React Gaming Group Inc. - Interim / Quarterly Report 2022

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(formerly Intema Solutions Inc.)

Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars)

NOTICE TO READER

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Canadian Institute of Chartered Professional Accountants.

Condensed Consolidated Interim Statements of Financial Position		1
Condensed Consolidated Interim Statements of Operations		2
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity		3
Condensed Consolidated Interim Statements of Cash Flows		4
Notes to the Condensed Consolidated Interim Financial Statements	5	– 28

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Financial Position (in Canadian dollars)

Assets Note	As at September 30, 2022	As at December 31, 2021
Cash and cash equivalents Restricted cash Trade and other receivables 8 Subscriptions receivable 17 Inventory Prepaid expenses Current assets Deposit Property and equipment, net 9 Lease asset - right of use asset, net 10 Intangible assets, net 11 Goodwill 12 Non-current assets	351,142 $ 838,788 674,675 - 9,035 69,096 1,942,736 $ 7,028 14,733 57,612 2,772,319 12,788,300 15,639,992 $	2,949,609 $ 8,983,100 164,000 1,023,900 - 120,833 13,241,442 $ 15,000 43,738 160,715 300,705 525,289 1,045,447 $
Total assets	17,582,728 $	14,286,889 $
Liabilities
Employee benefits Accounts payable and other liabilities 13 Subscription receipt liability Short-term debt 14 Current portion of long-term debt 16 Current liabilities Performance contigency, net of current portion 15 Long-term debt, net of current portion 16 Long-term liabilities	216,981 $ 3,800,436 - 390,883 2,239,111 6,647,411 $ 1,154,202 8,529 1,162,731 $	109,013 $ 603,417 10,007,000 - 222,898 10,942,328 $ - 139,540 139,540 $
Total liabilities	7,810,142 $	11,081,868 $
Commitments and contingencies 10, 22 Equity
Share capital 17 Contributed surplus Warrants 17 Accumulated other comprehensive income Accumulated deficit Total equity	27,272,982 3,883,372 1,767,697 (756,370) (22,395,095) 9,772,586 $	14,380,053 2,417,133 1,798,547 - (15,390,712) 3,205,021 $
Total liabilities and equity	17,582,728 $	14,286,889 $
Nature of operation and going concern 1 Subsequent events 24

Approved on behalf of the board of directors by:

“Michael Curtis” Michael Curtis Director

“Philip Nolan” Philip Nolan Director

The accompanying notes are an integral part of these condensed consolidated interim financial statements. 1

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Operations For the three and nine months ended September 30, 2022, and 2021 (in Canadian dollars)

REACT GAMING GROUP INC.(Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Operations For the three and nine months ended September 30, 2022, and 2021 (in Canadian dollars)	REACT GAMING GROUP INC.(Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Operations For the three and nine months ended September 30, 2022, and 2021 (in Canadian dollars)	REACT GAMING GROUP INC.(Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Operations For the three and nine months ended September 30, 2022, and 2021 (in Canadian dollars)
Three months ended Three months ended Note September 30, 2022 September 30, 2021			Nine months ended September 30, 2022	Nine months ended September 30, 2021
Revenue Cost of sales 5 Gross profit (loss) Administration and sales 5 Research and development 5 Operating loss Financial income 6 Financial expenses 6 Gain on revaluation of performance contingency 15 Goodwill impairment	792,164 $ 403,073 389,091 $ 1,999,925 24,584 (1,635,418) $ 8,597 6,612 - 444,405	32,918 $ 9,236 23,682 $ 1,387,022 133,534 (1,496,874) $ - 21,952 - -	1,971,668 $ 1,017,260 954,408 $ 8,618,507 166,426 (7,830,525) $ 18,807 26,436 (1,315,790) 444,405	95,925 $ 37,732 58,193 $ 2,680,387 218,419 (2,840,613) $ - 44,731 - -
Net loss	(2,095,032)	(1,518,826)	(7,004,383) $	(2,885,344) $
Other comprehensive income Foreign currency adjustment	(24,328)	-	(756,370)	-
Net comprehensive income	(2,119,360)	(1,518,826)	(7,760,753)	(2,885,344)
Weighted average number of shares – basic and diluted 7 Net loss per share – basic and diluted 7	167,402,095 (0.013)	116,753,789 (0.013)	161,898,790 (0.043) $	112,849,888 (0.026) $

