Psyched Wellness Ltd. — Annual Report 2019

Mar 23, 2020

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Duncan Park Holdings Corporation

Financial Statements

For the Years ended November 30, 2019 and 2018

(Expressed in Canadian dollars)

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of

Duncan Park Holdings Corporation

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Duncan Park Holdings Corporation (the Company), which comprise the statements of financial position as at November 30, 2019, and the statements of operations and comprehensive loss, statements of cash flows and statements of changes in equity for the year 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 November 30, 2019, and its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards.

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

Material Uncertainty Relating to Going Concern

We draw your attention to Note 1 in the financial statements, which indicates that the Company incurred a comprehensive loss of $350,119 during the year ended November 30, 2019. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Matter

The financial statements of the Company for the year ended November 30, 2018, were audited by another auditor, who expressed an unmodified opinion on those statements on April 1, 2019.

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the annual management’s discussion and analysis, but does not include the financial statements and our auditor’s report thereon.

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 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.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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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 International Financial Reporting Standards, 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 relating 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 scepticism 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.

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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 Pat Kenney.

Chartered Professional Accountants Licensed Public Accountants

Mississauga, Ontario March 19, 2020

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Duncan Park Holdings Corporation Statements of Financial Position (Expressed in Canadian Dollars)

		As at	As at
		November 30,	November 30,
	Notes	2019	2018
		$	$
Assets
Current
Cash		1,471	55,757
Accountsreceivable	4	3,308	6,398
Total Current Assets		4,779	62,155
Exploration and evaluation assets	5	-	50,000
Land	6	-	25,000
Total Assets		4,779	137,155
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	7	369,736	261,594
Term loans	8	-	433,036
Promissory notes payable	9	49,638	-
Convertible debentures	10	-	220,994
Total Liabilities		419,374	915,624
Shareholders’ Deficiency
Share capital	11	12,046,131	11,332,138
Contributed surplus		400,293	400,293
Accumulated deficit		(12,861,019)	(12,510,900)
Total Shareholders’ Deficiency		(414,595)	(778,469)
Total Liabilities and Shareholders’ Deficiency		4,779	137,155
Going Concern	1
Approved on behalf of the Board of Directors:

“Eric Salsberg” “Brian Presement” Eric Salsberg, Director Brian Presement, Director

The accompanying notes are an integral part of these financial statements

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Duncan Park Holdings Corporation Statements of Operations and Comprehensive Loss For the years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

	Notes	2019	2018
		$	$
Expenses
Compensation	12	28,533	58,434
Professional Fees
Consulting		8,000	-
Legal		90,829	81,949
Audit and accounting	12	33,735	18,275
Regulatory compliance		22,929	27,669
Investor communications		7,481	5,260
Bank charges		1,087	1,368
Interest on convertible debentures	10	21,436	3,904
Interest on term loans	8	5,617	19,601
Interest on promissory notes	9	2,436	-
Office and general		5,861	7,357
Property taxes		4,265	6,975
Amortization of financing costs	10	32,910	6,090
Annual minimum royalty		10,000	10,000
Total Expenses		(275,119)	(246,882)
Other expenses
Write-down of exploration and evaluation assets	5	50,000	-
Write-down of land	6	25,000	-
Interest andforeignexchange		-	1,507
		(75,000)	(1,507)
Net Loss and Comprehensive Loss		(350,119)	(248,389)
Lossper Share - basic and diluted(1)	11	(0.086)	(0.079)
Weighted Average Number of Shares Outstanding (1)		4,083,851	3,151,903

(1)Adjusted for 40:1 share consolidation effective February 1, 2019

The accompanying notes are an integral part of these financial statements

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Duncan Park Holdings Corporation Statements of Changes in Shareholders’ Deficiency For the years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

