Protium Clean Energy Corp. — Annual Report 2021

Jul 16, 2021

EAGLE I CAPITAL CORPORATION

FINANCIAL STATEMENTS

FOR THE YEARS ENDED

MAY 31, 2021 AND 2020

(EXPRESSED IN CANADIAN DOLLARS)

Eagle I Capital Corporation

FINANCIAL STATEMENTS

May 31, 2021 and 2020

(EXPRESSED IN CANADIAN DOLLARS)

INDEX	PAGE
Independent Auditor’s Report	1
Statements of Financial Position	4
Statements of Loss and Comprehensive Loss	5
Statements of Changes in Shareholders’ Equity	6
Statements of Cash Flows	7
Notes to the Financial Statements	8 -18

Chartered Professional Accountants

Stern & Lovrics LLP

Samuel V. Stern, BA, CPA, CA George G. Lovrics, BComm, CPA, CA CPA (Illinois) Nazli Dewji, BA, CPA, CMA

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Eagle I Capital Corporation

Opinion

We have audited the financial statements of Eagle I Capital Corporation (the “Company”), which comprise the statements of financial position as at May 31, 2021 and May 31, 2020, and the statements of loss and comprehensive loss, changes in shareholders’ equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2021 and May 31, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 1 in the financial statements, which indicates that the Company incurred a net loss of $64,662 for the year ended May 31, 2021 (2020 - $8,500) and has incurred cumulative losses from inception in the amount of $2,238,473 at May 31, 2021. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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1210 Sheppard Avenue East, Suite 302, Toronto, Ontario M2K 1E3 Tel: (416) 499-8848 Fax: (416) 491-5301

Other Information

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is George G. Lovrics.

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Toronto, Ontario July 14, 2021

Chartered Professional Accountants Licensed Public Accountants

EAGLE I CAPITAL CORPORATION STATEMENTS OF FINANCIAL POSITION (EXPRESSED IN CANADIAN DOLLARS) AS AT MAY 31

ASSETS CURRENT Cash HST recoverable TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities Loans payable NON-CURRENT LIABILITIES Other payables SHAREHOLDERS’ EQUITY SHARE CAPITAL RESERVES DEFICIT TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY NATURE OF OPERATIONS AND GOING CONCERN	Notes	2021 $ 2020 $
	4 6 3(b) 1	38,871 - 3,712 -
		42,583 -
		15,745 8,500 100,000 100,000
		115,745 108,500 200,884 200,884
		316,629 309,384
		1,856,127 1,756,127 108,300 108,300 (2,238,473) (2,173,811)
		(274,046) (309,384)
		42,583 -

APPROVED ON BEHALF OF THE BOARD

"Ross Mitgang"	Director
"Martin Blatt"	Director

See the accompanying notes to the financial statements

4

EAGLE I CAPITAL CORPORATION STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (EXPRESSED IN CANADIAN DOLLARS) FOR THE YEARS ENDED MAY 31

EXPENSES General and administrative Public company fees Professional fees NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR NET LOSS PER SHARE - Basic and diluted WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - Basic and diluted	2021 $ 2020 $
	750 - 6,453 57,459 8,500
	64,662 8,500
	0.00 0.00
	31,992,397 9,965,500

See the accompanying notes to the financial statements

5

EAGLE I CAPITAL CORPORATION

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (EXPRESSED IN CANADIAN DOLLARS) FOR THE YEARS ENDED MAY 31, 2021 AND 2020

BALANCE, MAY 31, 2019 Loss and comprehensive loss BALANCE, MAY 31, 2020 Private placement for cash Loss and comprehensive loss BALANCE, MAY 31, 2021	Capital Capital Stock Stock Reserves (Deficit) Total # $ $ $ $
	9,965,500 1,756,127 108,300 (2,165,311) (300,884) - - - (8,500) (8,500)
	9,965,500 1,756,127 108,300 (2,173,811) (309,384) 40,000,000 100,000 - - 100,000 - - - (64,662) (64,662)
	49,965,500 1,856,127 108,300 (2,238,473) (274,046)

See the accompanying notes to the financial statements

6

EAGLE I CAPITAL CORPORATION STATEMENTS OF CASH FLOWS (EXPRESSED IN CANADIAN DOLLARS) FOR THE YEARS ENDED MAY 31,

CASH FLOWS USED IN OPERATING ACTIVITIES Net loss and comprehensive loss for the year Changes in non-cash components of working capital Increase in GST/HST receivable Increase (decrease) in accounts payable and accrued liabilities Cash flow used in operating activities CASH FLOWS PROVIDED BY FINANCING ACTIVITIES Issuance of share capital Cash flow provided by financing activities Increase in cash and cash equivalents for the year CASH, beginning of the year CASH AND CASH EQUIVALENTS, end of the year	2021 $ 2020 $
	(64,662) (8,500) (3,712) 7,245 8,500
	(61,129) -
	100,000 -
	100,000 -
	38,871 - - -
	38,871 -