The accompanying notes are an integral part of these condensed consolidated interim financial statements. 2

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity For the nine months ended September 30, 2022, and the year ended December 31, 2021 (in Canadian dollars)

									Accumulated other	Accumulated other
		Number of common								comprehensive			Total	shareholders'
	Note	shares		Share capital	Contributed surplus			Warrant reserve		income	Accumulated deficit			equity

Balance as at December 31, 2020		91,753,790	$	8,409,109	$	1,944,134	$	43,027	$	-	$	(10,207,531)	$	188,739
Issuance of capital stock	17	28,699,384		4,025,974		-		2,119,757		-		-		6,145,731
Cost of capital stock issuance	17	-		(225,680)		-		(151,399)		-		-		(377,079)
Exercised warrants	17	15,370,000		2,170,650		212,838		(212,838)		-		-		2,170,650
Stock-based compensation	17	-		-		260,161		-		-		-		260,161
Net loss		-		-		-		-		-		(5,183,181)		(5,183,181)
Balance as at December 31, 2021		135,823,174	$	14,380,053	$	2,417,133	$	1,798,547	$	-	$	(15,390,712)	$	3,205,021
Issuance of capital stock	17	28,841,560		12,733,920		-		210,957		-		-		12,944,877
Cost of capital stock issuance	17	-		(495,116)		-		(2,057)		-		-		(497,173)
Exercised warrants	17	2,775,000		654,125		239,750		(239,750)		-		-		654,125
Stock-based compensation	17	-		-		1,226,489		-		-		-		1,226,489
Net comprehensive loss		-		-		-		-		(756,370)		(7,004,383)		(7,760,753)
Balance as at September 30, 2022		167,439,734	$	27,272,982	$	3,883,372	$	1,767,697	$	(756,370)	$	(22,395,095)	$	9,772,586

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

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Cash Flows For the nine months ended September 30, 2022, and 2021 (in Canadian dollars)

Note	2022	2021
Net loss Adjustments for: Depreciation 9, 10 Amortization 11 Loss on assets written off Gain on revaluation of performance contingency 15 Goodwill impairment Stock-based compensation expense Changes in non-cash working capital items 18 Net cash flows used in operating activities Acquisition of businesses, net of cash Acquisition of property and equipment Acquisition of intangible assets and goodwill Net cash flows used in investing activities Advance to an officer Short term debt Long term debt Proceeds from issuance of share capital Proceeds from issuance of warrants Cost of issuance of shares Cost of issuance of warrants Exercise of warrants Net cash flows provided by financing activities Effect of exchange rate changes	(7,004,383) $ 48,623 790,980 196,914 (1,315,790) 444,405 1,226,489 183,860 (5,428,902) $ (7,942,837) (16,230) - (7,959,067) $ (225,961) 300,000 (185,350) 10,007,000 - - - 654,125 10,549,814 $ 239,688	(2,885,344) $ 6,610 104,969 53,909 - - 393,582 (300,679) (2,626,953) $ (148,159) (23,664) (4,778) (176,601) $ - 294 - 2,807,191 2,395,233 (157,797) (145,104) 26,500 4,926,317 $ -
Net increase(decrease) in cash and cash equivalents	(2,598,467) $	2,122,763 $
Cash and cash equivalents at beginning of period	2,949,609	301,087
Cash and cash equivalents at end ofperiod	351,142 $	2,423,850 $

The accompanying notes are an integral part of these condensed consolidated interim financial statements. 4

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2022 and 2021 (in Canadian dollars)

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

React Gaming Group Inc. (formerly Intema Solutions Inc., name change effective April 12, 2022), incorporated under the Canada Business Corporation Act. As of February 18, 2022, the Company provides online gambling on esports and other events through its acquisition of Livestream Belize and its Loot.Bet platform. Prior to that, the Company provided compliant email marketing through its eflyermaker platform and Web services until March 31, 2022, after which, the Company discontinued this operation. The Company’s registered office is located at 2020 Transcanada Hwy, Suite 107, Dorval, QC, H9P 2N4, Canada. The Company is trading on the TSX Venture Exchange under the symbol “RGG” and has no controlling shareholders.