		Number of	Share	Contributed	Accumulated
	Notes	Shares(1)	**Capital **	Surplus	Deficit	Total
		#	$	$	$	$
Balance, November 30, 2017		3,151,903	11,332,138	400,293	(12,262,511)	(530,080)
Netlossforthe year		-	-	-	(248,389)	(248,389)
Balance, November 30, 2018		3,151,903	11,332,138	400,293	(12,510,900)	(778,469)
Issuance of shares on debt settlement	11	1,462,178	438,653	-	-	438,653
Issuance of shares on conversion of debentures	11	917,800	275,340	-	-	275,340
Netlossforthe year		-	-	-	(350,119)	(350,119)
Balance, November 30, 2019		5,531,881	12,046,131	400,293	(12,861,019)	(414,595)

(1)Adjusted for 40:1 share consolidation effective February 1, 2019

The accompanying notes are an integral part of these financial statements

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Duncan Park Holdings Corporation Statements of Cash Flows For the years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

	Notes	2019	2018
		$	$
Operating Activities
Net loss for the year		(350,119)	(248,389)
Adjustments for:
Amortization of financing costs	10	32,910	6,090
Interest on convertible debentures	10	21,436	3,904
Interest on term loans	8	5,617	19,601
Interest on promissory notes	9	2,436	-
Write-down of exploration and evaluation assets	5	50,000	-
Write-downof land	6	25,000	-
		(212,720)	(218,794)
Net change in non-cash working capital items:
Accounts receivable		3,090	-
Accounts payable and accrued liabilities	7	108,142	96,490
Federaltax recoverable		-	(2,011)
Cash flows (used in) Operating Activities		(101,488)	(124,315)
Financing Activities
Advances received on promissory notes	9	47,202	-
Issue of Convertible debentures	10	-	250,000
Financing costs	10	-	(39,000)
Repayment ofterm loans	8	-	(34,569)
Cash flows provided by Financing Activities		47,202	176,431
(Decrease) increase in cash		(54,286)	52,116
Cash, beginning ofyear		55,757	3,641
Cash, end of year		1,471	55,757

The accompanying notes are an integral part of these financial statements

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Nature of Operations

Duncan Park Holdings Corporation (“Duncan Park” or the “Company”) is incorporated in the Province of Ontario, Canada. The Company operates in the mining industry and devotes its efforts to establish commercially viable mineral properties by exploring for gold and other precious metals in politically stable areas of the world. The Company has been exploring certain properties in the Red Lake mining district in Northwestern Ontario. More recently, all money raised has been used for administrative expenses.

The Company’s registered address is 77 King Street West, Suite 3000, Toronto, Ontario, M5K 1G8, Canada.

Going Concern

The Company holds mining claims in Ontario and has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties. These procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements, unregistered claims, aboriginal claims and noncompliance with regulatory, social and environmental requirements.

These financial statements have been prepared using International Financial Reporting Standards (“IFRS”) applicable to a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business for the foreseeable future as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.

The Company has no commercial operations and, therefore, no revenue, and is subject to the normal risks and challenges experienced by other such exploration companies in a comparable stage of development. Specifically, the recovery of the Company’s investment in exploration and evaluation (“E&E”) assets and related deferred expenditures are dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to develop the properties and establish future profitable production from the properties, or from the proceeds of their disposition. As at November 30, 2019, the Company had a working capital deficiency of $414,595 (November 30, 2018 – working capital deficiency of $853,469).

The primary reason for the working capital deficiencies is due to administrative expenses incurred related to the ongoing corporate restructuring and debt settlement activities. The Company had implemented certain strategies to mitigate and reduce such costs and other expenses, but there is no guarantee whether these strategies will be successful. These conditions raise material uncertainties which cast significant doubt regarding the Company’s ability to continue as a going concern. These financial statements do not reflect adjustments to the carrying amounts of assets and liabilities, the reported revenues and expenses and the statements of financial position classification used that would be necessary if the going concern assumptions were not appropriate. Such adjustments could be material.

Corporate Restructuring

During the year ended November 30, 2019, the Company undertook a series of corporate measures to address its capital and debt structure in order to better position the Company for future opportunities.