See the accompanying notes to the financial statements

7

1. NATURE OF OPERATIONS AND GOING CONCERN

Eagle I Capital Corporation (“Eagle I” or the “Company”) was incorporated on October 23, 2007 under the Business Corporations Act of British Columbia. Currently the Company is actively pursuing potential business opportunities. The Company’s head office is located at 1049 Chico Street West, Suite 405, Vancouver, British Columbia, V6G 2R7.

These financial statements of the Company were approved and authorized for issue by the Board of Directors (the “Board”) on July 14, 2021.

These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. The Company has a net loss of $64,662 for the year ended May 31, 2021 (year ended May 31, 2020 – loss of $8,500) and a deficit of $2,238,473 as at May 31, 2021 (May 31, 2020 - $2,173,811). Management believes it will be successful in raising the necessary funds to continue in the normal course of operations or effecting a corporate transaction; however, there is no assurance that these funds will be available on terms acceptable to the Company or at all, or that a corporate transaction will be effected. These financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

Since January 1, 2020, the spread of COVID-19 has severely impacted many local economies around the globe. In many countries, including Canada and the USA, businesses are being forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. Governments and central banks have responded.

At this time, there is no material impact on company’s operations and financial results. The Company has determined that these events are non-adjusting subsequent events. Accordingly, the balance sheet and results of operations as of and for the year ended May 31, 2021 have not been adjusted to reflect their impact. The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, including the closure of non-essential businesses for an undetermined period of time, remains unclear. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.

8

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

These financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”). The policies set out below were consistently applied to all periods presented unless otherwise noted.

(b) Basis of preparation and presentation

These financial statements have been prepared under the historical cost basis. 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.

( c) Share-based payment transactions

The fair value of share options granted to employees and non-employees is recognized as an expense over the vesting period with a corresponding increase in shareholders’ equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company. The fair value is measured at the grant date and recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

(d) Income taxes

Income tax on the profit or loss for the years presented comprises current and deferred tax. Income tax is recognized in the statement of operations except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

9

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements unless such differences arise from goodwill or the initial recognition (other than in a business combination) of other assets or liabilities in a transaction that affects neither the taxable profit nor the accounting profit or loss. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the statement of financial position date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are presented as non-current. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(e) Loss per common share

Basic loss per share is calculated using the weighted average number of shares outstanding. The diluted loss per share assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase common shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted loss per share calculation. The diluted loss per share calculation excludes any potential conversion of options and warrants that would decrease loss per share. See Notes 3(c), and (d) for details on the Company’s potentially dilutive securities. The Company had no outstanding stock options for the years ended May 31, 2021 and 2020.

(f ) Significant accounting judgements and estimates

The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on

10

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020

(Expressed in Canadian Dollars)

historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting judgments

• going concern presentation of the financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due; and

• management's determination that the functional currency of the Company is the Canadian Dollar.

Critical accounting estimates

• the measurement of income taxes payable and deferred tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income in future periods in order to utilize recognized deferred tax assets;

• Share-based payments - management determines costs for share-based payments using the Black-Scholes option pricing model. The fair value of the market-based and performancebased share awards are determined at the date of grant and incorporates Black- Scholes input assumption's including the future volatility of the stock price, expected dividend yield, and expected life. Such judgements and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

• (g) Provisions

A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

As at May 31, 2021 and May 31, 2020, the Company did not have any provisions.

11

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

• (h) Financial Instruments

All financial assets not classified at amortized cost or FVOCI are measured at FVTPL. On initial recognition, the Corporation can irrevocably designate a financial asset at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at FVTPL:

• It is held within a business model whose objective is to hold the financial asset to collect the contractual cash flows associated with the financial asset instead of selling the financial asset for a profit or loss;

• Its contractual terms give rise to cash flows that are solely payments of principal and interest.

All financial instruments are initially recognized at fair value on the statement of financial position. Subsequent measurement of financial instruments is based on their classification. Financial assets and liabilities classified at FVTPL are measured at fair value with changes in those fair values recognized in the statement of loss and comprehensive loss for the period. Financial assets classified at amortized cost and financial liabilities are measured at amortized cost using the effective interest method.