Going concern

The condensed consolidated interim financial statements are based on the going concern assumption, meaning the Company will be able to realize its assets and discharge its liabilities in the normal course of operations. Considering the operating losses and unfulfilled financial ratios, those material uncertainties raise significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to realize its assets and discharge its liabilities depends on the continued support of its lenders and shareholders. As at September 30, 2022, the Company has accumulated a deficit of $22,395,095 and a net loss of $7,004,383 and net cash used in operations of $5,428,902. Going concern of the Company depends on, among other things, its ability to achieve a satisfactory level of revenue, the support of its customers, the conclusion of new financial agreements and its ability to raise new sources of funds.

Management believes that obtaining additional financing, reorienting its activities, and relying on the continued support of its existing customers and its shareholders, will help the Company to operate normally. However, there is no certainty that those measures will be sufficient to allow the continuation of the Company in the normal course of business.

The carrying amounts of assets, liabilities, revenues, and expenses presented in the condensed consolidated interim financial statements have not been adjusted as would be required if the going concern assumption was not appropriate. Those adjustments could be material.

NOTE 2 – BASIS OF PREPARATION

Basis of presentation

Statement of compliance and application of new International Financial Reporting Standards (“IFRS”).

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting.

The condensed consolidated interim financial statements do not include all of the information required for annual consolidated financial statements and should be read in conjunction with the audited annual financial statements of the Company for the year ended December 31, 2021, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by International Accounting Standards Board (“IASB”) and interpretations by the IFRS Interpretations Committee.

Presentation of financial statements

The condensed consolidated interim financial statements are disclosed according to IAS 1 Presentation of Financial Statements, which refers to how financial statements should be structured.

Use of estimates and judgments

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

The Company’s accounting policies as described in Note 3, Significant Accounting Policies, of the Company’s audited consolidated financial statements for the year ended December 31, 2021, have been applied consistently to all periods presented in these condensed consolidated interim financial statements. Refer to those audited consolidated financial statements for the significant accounting policies which remain unchanged as of September 30, 2022 except for the following items.

Revenue from games (GGR)

Gaming transactions in which the Company’s revenue consists of a commission, fixed percentage of winnings or similar are accounted for in accordance with IFRS 15 “Revenue from Contracts with Customers”. Gaming revenues are reported net after deduction for player winnings.

Revenue attributable to gaming transactions in which the Company assumes an open position against the player are reported net, after deduction of player winnings which are calculated according to the outcome of the game. Income from gaming activities represents the net gain or loss from gaming activities in the period.

Amounts wagered does not represent the Company’s statutory revenue measure and comprises the gross takings received and receivable from customers in respect of games.

Basis of consolidation

The Company’s financial statements consolidate those of the parent company and all of its subsidiaries as of September 30, 2022 and 2021. All subsidiaries have a year-end reporting date of December 31.

All inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions, have been eliminated upon consolidation. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Company perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Company.

Profit or loss of subsidiaries acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable.

The table below lists the Company’s wholly owned subsidiaries:

Name of subsidiary	Jurisdiction	Functional currency	Accounting Method
React Gaming Group Inc	Canada	Canadian dollars	Consolidation
Champion Esports Inc.	Canada	Canadian dollars	Consolidation
HypeX.gg Plateforme de Jeux Sociaux inc.	Canada	Canadian dollars	Consolidation
Team Bloodhounds Inc.	Canada	Canadian dollars	Consolidation
Generationz Gaming Entertainment inc.	USA	Canadian dollars	Consolidation
eFlyermaker	Canada	Canadian dollars	Consolidation
Livestream eSports Limited	Isle of Man	Great British pounds	Consolidation
Livestream Services Limited	Isle of Man	Great British pounds	Consolidation
Livestream eSports Limited	Belize	Euros	Consolidation
Livestream Ltd	Cyprus	Euros	Consolidation
GGWP	Belarus	Euros	Consolidation
Zubrsoft	Belarus	Euros	Consolidation
Parabellum Media Inc	Canada	Canadian dollars	Consolidation

See note 12 for further details on business acquisitions.

No new standards, interpretations, amendments, or standards issued but not yet effective were adopted for the first time from January 1, 2022.

NOTE 4 – SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES, AND UNCERTAINTIES

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated interim financial statements and notes to the condensed consolidated interim financial statements. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.

There have been no significant changes to the Company’s significant accounting judgments, estimates and uncertainties, as described in Note 4, Significant Accounting Judgments, Estimates and Uncertainties, of the Company’s audited consolidated financial statements for the year ended December 31, 2021.