Share Consolidation

On December 18, 2018, at Duncan Park’s Annual General Meeting of Shareholders (the “AGM”), shareholders of the Company approved a resolution empowering the Board of Directors (the “Board”) to affect a share consolidation of up to 1 post-consolidation share for every 40 pre-consolidation shares (the “Share Consolidation”). Subsequently, the Board approved a motion to consolidate the Company’s shares at a 40:1 ratio (the “Consolidation Ratio”). Regulatory approval was received on January 29, 2019, and the Share Consolidation was effective February 1, 2019.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN (continued)

Corporate Restructuring (continued)

De-Listing

On December 18, 2018, at the AGM, the Company asked shareholders to provide the Board with the discretion to apply to de-list the Company from the TSX Venture Exchange (“TSXV”). This discretion from shareholders was given. The Board believed that having such flexibility may enable the Company to pursue certain opportunities within and/or outside the resource sector. The Board has made no determination as to any future opportunities that it may pursue and there can be no assurance that any future opportunities will be identified or completed. The voluntary delisting was approved by the TSXV on May 4, 2019.

Debt Conversion

On October 9, 2018, the Company completed a private placement of $250,000 (the “Private Placement”) of convertible debentures (the “Debentures”) which had a term of one (1) year and accrued interest at a rate of 10% per annum. On October 9, 2019, 917,800 shares of the Company were issued as a result of the conversion of the Debentures (see Note 10 for details).

Debt Settlement

The Company previously entered into Debt Settlement Agreements dated August 22, 2018 with its two (2) largest creditors: the Estate of Ian McAvity (“the Estate”) and Eric P. Salsberg (“E. Salsberg”), the Chairman of Audit Committee and a director of the Company, which on May 14, 2019, settled $301,989 and $136,664 of outstanding principal amount of term loans (plus accrued interest), respectively, through the full issuance of 1,462,178 common shares of the Company (“the Debt Settlement Shares”). The unsecured loans, which bore interest at a rate of 5% per annum, were made to the Company by the late Ian McAvity, the former President and a director of the Company, and E. Salsberg, in tranches over time to help fund the Company’s ongoing working capital requirements.

After completion of the Share Consolidation, the Debt Settlement Shares were issued at a price based on a deemed preConsolidation Share price of $0.0075 per share multiplied by the Consolidation Ratio. Based on the Consolidation Ratio, the Debt Settlement Shares were issued at an adjusted price of $0.30 per share on May 14, 2019 (see Note 8 for details).

A condition of closing of the Private Placement was that the Estate and E. Salsberg were to sell the Debt Settlement Shares to the investors participating in the Private Placement plus one (1) other investor at a price equal to 20% of the principal amount of the debt and accrued interest. Share purchase agreements between the investors, the Estate and E. Salsberg, respectively, were entered and completed on May 14, 2019.

2. BASIS OF PRESENTATION

Statement of Compliance

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

These financial statements were reviewed, approved and authorized for issuance by the Company’s Board on March 19, 2020.

Basis of Measurement

These financial statements have been prepared in accordance with IFRS, on the historical cost basis except for financial instruments which are measured at fair value, as explained in the significant accounting policies set out in Note 3. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

2. BASIS OF PRESENTATION (continued)

Functional Currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of the Company is the Canadian Dollar, which is the presentation currency of these financial statements, unless otherwise noted.

Significant Accounting Judgments and Estimates

The preparation of these financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known. Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Impairment

Long-lived assets, including E&E assets and land, are reviewed for indicators of impairment at each reporting period or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. Impairment is dependent upon estimates of recoverable amounts. These are determined through the exercise of judgments and are dependent upon estimates that take into account factors such as economic and market conditions, frequency of use, anticipated changes in laws, and technological improvements.

Income taxes

Income taxes and tax exposures recognized in the financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash

Cash on the statements of financial position comprises bank balances held in Canadian chartered banks, and funds held in trust with the Company’s legal counsel which is available on demand.

Exploration and Evaluation Expenditures

Once the legal right to explore a property has been acquired, costs directly related to E&E expenditures are recognized and capitalized, in addition to the exploration costs. Direct expenditures include such costs as material used, surveying costs, drilling costs and payments made to contractors.

