2,244,933 301,196 2,096,741 2,110,593 750,000 687,500 98,812 -
	$ 5,190,486 $ 3,099,289
	$ 380,275 $ 457,672 98,574 -
	478,849 457,672 53,774 51,834 1,839,848 1,961,570 25,262 24,686 215,048 196,848
	2,612,781 2,692,610
	6,083,707 1,902,131 51,841 51,841 55,170 55,170 (3,613,013) (1,602,463)
	2,577,705 406,679
	$ 5,190,486 $ 3,099,289

The accompanying notes are an integral part of these financial statements

Approved and authorized for issue on behalf of the Board on May 4, 2021

"Connor Yuen" "Jason Ding" CEO ____________________________________CFO

PONTUS PROTEIN LTD. (FORMERLY AMWOLF CAPITAL CORP.) CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 2021 (Expressed in Canadian dollars) (Unaudited)

	February 28 November 30 2021 2020 $ 435,554 $ 13,875 49,229 16,410 737 57 195,926 68,149 279,873 10,151 52,555 19,690 1,400 2,444 7,179 13,161 104,845 205,922 838,581 - 32,047 - 5,000 4,620 1,436 8,530 6,188 740 - 1,346
EXPENSES Advertising and promotion Amortization Bank charges Consulting fees Legal fees Interest on long-term debt Memberships Office and miscellaneous Professional fees Stock listing fee Research and development Repairs and maintenance Sub-contract Telephone Travel LOSS FROM OPERATIONS OTHER INCOME Expense recoveries Gain on CEBA loan NET LOSS FOR THE PERIOD Loss Per Share – Basic and Diluted Weighted Average Number of Common Shares Outstanding
	2,010,550 365,095
	(2,010,550) (365,095)
	- 50,350 - 6,589
	- 56,939
	$(2,010,550) $ (308,156)
	$ (0.006) $ (0.006)
	57,016,855 33,840,031

Share Capital

	Share Capital
	Number of shares Amount Equity portion of convertible promissory notes Reserves -warrants Deficit Total
Balance, August 31, 2020	# $ $ $ $ $ 34,450,929 1,582,787 - 152,796 (1,294,308) 441,275
Private placements Share issuance costs Convertible promissory notes Balance, November 30, 2020	1,544,159 345,837 - (100,955) - 244,882 - (26,493) - - - 26,493 - - 55,171 ~~-~~ - - 55,171
	35,995,008 1,902,131 55,171 51,841 (1,602,463) 406,680
Balance, November 30, 2020	35,995,008 1,902,131 55,171 51,841 (1,602,463) 406,680
Private placements Share-based payment Share issuance costs Convertible promissory notes Net loss for theperiod	21,632,665 3,244,900 - 293,925 - 3,538,825 - 838,581 - - - 838,581 - 195,831 - - - 195,831 - - - - - - - - - - (2,010,550) (2,010,550)
Balance, February 28, 2021	57,627,753 5,789,781 55,171 345,766 3,613,013 2,577,705

PONTUS PROTEIN LTD. (FORMERLY AMWOLF CAPITAL CORP.) CONDENSED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 2021 (Expressed in Canadian dollars) (Unaudited)

	February 28, 2021 November 30, 2020
OPERATING ACTIVITIES Net loss for the year Items not affecting cash: Amortization of plant and right-of use asset Interest un-winding Changes in non-cash working capital_(Note 15)_ Cash flow used by operating activities INVESTING ACTIVITIES Construction of plant Right-of-use asset (for capital lease) Cash flow used by investing activities FINANCING ACTIVITIES Advances from related party Changes in warrant reserves Proceeds from private placement Proceeds from long-term debt Capital lease (as for Right-of-use of asset) Equity portion of convertible debt Current portion of obligations under capital lease Interest un-winding on convertible debt Cash flow from financing activities INCREASE (DECREASE) IN CASH FLOW Cash–beginning of period CASH– END OF PERIOD	$ (2,010,550) $ (308,156) 49,229 16,410 1,192 398
	(1,960,129) (291,348) (33,509) 61,582
	(1,993,638) (229,766) (36,569) (98,649) - (2,016,829) (62,500) -
	(99,069) (2,115,478)
	(80,612) 91,504 - (77,166) 4,181,576 301,355 576 (5,314) (121,722) 1,961,570 - 55,170 98,574 - 1,940 (23,166)
	4,080,332 2,303,953
	1,987,625 (41,291) 111,796 153,087
	$ 2,099,421 $ 111,796