NOTE 5 – OPERATING EXPENSES

	Three	months ended	Three	months ended	Nine	months ended	Nine	months ended
Operatingexpenses include :	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Employees expenses	$	349,206	$	434,250	$	2,192,742	$	832,473
Production expenses		957,519		2,464		1,035,896		9,639
Rent		1,791		33,884		68,167		63,842
Office expenses		49,950		294,973		1,147,007		457,000
Professional fees		327,115		516,189		2,208,987		977,969
Stock-based compensation expenses		157,171		67,320		1,226,489		393,582
Advertising and promotion		168,910		36,545		797,673		36,545
Write off of fixed assets		164,749		18,909		184,174		18,909
Impairment of intangible asset		-		35,000		12,740		35,000
Settlement		-		-		125,000		-
Bad debt		6,393		-		144,399		-
Ubisoft stipend		(76,592)		-		(180,684)		-
Depreciation / amortization		321,370		90,258		839,603		111,579
Total operating expenses	$	2,427,582	$	1,529,792	$	9,802,193	$	2,936,538

NOTE 6 – FINANCIAL INCOME AND EXPENSES

		Three months		Three months
Financial income and expense		ended		ended	Nine months ended		Nine months ended
is detailed as follows:	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Interest on current liabilities	$	5,205	$	10,386	$	12,205	$	28,161
Interest income		357		-		(4,277)	$	-
Loss (gain) on foreign exchange		9,647		11,566		26,359		16,570
Subtotal		15,209		21,952	$	34,287	$	44,731
Interest and financial expenses on long-term debt		-		-		10,956		-
Total financial expenses	$	15,209	$	21,952	$	45,243	$	44,731

The current portion of long-term debt is classified as a current liability and any interest accrued is classified as interest on current liabilities.

NOTE 7 – LOSS PER SHARE

Dilutive potential instruments (convertible debentures, warrants, stock options) have not been included in the calculation of dilutive earnings per share because of their anti-dilutive effect.

NOTE 8 – TRADE AND OTHER RECEIVABLES

	September 30,	September 30,		December 31,
		2022		2021
Trade accounts receivable	$	93,493	$	34,832
Advance to an officer without interest		174,761		19,081
Advance to acquisition target		50,000		-
Sales tax receivable		356,421		110,087
Trade and other receivables	$	674,675	$	164,000

All amounts are due in the short term. The net carrying amounts represent a reasonable approximation of their fair value.

The net book value of outstanding trade receivables of the Company is $93,493 ($34,832 as at December 31, 2021) at the end of the period. The aging of these receivables is detailed in the following table:

	September 30,	September 30,		December 31,
Agingof receivables		2022		2021
Not impaired and past due by:
0 to 30 days	$	90,993	$	34,832
31 to 60 days		-		-
61 to 90 days		2,500		-
Over 90 days		-		-
Trade and other receivables	$	93,493	$	34,832

The Company has not set up any allowance for the accounts presented in the preceding table since the credit quality of these receivables has not changed significantly, and they are still considered collectible.

Trade receivables are normally recovered in 61 days (68 days in 2021). The Company does not hold any collateral in respect of these receivables.

As at September 30, 2022, the Company has outstanding receivables to a former officer in the amount of $174,750. These receivables have no payment terms and bear no interest.

NOTE 9 – PROPERTY AND EQUIPMENT

		Computer				Leasehold
Cost		hardware		Furniture		improvements			Total

As at December 31, 2020	$	181,624	$	21,520	$		-	$		203,144
Additions		12,616		30,238		2,704				45,558
Disposals		(166,642)		(24,520)		(2,704)				(193,866)
As at December 31, 2021	$	27,598	$	27,238	$		-	$		54,836
Additions		5,487		10,741			-			16,228
Acquisitions		15,058		1,257			-			16,315
Disposals		(27,598)		(37,980)			-			(65,578)
Effect of foreign exchange		(1,137)		(92)			-			(1,229)
As at September 30, 2022	$	19,408	$	1,164	$		-	$		20,572

		Computer				Leasehold
Accumulated depreciation		hardware		Furniture		improvements			Total

As at December 31, 2020	$	155,967	$	14,943	$		-	$		170,910
Additions		6,159		776			-			6,935
Disposals		(151,028)		(15,719)			-			(166,747)
As at December 31, 2021	$	11,098	$	-	$		-	$		11,098
Additions		10,825		1,973			-			12,798
Disposals		(16,273)		(1,739)			-			(18,012)
Effect of foreign exchange		(43)		(2)			-			(45)
As at September 30, 2022	$	5,607	$	232	$		-	$		5,839