The Company assesses E&E assets for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. Some facts and circumstances which may be indicative of possible impairment include, but are not limited to: the expiration of the period for which the Company has the right to explore the property or the Company’s intention not to renew that right; substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area; sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the E&E asset is unlikely to be recovered in full from successful development or sale.

When a project is deemed to no longer have commercially viable prospects to the Company, E&E assets in respect of that project are deemed to be impaired. The recoverable amount of an E&E asset is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an E&E asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the carrying amount of the E&E asset exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the E&E asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as “mines under construction”. E&E assets are also tested for impairment before the assets are transferred to development properties.

Investments in E&E properties are recorded at cost and are not written down except to the extent that it is determined that their value is impaired. Any impairment loss identified is recognized on the statements of operations and comprehensive loss.

Due to the fact that impairment was identified and the value of the exploration properties had been written down to estimated realizable value in fiscal 2017 and 2019, the normal application of the Company’s accounting principles requires that all further costs be expensed in the statements of operations and comprehensive loss.

Land

Land is carried at cost, subject to estimates for impairment.

Financial Instruments

Financial assets and financial liabilities, including derivatives, are recognized on the statements of financial position when the Company becomes a party to the financial instrument or derivative contract.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories: (a) those to be measured subsequently at fair value through profit or loss (“FVTPL”); (b) those to be measured subsequently at fair value through other comprehensive income (“FVTOCI”); and (c) those to be measured at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are recorded in profit or loss.

The Company reclassifies financial assets when its business model for managing those assets changes. Financial liabilities are not reclassified.

Amortized cost

This category includes financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the solely principal and interest (“SPPI”) criterion. Financial asset classified in this category are measured at amortized cost using the effective interest method.

Expected credit loss impairment model

IFRS 9 – Financial Instruments (“IFRS 9”) introduced a single expected credit loss (“ECL”) impairment model, which is based on changes in credit quality since initial application. The adoption of the ECL impairment model had resulted in a provision of ECL recorded on the Company’s statements of loss and comprehensive loss.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Company in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts.

Fair value through profit or loss

This category includes derivative instruments as well as quoted equity instruments which the Company has not irrevocably elected, at initial recognition or transition, to classify at FVTOCI. This category would also include debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. Financial assets in this category are recorded at fair value with changes recognized in profit or loss.

Financial assets at fair value through other comprehensive income

Equity instruments that are not held-for-trading can be irrevocably designated to have their change in FVTOCI instead of through profit or loss. This election can be made on individual instruments and is not required to be made for the entire class of instruments. Attributable transaction costs are included in the carrying value of the instruments. Financial assets at FVTOCI are initially measured at fair value and changes therein are recognized in other comprehensive income (loss).

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets and financial liabilities with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through profit and loss or other comprehensive income (loss) (irrevocable election at the time of recognition). For financial liabilities measured subsequently at FVTPL, changes in fair value due to credit risk are recorded in other comprehensive income (loss).

The Company’s classification and measurements of financial assets and liabilities are summarized below:

	IFRS 9
Cash	FVTPL
Accounts payable and accrued liabilities	Amortized cost
Term loans	Amortized cost
Promissory notes payable	Amortized cost
Convertible debentures	Amortized cost

Fair value hierarchy

The Company classifies fair value measurements 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 – 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).

As at November 30, 2019, the Company does not have any financial instruments measured at fair value, other than cash, after initial recognition.

Share Capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.

Loss Per Share

The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, in the weighted average number of common shares outstanding during the year, if dilutive. The “treasury stock method” is used for the assumed proceeds upon the exercise of the options and warrants that are used to purchase common shares at the average market price during the year.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 November 30, 2019 and 2018, the Company had no material provisions.

Income Taxes

Income tax expense comprises current and deferred income tax expense. Current and deferred taxes are recognized in net loss, except to the extent that it relates to items recognized directly in equity or in other comprehensive income (loss).

Current income taxes

Current income taxes are recognized and measured at the amount expected to be recovered from, or payable to, the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred income taxes

Deferred income taxes are recorded for temporary differences at the date of the statements of financial position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of a deferred income tax asset is reviewed at the end of the reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of the reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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 at the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if, and only if, they relate to income taxes levied by the same taxation authority and the Company has the legal rights and intent to offset.