1. DESCRIPTION OF BUSINESS

Pontus Protein Ltd. (“Pontus” or the “Company”) formerly known as AmWolf Capital Corp. (“AmWolf”) was incorporated under the British Columbia Business Corporation Act on April 23, 2018 and upon incorporation was classified as a Capital Pool Corporation as defined in the Policy 2.4 of the TSX Venture Exchange (the “Exchange”).

On January 25, 2021, the Company completed a qualifying transaction and business combination with 42 Protein Corp. (“42 Protein”), a corporation incorporated under the Canada Business Corporations Act on November 11, 2018. The Business Combination Agreement entered into between the Company, a subsidiary of the Company and 42 Protein was structured as a three-cornered amalgamation under the Business Corporations Act (the "Transaction"). As a result of the Transaction, 42 Protein became a wholly-owned subsidiary of the Company. Completion of the Transaction resulted in a Reverse Takeover and Change of Business for the Company (the “RTO”).

On closing of the transaction, all of the issued and outstanding securities of 42 Protein were exchanged for corresponding securities of the Company on the terms of the amalgamation agreement with the underlying securities of 42 Protein being cancelled and the following securities of the Company being issued to the former security holders of the 42 Protein: an aggregate of 30,495,087 Pontus shares to the former shareholders of 42 Protein, and warrants to acquire an aggregate of 30,495,087 Pontus shares were issued to the former warrant holders of Pontus.

Upon completion of the Transaction, AmWolf changed its name to Pontus Protein Ltd. Subsequent to the Transaction, the Company’s principal activity is to process and provide an environmentally sustainable source of pure-plant based protein. The Company’s common shares are listed on the Toronto Stock Exchange’s Venture Exchange (the “TSX- V”) under the symbol “HULK” and commenced trading on January 28, 2021.

The registered and records office of the Company is located at 203 – 815 Hornby Street, Vancouver, BC, V6Z 2E6.

These condensed consolidate interim financial statements for the period ended February 28, 2021, include the financial results of the Company for the three months ended February 28, 2021, and the financial results of AmWolf for the three months ended February 28, 2020.

These financial statements have been prepared on the assumption that Pontus will continue as a going concern, which contemplates the realization of assets and settlement of liabilities as they fall due in the normal course of business for the foreseeable future. The Company’s ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. Pontus has incurred losses and has had negative cash flows from operations from the inception that have primarily been funded through financing activities. These factors indicate the existence of a material uncertainty that may cast significant doubt as to the Company’s ability to continue as a going concern. Pontus will need to raise additional capital during the next twelve months and beyond to support current operations and planned development. The financial statements do not reflect the adjustments to the carrying amounts of assets and liabilities and the reported expenses that would be necessary if Pontus was unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

1. DESCRIPTION OF BUSINESS (continued)

The ongoing novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the Canadian and global economies, disruptions of financial markets, and created uncertainty regarding potential impacts to the Company’s supply chain and operations. The COVID-19 pandemic has impacted and could further impact the Company’s operations and the operations of the Company’s suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company’s suppliers and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. The management team is closely following the progression of COVID-19 and its potential impact on the Company. Even after the COVID-19 pandemic has subsided, the Company may experience adverse impacts to its business as a result of any economic recession or depression that has occurred or may occur in the future. Therefore, the Company cannot reasonably estimate the impact at this time our business, liquidity, capital resources and financial results.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements are prepared in accordance with accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all periods presented, unless otherwise stated.

Basis of Presentation and Measurement

The financial statements have been prepared on an historical cost basis except for certain financial instruments which are measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The financial statements are presented in Canadian Dollars, which is also the Company’s functional

currency.

Significant accounting estimates and judgements

The preparation of these financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods affected.

Critical accounting estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting year, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

i. the carrying value and recoverability of intangible assets, and

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i. the measurement and recoverability of deferred income tax assets.