		Computer				Leasehold
Net book value		hardware		Furniture		improvements			Total
As at December 31, 2021	$	16,500	$	27,238	$		-	$		43,738
As at September 30, 2022	$	13,801	$	932	$		-	$		14,733

NOTE 10 – LEASE ASSET – RIGHT OF USE

Cost

Cost
As at December 31, 2020	$	133,226
Additions		160,715
Disposals		(133,226)
As at December 31, 2021	$	160,715
Acquisitions		74,680
Disposals		(160,715)
Effect of foreign exchange		(5,438)
As at September 30, 2022	$	69,242

Accumulated depreciation

As at December 31, 2020	$	48,109
Additions		44,409
Disposals		(92,518)
As at December 31, 2021	$	-
Additions		35,825
Disposals		(24,107)
Effect of foreign exchange		(88)
As at September 30, 2022	$	11,630

Net book value

As at December 31, 2021	$	160,715
As at September 30, 2022	$	57,612

The right of use asset is a lease for office space. The Company is committed to pay under long-term leases agreements an amount of $47,346 before December 2026. The payments are as follows over the next five years: 2022 - $9,696 and 2023 - $37,650.

NOTE 11 – INTANGIBLE ASSETS

				Computer		Domain		Active		Trade		Total
Cost		Patents		software		name		users		names		intangibles

As at December 31, 2020	$	52,202	$	1,193,622	$	3,928	$	-	$	-	$	1,249,752
Additions		-		383,800		-		27,300		40,300		451,400
Disposals		(52,202)		-		(3,928)		-		(35,000)		(91,130)
As at December 31, 2021	$	-	$	1,577,422	$	-	$	27,300	$	5,300	$	1,610,022
Additions		-		-		-		-		-		-
Acquisitions		-		3,526,984		-		-		-		3,526,984
Disposals		-		(1,193,623)		-		-		-		(1,193,623)
Effect of foreign exchange		-		(256,814)		-		-		-		(256,814)
As at September 30, 2022	$	-	$	3,653,969	$	-	$	27,300	$	5,300	$	3,686,569

				Computer		Domain		Active		Trade		Total
Accumulated amortization		Patents		software		name		users		names		intangibles

As at December 31, 2020	$	10,298	$	1,164,334	$	-	$	-	$	-	$	1,174,632
Additions		2,610		136,641		-		8,342		-		147,593
Disposals		(12,908)		-		-		-		-		(12,908)
As at December 31, 2021	$	-	$	1,300,975	$	-	$	8,342	$	-	$	1,309,317
Additions		-		784,155		-		6,825		-		790,980
Disposals		-		(1,186,183)		-		-		5,300		(1,180,883)
Effect of foreign exchange		-		(5,164)		-		-		-		(5,164)
As at September 30, 2022	$	-	$	893,783	$	-	$	15,167	$	5,300	$	914,250

				Computer		Domain		Active		Trade		Total
Net book value		Patents		software		name		users		names		intangibles
As at December 31, 2021	$	-	$	276,447	$	-	$	18,958	$	5,300	$	300,705
As at September 30, 2022	$	-	$	2,760,186	$	-	$	12,133	$	-	$	2,772,319

NOTE 12 – BUSINESS ACQUISITIONS

Acquisition of Livestream (Belize)

On February 18, 2022, the Company acquired 100% of the issued and outstanding shares of Livestream (Belize). The purchase price consideration was:

Cash of $8,000,000
6,470,598 shares valued at $2,135,294
A holdback loan of $4,000,000 payable as $2,000,000 in 9 months and $2,000,000 in 18 months. The amounts payable are subject to working capital adjustments based on the net opening balances of working capital as of February 28, 2022. As of these statements, the first tranche of the holdback is valued at $90,883
A contingent performance bonus of $1,500,000 if $7,500,000 of GGR (gross gaming revenue) is achieved in 12 months from the acquisition date and a contingent performance bonus of $1,500,000 if $11,250,000 of GGR is achieved in 24 months from the acquisition date. These contingent performances have a discounted value of $1,315,790 and $1,154,202 for the 12 months and 24 months amount, respectively. The amounts have been discounted at 14% as the last rate the Company used for borrowing.