The following table summarizes the classification and measurement for each financial instrument:

Financial Instrument	Classification
Cash	FVTPL
Amounts receivable	Amortized cost
Accounts payable and
accrued liabilities	Amortized cost

Impairment of financial assets:

The Company assesses all information available, including on a forward-looking basis the expected credit losses associated with any financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information.

12

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

Financial instruments recorded at fair value on the statements of financial position are classified using 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 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - valuation techniques based on 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 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(i) New accounting standards adopted during the year

IAS 1, Presentation of Financial Statements ("IAS 1")

Amendments to IAS 1, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications. The amendments are effective for annual periods beginning on or after January 1, 2020 and are required to be applied prospectively. The adoption of the amendments had no impact on the Company's financial statements.

IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ("IAS 8")

Amendments to IAS 8, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications. The amendments are effective for annual periods beginning on or after January 1, 2020 and are required to be applied prospectively. The adoption of the amendments had no impact on the Company's consolidated financial statements.

3 . CAPITAL STOCK

The capital stock is as follows:

(a) Authorized

Unlimited number of common shares

Unlimited number of preferred shares, issuable in series

13

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

(b) Issued

Balance, May 31, 2019, and 2020 Private placement for cash Balance, May 31, 2021	Common Shares Amount # $
	9,965,500 1,756,127 40,000,000 100,000
	49,965,500 1,856,127

On November 11, 2020 the Company issued 40,000,000 common shares for proceeds of $100,000. The shares were purchased by one investor. After the share purchase, the investor held 80.05% of the issued and outstanding shares of the Company.

(c) Stock Options

On May 28, 2021 the Company granted 4,996,544 stock options to certain directors, officers and consultants of the Company. Each option is exercisable at $0.006 per share until May 27, 2026. All of the options vested upon date of grant. The estimated fair value of the options was $ 7,695, measured using the Black-Scholes Option Pricing Model with the following assumptions: share price $0.0025; exercise price - $0.006; expected life - 5 years; volatility - 100%; dividend yield - $0; and risk-free rate – 0.92%.

The following table summarizes information about share options outstanding and exercisable at May 31, 2021 and May 31, 2020:

	May	May	31, 2021	May	May	31, 2020
		Weighted			Weighted
			Average			Average
	Number of		Exercise	Number of		Exercise
	Options		Price	Options		Price
Balance , beginning of year	-	$	-	-	$	-
Granted	4,996,544	$	0.006	-	$	-
Expired	-	$	-	-	$	-
Balance, end of year	4,996,544	$	0.006	-	$	-

As at May 31, 2021, the Company has outstanding share options exercisable to acquire 4,996,544 common shares as follows:

Number of Share Options	Exercise	Expiry	Average remaining
Outstanding	Price	Date	Contractual life(Years)
4,996,544	$0.006	May27, 2026	5
4,996,544			5

14

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

• (d) Warrants

As of May 31, 2021 and 2020 there were no outstanding warrants to purchase common shares of the Company.

4. RELATED PARTY TRANSACTIONS

Related parties include directors, officers, close family members, certain consultants and enterprises that are controlled by these individuals as well as certain persons performing similar functions.

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

During the year ended May 31, 2021, the Company paid one director a fee of $750. The Company did not report any remuneration of directors and key management personnel for the year ended May 31, 2020.

As at May 31, 2021, a significant shareholder held a non-interest loan payable of $100,000 (May 31, 2020 - $100,000).

Included in statute barred liabilities at May 31, 2020 is $26,392 (May 31, 2019 - $26,392) due to former directors and officers of the Company.

These transactions were in the normal course of operations and were measured at the exchange value, which represented the amount of consideration established and agreed to by the related parties. The amounts payable to related parties are unsecured, non-interest bearing and have no fixed terms of repayment.

5. FINANCIAL RISK FACTORS

The Company's risk exposures and the impact on the Company's financial instruments are summarized below. There have been no changes in the risks, objectives, policies and procedures from previous periods.

15

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

(a) Credit Risk

The Company’s credit risk is primarily attributable to cash. The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to cash, and financial instruments included in amounts receivable is remote.

(b) Liquidity Risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet its obligations when due. At May 31, 2021, the Company had cash of $38,871 (May 31, 2020 - $Nil) available to settle current liabilities of $115,745, (May 31, 2020 - $108,500). The Company’s accounts payable are subject to normal trade terms.

(c) Market Risk

The Company is exposed to the following market risks:

(d) Interest Rate Risk

The Company has no cash balances and no variable interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

• (e) Foreign Exchange Risk

While the Company’s functional currency is the Canadian dollar, major purchases could be transacted in Canadian dollars or United States dollars. As at May 31, 2021, the Company does not hold foreign currency balances.