Critical accounting judgments

i. the classification of financial assets and financial liabilities, which involves judgments or assessments made by management,

ii. the determination of whether it is likely that future economic benefits associated with the intangible asset capitalized will flow to the Company, which may be based on assumptions about future events or circumstances, and

iii. the assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty.

Indefinite-life intangible assets

An intangible asset is an identifiable asset without physical substance. An asset is identifiable if it is separable, or arises from contractual or legal rights, regardless of whether those rights are transferrable or separable from the Company or from other rights and obligations.

Intangible assets with indefinite useful lives are comprised of the rights to use the trademark, designs, technologies and the know-how related to the close environmental vertical aquaponics system for production of water lentils as described in Note 6.

Research and Development Expenditures

Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use
or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its
development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

As at February 28, 2021, the Corporation had not recognized any internally-generated intangible assets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of assets

The carrying amount of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in profit or loss. .

The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.

An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. Any reversal of impairment cannot increase the carrying value of the asset to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

Loss per share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, the loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Diluted loss per share is calculated by the treasury stock method and to the extent that it is not antidilutive. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.

Income taxes

Current income tax:

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate

Deferred income tax:

Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred income tax (continued):

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Financial Instruments

Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

The Company completed a detailed assessment of its financial assets and liabilities as at November 30, 2020. The following table shows the classification under IFRS 9:

Financial assets/liabilities Cash Share subscription receivable GST receivable Accounts payable and accrued liabilities Convertible promissory notes Due to related parties Loan payable	Classification FVTPL Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of loss and comprehensive loss in the period in which they arise.

Debt investments at FVTOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Equity investments at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

Gains and losses on derecognition are generally recognized in profit or loss.

Convertible debentures

The component parts of convertible debentures (e.g., debt issued with a conversion feature) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed number of the Company’s own equity instruments is an equity instrument.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar debt without conversion features. This amount is recorded as a liability on the amortized cost basis using the effective interest method until extinguished or at the instrument’s maturity date.

The conversion features classified as equity are determined by deducting the amount of the liability component from the fair value of the instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, conversion feature classified as equity will remain in equity until the conversion option is exercised, in which case the balance recognized in equity will be transferred to common shares within equity. When the conversion feature remains unexercised at their maturity date, the balance recognized in equity will be transferred to retained earnings or deficit. No gain or loss is recognized in profit or loss upon conversion.

Adoption of new accounting standards

Leases

Ongoing recognition and measurement

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company recognizes a lease liability and a right-of-use asset at the lease commencement date. The lease liability is initially measured as the present value of future lease payments discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s applicable incremental borrowing rate. The incremental borrowing rate is the rate which the Company 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Ongoing recognition and measurement (continued):

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments, less any lease incentives
receivable;
variable lease payments that depend on an index or a rate, initially measured using the
index or rate as at the commencement date;
amounts expected to be payable by the Company under residual value guarantees;
the exercise price of a purchase option if the Company is reasonably certain to exercise
that option; and
payments of penalties for terminating the lease, if the Company expects to exercise an
option to terminate the lease.

The lease liability is subsequently measured by:

increasing the carrying amount to reflect interest on the lease liability;
reducing the carrying amount to reflect the lease payments made; and
remeasuring the carrying amount to reflect any reassessment or lease modifications.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

The right-of-use asset is initially measured at cost, which comprises the following:

the amount of the initial measurement of the lease liability; any lease payments made at or
before the commencement date, less any lease incentives received;
any initial direct costs incurred by the Company; and
an estimate of costs to be incurred by the Company in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

The right-of-use asset is subsequently measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of the lease liability. It is depreciated in accordance with the Company’s accounting policy for property and equipment, from the commencement date to the earlier of the end of its useful life or the end of the lease term. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to net earnings over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets are presented as property and equipment and the lease liabilities are presented as loans on the consolidated statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for the short-term leases that have a lease term of 12 months or less. For its lease, the Company recognizes the lease payments as an expense to profit or loss on a straight-line basis over the term of the lease.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Measurement uncertainty

When preparing financial statements management makes estimates and assumptions relating to:

reported amounts of revenues and expenses
reported amounts of assets and liabilities
disclosure of contingent assets and liabilities.