Adoption of New Accounting Policies

The Company adopted the following standard, effective December 1, 2018. The changes were made in accordance with the applicable transitional provisions. There was no material impact upon adoption of the new standards on the Company’s financial statements:

IFRS 9 – Financial Instruments

Effective December 1, 2018, the Company adopted all the requirements of IFRS 9 and the related consequential amendments to IFRS 7 – Financial Instruments: Disclosures. IFRS 9 introduces new requirements for:

• Classification and measurement of financial assets and financial liabilities;

• Impairment for financial assets; and

• General hedge accounting, which represent a significant change from IAS 39 – Financial Instruments: Recognition and Measurement (“IAS 39”).

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Adoption of New Accounting Policies (continued)

As permitted by the transition provisions of IFRS 9, the Company elected not to restate comparative period results. As such, all comparative period information is presented in accordance with the previous accounting policies. Adjustments to the carrying amounts of financial assets and liabilities, at the date of initial application have been recognized in opening deficit and other components of equity for the current period. New or amended interim disclosures have been provided for the current period, where applicable, while comparative period disclosures are consistent with those made in prior periods.

IFRS 9 utilizes a revised model for recognition and measurement of financial instruments and a single, forward-looking “expected loss” impairment model. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward in IFRS 9, such that the Company’s accounting policy with respect to financial liabilities is unchanged. IFRS 9 contains three (3) principal classification categories for financial assets: measured at amortized cost, FVTOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held-to-maturity, loans and receivables, and available-for-sale. IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ECL model. The new impairment model applies to financial assets measured at amortized cost. Under IFRS 9, credit losses are recognized earlier than under IAS 39.

Recent Accounting Pronouncements

The IASB and the IFRS Interpretations Committee have issued certain pronouncements that are mandatory for the Company’s accounting periods commencing on or after December 1, 2019. Many are not applicable or do not have a significant impact to the Company and have been excluded.

IFRS 16 – Leases (“IFRS 16”)

IFRS 16 was issued in January 2016 and replaces IAS 17 – Leases as well as some lease related interpretations. With certain exceptions for leases under twelve months in length or for assets of low value, IFRS 16 states that upon lease commencement a lessee recognizes a right-of-use (“ROU”) asset and a lease liability. The ROU asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall measure the ROU asset at cost less accumulated amortization and accumulated impairment. A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application. IFRS 16 requires that lessors classify each lease as an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise it is an operating lease. IFRS 16 is effective for annual periods beginning on or after December 1, 2019.

The Company has reviewed its leasing arrangements outstanding as at November 30, 2019, in respect of the new lease standard, and had assessed that the impact of adopting this new standard will have on the Company’s financial statements to be immaterial.

IFRIC 23 – Uncertainty Over Income Tax Treatments (“IFRIC 23”)

IFRIC 23 clarifies the accounting for uncertainties in income taxes. The interpretation committee concluded that an entity shall consider whether it is probable that a taxation authority will accept an uncertain tax treatment. If an entity concludes it is probable that the taxation authority will accept an uncertain tax treatment, then the entity shall determine taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates consistently with the tax treatment used or planned to be used in its income tax filings. If an entity concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the entity shall reflect the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates. IFRIC 23 is effective for annual periods beginning on or after December 1, 2019. The Company has performed a preliminary analysis and has not assessed any significant impact as a result of the adoption of this standard.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

4. ACCOUNTS RECEIVABLE

The Company’s accounts receivable balance represents amounts due from government taxation authorities in respect of the Harmonized Sales Tax. The Company anticipates full recovery of these amounts and therefore no credit loss has been recorded against these receivables, which are due in less than one (1) year.

5. EXPLORATION AND EVALUATION ASSETS

The Company previously acquired a 100% interest in two (2) properties in the Red Lake mining district of Northwestern Ontario, Canada. The properties are commonly referred to as the “Dome Property”, with respect to 17 unpatented mining claims covering 40 mining units and approximately 504 hectares in the Dome, Byshe and Heyson Townships and, the “McManus Claims” with respect to 17 patented mining claims and 11 licenses of occupation covering approximately 324 hectares, which abut the Dome Property.