6. OTHER PAYABLES

During the year ended May 31, 2013, the Company transferred $200,884 of liabilities (the “Statutebarred Claims”) to non-current liabilities on the basis that any claims in respect of the Statutebarred Claims were statute barred under the Limitations Act (British Columbia). The Statute-barred Claims relate to liabilities of third parties. Under IFRS, a financial liability can only be derecognized from the Company’s Statement of Financial Position when it is extinguished, meaning only when the contract is discharged or canceled or expires. The effect of the Limitations Act is to prevent a

16

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

creditor from enforcing an obligation, but it does not formally extinguish the financial liability under IFRS.

It is the position of management of the Company that the Statute-barred Claims cannot be enforced by the creditors, do not create any obligation for the Company to pay out any cash and do not affect the financial or working capital position of the Company. The Statute-barred Claims are required to be reflected on the Company’s Statement of Financial Position as a result of the current interpretation of IFRS, but they are classified as non-current liabilities as the Company has no intention to pay these Statute-barred Claims and the creditors cannot enforce payment of the Statute-barred Claims.

7. INCOME TAXES

• (a) The items causing the Company’s effective income tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% (2020 – 26.5%) are as follows:

Loss before income taxes Expected income tax recovery Adjustments to benefit resulting from: Benefit of tax losses not recognized Deferred income tax recovery	2021 2020 $ $
	64,662 8,500
	17,135 2,253 (17,135) (2,253)
	- -

• (b) Tax benefits from non-capital loss carry-forwards have not been recorded in the financial statements. These losses, which may reduce taxable income in future years, amount to approximately $1,150,000 and expires as follows:

Year 2028 2029 2030 2031 2032 2033 2034 2040 2041	Amount ($) 20,000 119,000 455,000 393,000 40,000 25,000 25,000 8,000 65,000
	1,150,000

17

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

• (c) Unrecognized deferred tax assets

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:

Non-capital loss carry-forwards Capital loss carry-forwards Total	2021 2020 $ $
	1,150,000 1,085,000 1,189,000 1,189,000
	2,339,000 2,274,000

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can use the benefits.

8. CAPITAL MANAGEMENT

The Company manages its capital with the following objectives:

• to ensure sufficient financial flexibility to achieve the ongoing business objectives; and

• to maximize shareholder return through enhancing the share value.

The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.

The Company's equity comprises of share capital and accumulated deficit, which at May 31, 2021 was $(274,046) (May 31, 2020 –$(309,384)).

The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the year ended May 31, 2021. The Company is not subject to external capital requirements.

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18

EAGLE I CAPITAL CORPORATION Notes to Financial Statements Years ended May 31, 2021 and 2020 (Expressed in Canadian Dollars)

9. SUBSEQUENT EVENTS

On June 28, 2021, the Company entered into a binding letter agreement with Adnimation Ltd. (“ Adnimation ”) an innovative SaaS-based monetization service and technology company (the “ Letter Agreement ”). The Letter Agreement contemplates the Company and Adnimation completing a business combination by a way of a transaction that will constitute a reverse takeover of the Company by the shareholders and noteholders of Adnimation (the “ Transaction ”). Pursuant to the terms of the Letter Agreement, the Company will effect a stock split or consolidation (the “Adjustment”) of its issued and outstanding common shares prior to the completion of the Transaction (the “Closing”) into a number of post-adjustment shares (“Adjusted Shares”) that, when multiplied by the Issue Price (as defined herein) will be equal to $2,250,000.

Under the terms of the Letter Agreement, Adnimation is to complete a non-brokered private placement of 8% unsecured convertible notes (“ Adnimation Notes ”) to raise aggregate gross proceeds of up to C$4,000,000 (the “Adnimation Note Financing”). Each Adnimation Note will automatically convert into ordinary shares in the capital of Adnimation (“Adnimation Shares”) immediately prior to the completion of the Transaction at a conversion price of no less than 0.75 of the Issue Price and no more than 0.8 of the Issue Price and in addition, warrants to be exercised to shares of the company equal to a 50% premium of the price of Subscription Receipts (as defined below). After the completion of the Adnimation Note Financing but before the completion of the Transaction, the Company will complete a public offering of subscription receipts (“ Subscription Receipts ”) at a price per Subscription Receipt (the “Issue Price”) to be determined in the context of the market to raise gross proceeds of a minimum of C$7,500,000.

The Letter Agreement also contemplates the Company completing a debt settlement whereby the Company will settle $100,000 in indebtedness by issuing common shares at a deemed price of $0.0025 per common share.

10. COMPARATIVE FIGURES

Certain numbers in the previous year have been reclassified to agree with the reporting categories of the current year.

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