Estimates are based on a number of factors including historical experience, current events and actions that the company may undertake in the future, and other assumptions that management believes are reasonable under the circumstances. By their nature, these estimates are subject to measurement uncertainty and actual results could differ. In particular, estimates are used in accounting for certain items such as revenues, allowance for doubtful accounts, useful lives of capital assets, asset impairments, legal and tax contingencies, employee compensation plans, employee benefit plans, retained interest in securitized receivables, income taxes, and goodwill impairment.

3. DEPOSITS AND PREPAID EXPENSE

Prepaid expenses $	February 28, 2021 November 30, 2020
	31,822 3,500

4. PLANT AND RIGHT-OF USE ASSET

Plant (Work in progress) $ Right-of-use asset $	Cost Accumulated amortization February 28 2021 Net Book Value November 30 2020 Net Book Value
	147,140 - $ 147,140 $ 110,571 2,016,829 67,228 1,949,601 2,000,022
	2,163,969 67,228 $ 2,096,741 $ 2,110,593

5. INTANGIBLE ASSETS

License - cost

$	February 28, 2021 November 30, 2020
	750,000 687,500

On November 15, 2018, the Company entered into a license agreement (the “License Agreement”) with Green Oasis Foods Ltd. (“Green Oasis”), pursuant to which Green Oasis agreed to grant Pontus a perpetual, world-wide, exclusive, non-transferrable, sub-licensable right and license (the “License”) to use the CEVAS tradename, system and brand, as well as all intellectual and other proprietary property, whether registered or not, associated with the closed environment vertical aquaponics system developed by Green Oasis (the “CEVAS System”) for the production of water lentils. In consideration for the License, the Company agreed to pay Green Oasis a one-time exclusivity fee of $600,000 (the “Exclusivity Fee”) as well as a license fee equal to 4% of all annual gross revenues of Pontus (the “License Fee”) starting on the date with which the Company earns revenue from the sale of its products using the CEVAS System.

In addition to the License Fee and the Exclusivity Fee, the Company has also agreed pay to Green Oasis:

$150,000 for each additional 10,000 sq/ft. pilot processing facility (each, an “Additional Pilot Farm”) built for use by Pontus, excluding the Company’s pilot farm;
$400,000 for each additional 56,000 sq/ft. commercial farm (each , a “Commercial Farm”) built for use by the Company;
$37,500 for each Additional Pilot Farm built for use by a sub-licensee of the CEVAS System;
$100,000 for each Commercial Farm built for use by a sub-licensee of the CEVAS System. Steve McArthur, the Chief Technology Officer and a director of the Company, is the founder, owner
and operator of Green Oasis.

On February 26, 2020, as amended on March 10, 2020, the Company entered into an independent consulting agreement with Green Oasis Foods Ltd. (“Green Oasis”) and Steve McArthur, as principal of Green Oasis, for $5,000 a month.

On February 27, 2020, the Company and Green Oasis, a company controlled by a director and officer of the Company, mutually terminated the License Agreement. See note 2 for more information on the License Agreement.

In connection with, and immediately following the termination of the License Agreement, the Company and Green Oasis entered into an asset purchase agreement (the “Asset Purchase Agreement”) dated February 27, 2020, whereby the Company agreed to acquire from Green Oasis certain intellectual property assets associated with the CEVAS System owned and developed by Green Oasis (collectively, the “Assets”). As consideration for the sale of the Assets, the Company agreed to pay Green Oasis an aggregate of $3,000,000 payable as follows:

$750,000 in cash, of which $685,000 Green Oasis acknowledged has been paid by the Company to Green Oasis pursuant to the License Agreement, and of which the remaining $65,000 is to be paid by the Company upon its common shares being listed for trading on a recognized Canadian stock exchange; and
An aggregate of $2,250,000 (the “Residual Purchase Price”) as a 4% top-line royalty on all gross revenues generated by the Company, calculated in accordance with applicable generally accepted principles, payable within 30 days of the end of each fiscal quarter, by such method and place, or to such financial institution, as the Vendor may specify in writing from time to time until the Residual Purchase Price is paid in full.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		February 28,		November 30,
		2021		2021
Accounts payable	$	362,477	$	281,133
Accrued liabilities		8,925		135,640
Total	$	371,402	$	416,773

7. CONVERTIBLE PROMISSORY NOTES

On August 13, 2020, the Company issued to a third-party lender a convertible promissory note in a principal amount of $45,000. The loan is unsecured, non-interest bearing and matures on August 13, 2025. The loan is convertible into the common shares of the Company at a price of $0.15 per common share at the holder’s discretion.