Through the acquisition of Livestream (Belize) the Company has access to its online esports gambling platform Loot.bet. Loot.bet is a premier esports gambling platform that provides wagering services on all major esports. In addition, Loot.bet allows for traditional sports wagering and casino games wagering.

The table below summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date:

Consideration Cash Holdback note Performance contingency Shares of the Company	8,000,000 $ 2,090,883 2,469,992 2,135,294
Total consideration	14,696,169 $
Net assets acquired Cash Restricted cash Other working capital, net Property and equipment Lease asset Intangible assets Goodwill Total assets, net	57,160 $ 621,548 $ (2,789,952) 16,315 74,680 3,506,105 13,210,313 14,696,169 $
Total net assets acquired	14,696,169 $

The final purchase price accounting has not been finalized and figures are subject to change based on the results of that process.

Acquisition of Parabellum Media Inc.

On February 24, 2022, the Company purchased 100% of the issued and outstanding shares of Parabellum Media Inc (“Parabellum”). The purchase price was the issuance of 1,700,000 shares of the Company with a holdback of 150,000 shares for a total value of $459,000 at a share value of $0.33.

Through the acquisition of Parabellum, the Company owns a leading esports team with competitive teams in Rainbow 6 and Rocket League.

The table below summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date:

Consideration Shares of the Company	459,000 $
Total consideration	459,000 $
Net assets acquired Goodwill Total assets	459,000 459,000 $
Total net assets acquired	459,000 $

Acquisition of HypeX.gg Plateforme de Jeux Sociaux Inc.

On February 8, 2021, the Company acquired 100% of the issued and outstanding shares of HypeX.gg Plateforme de Jeux Sociaux Inc. (“HypeX”). The purchase price was cash consideration of $75,000 and 1,625,000 shares of the Company valued at $0.26 for a value of $422,500.

Through the acquisition of HypeX, the Company provides the ability to offer esports tournaments to venues of small to arena sizes. HypeX also allows for many different esports to be played through its tournament platform.

The table below summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date:

Consideration Cash Shares of the Company	75,000 $ 422,500
Total consideration	497,500 $
Net assets acquired Cash Software Users Trade name Goodwill Total assets	215 $ 383,800 27,300 5,300 80,885 497,500 $
Total net assets acquired	497,500 $

Acquisition of Team Bloodhounds Inc.

On September 21, 2021, the Company acquired 100% of the issued and outstanding shares of Team Bloodhounds Inc. The purchase price was cash consideration of $54,834, 1,000,000 shares of the Company valued at $0.53 for a value of $500,000, less discounting for the vesting terms, which arrived at the final value of $345,564 with a payable to the owners of Team Bloodhounds Inc. due 3 months after the acquisition date of $60,500.

Team Bloodhounds Inc. is the second largest esports team in Canada. Through this acquisition, the Company has access to the Team Bloodhounds brand and marketing.

The table below summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date:

Consideration
Cash	$	54,834
Note payable		60,500
Shares of the Company		345,563

Total consideration	$	460,897
Net assets acquired
Cash	$	16,493
Goodwill		444,404
Total assets	$	460,897
Total net assets acquired	$	460,897

After evaluating the Goodwill, the entire amount of $444,004 was impaired during the year ended September 30, 2022

Goodwill is comprised of:

Goodwill is comprised of:
	September 30, 2022		December	31, 2021
HypeX goodwill	$	80,885	$	80,885
Team BH goodwill		-		444,404
Parabellum goodwill		459,000		-
Livestream goodwill		12,248,415		-
Totalgoodwill	$	12,788,300	$	525,289

Acquisition of Champion eSports Inc.

On April 20, 2021, the Company signed a purchase agreement to acquire 100% of the issued and outstanding shares of Champion eSports Inc. The purchase price was cash consideration of $35,000. The acquisition closed on April 20, 2021. The acquisition was deemed an asset acquisition.

The table below summarizes the fair value of the assets acquired and the liabilities assumed at the acquisition date:

Consideration Cash	35,000 $
Total consideration	35,000 $
Net assets acquired Trade name Total assets	35,000 $ 35,000
Total net assets acquired	35,000 $

After evaluating the trade name, the entire amount of $35,000 was impaired during the year ended December 31, 2021.