The Dome Property interests are subject to 2% Net Smelter Royalty obligations (“NSR”) to the previous property owners, ½ of which may be purchased for $1,750,000. The McManus property interests are subject to 3% NSR to Camp McMan Red Lake Gold Mines Ltd., 1½% of which may be purchased for $500,000 per ½% interest. Minimum annual advance royalty payment of $10,000 per annum commenced in December 2014.

As at November 30, 2019, the Company determined that the uncertainty over the E&E assets and the lack of planned or budgeted substantive expenditures were indicators of impairment. Accordingly, the Company tested the E&E assets for impairment and recorded an impairment of $50,000 on its E&E assets (2018 – $nil) based on a recoverable amount of $nil.

6. LAND

Land is comprised of six (6) vacant lots subject to a registered plan of subdivision in the Town of Red Lake and a 94acre block of undeveloped land south of the subdivision. The residual surface rights of the vacant lots were acquired as part of the earn-in agreement pursuant to which the Company acquired the McManus Patents.

As the Company does not have any foreseeable plans to actively pursue exploration in these lands, an impairment of $25,000 had been recorded as at November 30, 2019 (2018 – $nil), to write down the recoverable value to nil.

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payables of the Company are principally comprised of amounts outstanding for trade purchases relating to regular business activities and amounts payable for financing activities.

	November 30, 2019	November 30,2018
	$	$
Accounts payable	87,271	244,114
Accrued liabilities	261,197	17,500
Others	21,268	-
	369,736	261,594

The Company’s standard term for trade payable is 30 - 60 days.

Included in accounts payable and accrued liabilities are certain amounts owing to a former officer and current directors of the Company, in the aggregate amount of $250,514. As at November 30, 2019, the amount of USD $90,000 (approximately $119,601) was owed to the former President and Chief Executive Officer (“CEO”) of the Company, who is also a director of Duncan Park, and $111,158 was owed to a director of the Company, for financial advances and support of funding ongoing administrative expenses. Branson Corporate Services Ltd. (“Branson”) where the Chief Financial Officer (“CFO”) of the Company is employed, was also owed $19,755 as at November 30, 2019 (November 30, 2018 – $nil).

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

8. TERM LOANS

Commencing in 2014, the Company entered into a series of unsecured term loan agreements aggregating $250,000 and $116,000 with the late Ian McAvity and E. Salsberg, respectively. The loans bore interest at the rate of 5% per annum calculated annually and were due and payable on December 15, 2017.

On May 14, 2019, the Company settled $301,989 and $136,664 of outstanding principal term loan balances (including accrued interest) with the Estate and E. Salsberg, respectively, through the issuance of 1,462,178 Debt Settlement Shares. After completion of the Share Consolidation, the Debt Settlement Shares were issued at a price based on a deemed pre-Consolidation Share price of $0.0075 per share multiplied by the Consolidation Ratio. Adjusted for the Consolidation Ratio, the Debt Settlement Shares were issued at a price of $0.30 per share on May 14, 2019. For purposes of calculating interest, accrued interest was calculated as of the fifth (5[th] ) business day prior to the issuance of the Debt Settlement Shares.

As a condition of the Debt Settlement, the Estate and E. Salsberg agreed to sell the Debt Settlement Shares to certain investors, including certain subscribers to the Private Placement from October 2018, at a price equal to 20% of the principal amount of the debt and accrued interest.

As a result of the foregoing, none of the term loans remained outstanding as at November 30, 2019 (November 30, 2018 – $433,036).

9. PROMISSORY NOTES PAYABLE

On March 11, 2019, the Company issued a promissory note (the “First Promissory Note”) to an arm’s-length party, in exchange for an advance of $30,000. The First Promissory Note is unsecured, bears interest at a rate of 10% per annum on the unpaid portion of the principal, calculated and compounded on a monthly basis. The First Promissory Note is due and payable on demand.