On August 28, 2020, the Company issued to third-party lenders convertible promissory notes in principal amount of $30,000. The loans are unsecured, non-interest bearing and mature on August 28, 2025. The loans are convertible into the common shares of the Company at a price of $0.15 per common share at the holders’ discretion.

On September 10, 2020, the Company issued to a third-party lender a convertible promissory note in a principal amount of $15,000. The loan is unsecured, non-interest bearing and matures on September 10, 2025. The loan is convertible into the common shares of the Company at a price of $0.15 per common share at the holder’s discretion.

On September 11, 2020, the Company issued to a third-party lender a convertible promissory note in a principal amount of $15,000. The loan is unsecured, non-interest bearing and matures on September 11, 2025. The loan is convertible into the common shares of the Company at a price of $0.15 per common share at the holder’s discretion.

The total fair value of the liability component of the aforementioned convertible notes at the time of issue was determined to be $49,829 based on an estimated discount rate of 15% per annum for promissory notes without the conversion feature. The total fair value of the conversion feature, equity component, was determined to be $55,171, which was the difference between the face value and the fair value of the liability component.

On January 22, 2021, the promissory notes were converted into 700,000 shares of the Company.

The following is a summary of the movement of the convertible promissory notes:

Balance, November 30, 2020 $ Additions Portion allocated to equity Interest accrued Balance, February 28, 2021 $	February 28, 2021
	51,834 - - 1,939
	53,773

8. CAPITAL LEASE LIABILITY

A summary of right-of-use lease obligations is as follows:

Total minimum lease payments payable $ Portion representing interest to be expensed over the remaining term of the lease Principal outstanding Less: Current portion Non-current portion $	February 28, 2021 November 30, 2020
	3,143,780 $ 3,143,780 (1,205,357) (1,182,209)
	1,938,423 1,961,571 (98,574) (96,151)
	1,839,849$ 1,865,420

9. LOAN PAYABLE

In May 2020, the Company received $40,000 in the form of a Canada Emergency Business Account (“CEBA”) loan. CEBA is part of the economic assistance program launched by the Government of Canada to ensure that businesses have access to capital during the COVID-19 pandemic and can only be used to pay non-deferrable operating expenses. During the period from receipt of the CEBA loan to December 31, 2022 (the “Initial Term”), no interest is charged on the amount outstanding and should at least $30,000 be repaid on or before the end of the Initial Term, the remaining $10,000 of principal would be forgiven. If at the end of the Initial Term the loan is not repaid, the Company has the right to exercise the option to convert the CEBA loan into a three-year term loan bearing interest at 5% per annum. The Company anticipates repaying $30,000 prior to the end of the Initial Term. During the year end November 30, 2020, the Company recognized a gain from loan forgiveness of $10,000 (2019 - $nil). The loan is carried at amortized cost based on an 10% market interest rate causing the underlying value to be lower than the original principal value with a difference of $6,589 at inception which was recognized as a gain in the profit and loss. During the period ended February 28, 2021, interest accretion was $576,

10. SHARE CAPITAL

10. SHARE CAPITAL
Authorized Unlimited Common shares without par value Issued: Shares presented under equity Common Shares $	February 28, 2021 November 30, 2020
	6,083,707 $ 1,902,131

11. SHARE CAPITAL ( continued)

Warrants:

Warrants	Exercise Price	Expiry Date
Outstanding
	$
100,000	0.30	March 2, 2022
519,999	0.30	March 11, 2022
1,000,000	0.30	April 8, 2022
230,000	0.30	May 29, 2022
434,263	0.30	June 10, 2022
30,398	0.15	June 10, 2025
1,544,159	0.30	September 30, 2020
108,091	0.15	September 30, 2025

12. RELATED PARTY TRANSACTIONS

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including directors (executive and non-executive) of the Company.

cutive and non-executive) of the Company.
Management Fee $ Professional Fee $	February 28, 2021 November 30, 2020
	28,500 $ 28,500 7,500 7,500
	36,000 $ 36,000

13. CAPITAL MANAGEMENT

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

The proceeds raised from the issuance of common shares is to be used primarily for the construction of the corporation's first facility in the late calendar year of 2020.