NOTE 13 – ACCOUNTS PAYABLE AND OTHER LIABILITIES

	September 30,	September 30,		December 31,
		2022		2021
Trade and accrued payables	$	1,425,311	$	603,417
Accrued finders' fees		88,995		-
Player balances		430,508
Sales tax		1,855,622		-
Accountspayable and other liabilities	$	3,800,436	$	603,417

NOTE 14 – SHORT-TERM DEBT

	September 30,	September 30,		December 31,
		2022		2021
Livestream (Belize) holdback note (1)	$	90,883	$		-
Unsecured short term notes (2)		300,000			-
Total short-term debt	$	390,883	$		-

(1) The holdback note represents the short-term portion of the $2,000,000 payable to the former owners of Livestream due nine months from the date of acquisition. This note is $2,000,000 less negative working capital of $1,909,117 netting to $90,883. This note is subject to change pending the finalization of the opening balance sheet of Livestream (Belize) as at February 18, 2022.
(2) The unsecured short-term notes are as follows:
a. One $50,000 note at 12% interest per annum due July 31, 2023.
b. One $250,000 note at 30% interest per annum due October 5, 2022.

NOTE 15 – PERFORMANCE CONTINGENCY

The Company has a contingent performance bonus resulting from the Livestream transaction as mentioned in note 12.

The performance contingency consists of:

$1,500,000 if $7,500,000 of GGR (gross gaming revenue) is achieved in 12 months from the acquisition date. This performance contingency was discounted at 14%, as that is the last borrowing rate of the Company. The discounted value was $1,315,790. The Company has revalued the fair value of the liability to nil due to the low likelihood of reaching the GGR target at 12 months from acquisition.
$1,500,000 if $11,250,000 of GGR is achieved in 24 months from the acquisition date. This has been discounted at 14% as that is the last borrowing rate of the Company. The discounted value is $1,154,202.

NOTE 16 – LONG-TERM DEBT

NOTE16 – LONG-TERMDEBT
	September 30,			December 31,
		2022		2021
Loans from previous officer (1)	$	161,723	$	161,723
Lease liability (2)		45,917		160,715
COVID loan (3)		40,000		40,000
Livestream (Belize) holdback note (4)		2,000,000		-
Total debt	$	2,247,640	$	362,438
Current portion		2,239,111		222,898
Total long-term debt	$	8,529	$	139,540

(1) The loan without interest from a previous officer, whose repayment conditions are to be renegotiated (formerly, will be payable at $5,000 per month once the following conditions have been fulfilled: 1) relisting of the common shares of the Company on the TSX Exchange and, 2) the warrants included in the March 2019 special warrants financing are exercised).
(2) The Company has two lease assets as at March 31, 2022, both rental offices. The total interest expense in the statement of operations includes an amount of $3,247 ($7,081 in 2021) in interest on the lease liability. The Company’s total cash payments for its leases was $12,028 ($51,786 in 2021).
(3) The Canada Emergency Business Account (CEBA) is intended to provide financial support to businesses struggling to cover their expenses that are not able to defer through this pandemic. The loan is for $60,000 and is interest-free with the potential of up to $20,000 of loan forgiveness, if the balance of the loan is repaid on or before December 31, 2023. If the loan is not repaid by this date, it will be converted into a three-year term loan at an annual interest rate of 5% with the entire loan to be repaid. The Company intends to reimburse the $40,000 in December 2023.
(4) The holdback note represents the long-term portion of the $2,000,000 payable to the former owners of Livestream due 18 months from the date of acquisition. This note is subject to change pending the finalization of the opening balance sheet of Livestream (Belize) as at February 18, 2022.

NOTE 17 – SHAREHOLDERS’ EQUITY

Share capital

The Company’s authorized capital stock consists of an unlimited number of voting and participating common shares par value.