On October 23, 2019, the Company issued another promissory note (the “Second Promissory Note”) to another arm’slength party, in exchange for an advance of $17,203. The Second Promissory Note is unsecured, bears interest at a rate of 12% per annum on the unpaid portion of the principal, calculated and compounded on a monthly basis. The Second Promissory Note is due and payable on demand.

As at November 30, 2019, the amounts in outstanding principal of $47,202 (November 30, 2018 – $nil) and accumulated interest of $2,436 (November 30, 2018 – $nil) were owed by the Company. During the year ended November 30, 2019, $2,436 (2018 – $nil) of interest expense was incurred in relation to the Promissory Notes.

10. CONVERTIBLE DEBENTURES

On October 9, 2018, the Company completed a Private Placement of Debentures at a principal amount of $250,000, which had a term of one (1) year and accrued interest at a rate of 10% per annum.

Pursuant to the Private Placement, the Debentures are convertible into units of the Company, at the election of the holder. Each underlying unit was comprised of one (1) pre-consolidation share (a “Debenture Share”) and one-half (1/2) of one (1) pre-consolidation share purchase warrant (a “Warrant”), subject to adjustment following completion of the Share Consolidation.

Following the completion of the Share Consolidation as described in Note 2, the Debentures were convertible based on a price of $0.40, adjusted to account for the Consolidation Ratio. Following the completion of the Share Consolidation, the Warrants would be exercisable at a price of $0.60 for every one (1) Post-Consolidation Share. Following the Company’s delisting from the TSXV since May 9, 2019, the Debentures became effectively convertible into one (1) Debenture Share (and no Warrants) at a price of $0.30 per share, adjusted to account for the Share Consolidation.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

10. CONVERTIBLE DEBENTURES (continued)

In connection with the closing of the Private Placement, the lead investor in the Private Placement had the right to appoint one (1) additional director to the Board of the Company for the period ending with the completion of the next shareholders’ meeting of the Company, and did so. The proceeds were used to pay a substantial portion of liabilities incurred over the ordinary course of operations, to partially repay the term loans, to fund expenses related to holding the annual and special shareholders’ meeting and for general corporate purposes.

On October 9, 2019, immediately prior to its maturity, the Debentures were converted into 917,800 Debenture Shares of the Company, at the adjusted conversion price of $0.30.

11. SHARE CAPITAL AND LOSS PER SHARE

On May 14, 2019, the Company issued 1,462,178 common shares to settle outstanding term loans of $301,989 and $136,664 (including accrued interest) with the Estate and E. Salsberg, respectively. The Debt Settlement Shares were valued at $438,653 based on the fair value of the outstanding term loans (Note 8).

On October 9, 2019, the Company issued 917,800 common shares on conversion of the Debentures at the adjusted conversion price of $0.30 (see Note 10).

As at November 30, 2019, the authorized share capital of the Company consists of an unlimited number of common shares. Adjusted for the Share Consolidation, there were 5,531,881 shares issued and outstanding.

Basic loss per share is calculated by dividing the net loss for the period by the weighted average number of common shares in issue during the period. For the year ended November 30, 2019, the basic loss per share was $0.086 (2018 – $0.079).

12. RELATED PARTY TRANSACTIONS

Key management personnel compensation

Key management includes the Company’s directors and officers with authority and responsibility for planning, directing and controlling the activities of an entity, directly or indirectly.

On April 2, 2019, the Company and Branson entered into a management services agreement, providing for CFO services to the Company, as well as other accounting and administrative services, which are included in professional fees. During the year ended November 30, 2019, the Company was charged $18,000 (2018 – $nil) for services provided by Branson. As at November 30, 2019, an amount of $19,755 (November 30, 2018 – $nil) owing to Branson was included in accounts payable and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

During the year ended November 30, 2019, the Company was charged USD $15,000 (approximately $20,028) and $8,505 (2018 – USD $22,500 (approximately $28,750) and $14,993) by David Shaddrick, former President and CEO, and Harold Doran, the former CFO, of the Company respectively, for consulting and accounting services provided to the Company. As at November 30, 2019, an amount of USD $90,000 (approximately $119,601) (November 30, 2018 – USD $75,000 (approximately $99,758)) owing to the former President and CEO was included in accounts payable and accrued liabilities.