PONTUS PROTEIN LTD. (FORMERLY AMWOLF CAPITAL CORP.) CONDENSED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 28, 2021 AND 2020 (Expressed in Canadian dollars) (Unaudited)

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair value measurements

IFRS 13, Fair-Value Measurement, establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company determined that the carrying values of its short-term financial assets and liabilities approximate the corresponding fair values because of the relatively short periods to maturity of these instruments and the low credit risk

Financial risk management

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adhere to market conditions. The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments. This note presents information about the Company’s exposure to each of the risks and the Company’s objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included as applicable.

The Board of Directors has the overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has implemented and monitors compliance with risk management policies.

(a) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk on its cash. To minimize the credit risk, the Company places its cash with a major financial institution.

(b) Liquidity risk

management of liquidity risk of the Company, the Company maintains a balance between continuity of funding and the flexibility through the use of borrowings. Management closely monitors the liquidity position and expects to have adequate sources of funding to finance the Company’s projects and operations.

As at November 30, 2020, the Company has cash of $9,927 to settle accounts payable and accrued liabilities of $374,813 and the balance due to related parties of $238,806. The financial liabilities are due within twelve months following the reporting period end. The Company does not have adequate funds to settle liabilities and will rely on raising additional funds from equity financing. The liquidity risk is assessed as high.

(c) Currency risk

The Company’s expenses are denominated in Canadian dollars. The Company’s corporate office is based in Canada and current exposure to exchange rate fluctuations is minimal. The Company does not have any significant foreign currency denominated monetary liabilities.

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

a. Interest rate risk

The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The fair value interest rate risk on bank deposits is insignificant as the deposits are short term. The Company has not entered into any derivative instruments to manage interest rate fluctuations.

15. CHANGES IN NON-CASH WORKING CAPITAL

CHANGES IN NON-CASH WORKING CAPITAL
Accounts payable and accrued liabilities Retainer deposit Sales tax Security / tender deposits Employee deductions payable	February 28 November 30 2021 2020
	$ (77,397) $ 219,211 80,501 (110,823) (36,613) (59,098) - 9,000 - 3,292
	$ (33,509) $ 61,582

16. SUBSEQUENT EVENTS

Subsequent to February 28, 2021, the Company granted 100,000 stock options to purchase up to 100,000 common shares of the Company.

The Company granted an additional 50,000 stock options to purchase up to 50,000 common shares of the Company.

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Pontus Protein Ltd. — Interim / Quarterly Report 2021

47670_rns_2021-05-04_192cbd99-d7cf-478d-b16d-48d64f064d63.PDF

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

Share Capital

1. DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Presentation and Measurement

Significant accounting estimates and judgements

Critical accounting estimates

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Critical accounting judgments

Indefinite-life intangible assets

Research and Development Expenditures

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of assets

Loss per share

Income taxes

Current income tax:

Deferred income tax:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred income tax (continued):

Financial Instruments

Classification

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at FVTPL

Debt investments at FVTOCI

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Equity investments at FVTOCI

Derecognition

Financial assets

Financial liabilities

Convertible debentures

Adoption of new accounting standards

Leases

Ongoing recognition and measurement

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Ongoing recognition and measurement (continued):

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Measurement uncertainty

3. DEPOSITS AND PREPAID EXPENSE

4. PLANT AND RIGHT-OF USE ASSET

5. INTANGIBLE ASSETS

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

7. CONVERTIBLE PROMISSORY NOTES

8. CAPITAL LEASE LIABILITY

9. LOAN PAYABLE

10. SHARE CAPITAL

11. SHARE CAPITAL ( continued)

12. RELATED PARTY TRANSACTIONS

13. CAPITAL MANAGEMENT

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair value measurements

Financial risk management

(a) Credit risk

(b) Liquidity risk

(c) Currency risk

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

a. Interest rate risk

15. CHANGES IN NON-CASH WORKING CAPITAL

16. SUBSEQUENT EVENTS

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Pontus Protein Ltd. Interim / Quarterly Report 2021