Also included in accounts payable and accrued liabilities are amounts owing to E. Salsberg, a director of the Company. As at November 30, 2019, an amount of $111,158 (November 30, 2018 – $108,500) was owed to E. Salsberg, for support of funding ongoing administrative expenses.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

13. INCOME TAXES

The reported recovery of income taxes differs from amounts computed by applying the combined Canadian federal and provincial income tax rates to the reported loss before income taxes due to the following:

	November 30, 2019	November 30,2018
	$	$
Reported loss before income taxes	(350,119)	(248,389)
Combined statutory income tax rate	26.50%	26.50%
Expected income tax recovery at current rate	(92,781)	(65,823)
Deferred financing charges	6,655	-
Unrecognized deferred tax assets	84,413	65,823
Non-deductible expenses and other	1,713	-
	-	-

Deferred Tax Balances

The balance in the statement of financial position is comprised of:

	November 30, 2019	November 30,2018
	$	$
Non-capital losses carried forward	815,096	748,553
Capital losses	720,732	720,732
Exploration and evaluation assets	232,781	219,532
Land	39,750	39,750
Financing costs	6,201	1,291
Share issue costs and other	-	291
	1,814,560	1,730,149
Deferred tax assets not recognized	(1,814,560)	(1,730,149)

As at November 30, 2019, the Company has non-capital losses of approximately $3,074,308 expiring as shown below:

	$
2028	397,080
2029	188,981
2030	125,437
2031	282,441
2032	330,670
2033	265,417
2034	230,364
2035	171,849
2036	177,989
2037	160,160
2038	210,414
2039	282,398
2040	251,108
	3,074,308

In addition, it has a capital loss of $5,439,490 (no change from prior year) arising primarily from the write off of advances to its former US subsidiary Company, one half of which is deductible indefinitely against capital gains.

The potential benefit of these carry-forward non-capital losses, capital losses, and deductible temporary differences in excess of the deferred tax liabilities have not been recognized in these financial statements as it is not considered probable that sufficient future tax profit will allow the deferred tax assets to be recovered.

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Duncan Park Holdings Corporation Notes to the Financial Statements Years ended November 30, 2019 and 2018 (Expressed in Canadian Dollars)

14. CAPITAL MANAGEMENT

The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern and to provide the funding needed to continue exploration of its properties. Since the Company currently has no commercial operations, this necessitates repetitive approaches to the financial markets and other sources to raise capital in various forms. Due to the Company’s current financial circumstances, there can be no assurance that efforts to raise capital will be successful.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s capital management objectives, policies and processes have remained unchanged during the years ended November 30, 2019 and 2018.

The Company is not subject to any externally imposed capital requirements.

15. FINANCIAL INSTRUMENT RISKS

The Company’s financial instruments consist primarily of cash, accounts payable and accrued expenses and promissory notes payable. The Company is exposed to various risks as it relates to these financial instruments. There have not been any changes in the nature of these risks or the process of managing these risks from previous reporting periods.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow primarily from its financing activities. As at November 30, 2019, the Company had a cash balance of $1,471 (November 30, 2018 – $55,757) to settle current liabilities of $419,374 (November 30, 2018 – $915,624).

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet its liabilities as they come due. The Company has undertaken several proposed restructuring initiatives and other corporate measures to rationalize its capital and debt structure to better position the Company for future opportunities and meet its obligations as they come due. Until these initiatives and efforts are finalized, there is no assurance that one or any of these initiatives will be successful.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The majority of the Company’s debts have fixed interest rates. As at November 30, 2019, the Company had no hedging agreements in place with respect to floating interest rates.

Foreign exchange risk

The Company’s exposure to fluctuations in foreign exchange is related to amounts of United States dollars (“USD$”) denominated accounts payable as follows:

minated accounts payable as follows:
	November	30, 2019	November 30,2018
		$	$
Accounts payable and term loans		92,000	78,036

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