common shares par value.
Issued	Number of shares		Amount

Balance as at December 31, 2020	91,753,790	$	8,409,109
Private placement (a)	25,000,000		2,992,487
Shares issued in lieu of finders' fees (a)	1,012,120		202,424
Cost of share issuance (a)	-		(225,680)
Warrants exercised (b)	15,370,000		2,170,650
Purchase of Livestream (Belize) (c)	-		-
Purchase of Parabellum Media Inc. (d)	-		-
Purchase of HypeX.gg (e)	1,625,000		422,500
Purchase of Team Bloodhounds Inc. (f)	943,396		345,563
Issuance for marketing (g)	118,868		63,000
Issuance to related party (h)	-		-
Balance as at December 31, 2021	135,823,174	$	14,380,053
Private placement (a)	20,014,000		9,958,169
Shares issued in lieu of finders' fees (a)	314,800		75,552
Cost of share issuance (a)	-		(495,116)
Warrants exercised (b)	2,775,000		654,125
Purchase of Livestream (Belize) (c)	6,470,588		2,135,294
Purchase of Parabellum Media Inc. (d)	1,700,000		459,000
Purchase of HypeX.gg (e)	-		-
Purchase of Team Bloodhounds Inc. (f)	-		-
Issuance for marketing (g)	59,154		21,000
Issuance to related party (h)	283,018		84,905
Balance as at September 30, 2022	167,439,734	$	27,272,982

(a) Private placement

a. On February 18, 2022, the Company closed a private placement in escrow of 20,014,000 units for gross proceeds of $10,007,000. Each unit consisted of 1 share and 0.5 warrants with a strike price of $0.90 expiring within 1 year. $9,958,169 was assigned to the value of the shares and $48,831 was assigned to the value of the warrants. The transaction involved an accrued amount of $384,495 of finders’ fees to be paid when the filing statement of the Livestream acquisition is final, and the escrow is released. $1,876 of the finders’ fees were allocated to the warrants. 1,023,921 warrants were issued as finders’ fees for a value of $26,498. $26,369 of this expense was allocated to shares, the remaining $129 was allocated to the warrants. Related to the closing of the same private placement, on July 11, 2022, 314,800 shares were issued as finders’ fees valued at $75,552. 410,667 finders’ warrants were also issued on this date for a value of $10,628. $10,576 of this expense was allocated to shares, the remaining $52 was allocated to warrants.

b. On March 8, 2021, in connection with a non-brokered private placement the Company issued 25,000,000 common shares at $0.20 per share and 25,000,000 warrants for a total of $5,000,000. $2,992,487 was assigned to the value of shares with the remaining $2,007,513 assigned to the value of the warrants. The transaction involved a payment of $62,410 in cash for finders’ fees and of $202,424 in shares issued (1,012,120 shares at $0.20) and $112,244 of finders’ fees warrants issued (1,397,796 warrants with a strike price of $0.2650). Total finders’ fees amounted to $377,078, of which $250,738 was allocated to shares, and $123,340 was allocated to warrants.
(b) Warrants exercised
a. On January 5, 2022, 1,250,000 warrants issued as part of a settlement agreement with a former employee were executed at a price of $0.20 per warrant for a total value of $250,000.
b. Between January 20, 2022 and March 3, 2022, 1,525,000 warrants were exercised at a strike price of $0.265 for a value of $404,125.
c. On July 29, 2021, 100,000 warrants were exercised at a price of $0.265 per warrant for a total value of $26,500.
d. Between November 2, 2021 and December 29, 2021, 13,120,000 warrants were exercised at a price of $0.120 per warrant for a total value of $1,574,000.
e. Between November 21, 2021 and December 8, 2021, 2,268,868 warrants were exercised at a price of $0.265 for a total value of $632,750.
(c) Purchase of Livestream (Belize)
a. As part of the purchase of Livestream (Belize) (Loot.Bet), the Company issued 6,470,588 shares at a price of $0.33 for a total value of $2,135,294 to the former owners. The shares vest immediately and are subject to TSXV trading regulations.
(d) Purchase of Parabellum Media Inc.
a. As part of the purchase of Parabellum Media Inc., the Company issued 1,700,000 shares at a price of $0.27 for a total value of $459,000 to the former owners. The shares vest immediately and are subject to TSXV trading regulations.
(e) Purchase of HypeX.gg Plateforme de Jeux Sociaux Inc.
a. As part of the purchase of HypeX.gg, the Company issued 1,625,000 shares at a price of $0.26 for a total value of $422,500 to the former owners. 406,250 shares vested at closing, 406,250 vest 6 months after the purchase, 406,250 vest 9 months after the purchase, and the remainder vest 12 months after the purchase. The share value was not discounted as the vesting provision in the purchase agreement was not binding to the vendor.
(f) Purchase of Team Bloodhounds Inc.
a. As a part of the purchase of Team Bloodhounds Inc., the Company issued 1,000,000 shares at a price of $0.53 for a total value of $500,000 to the former owners. The amounts were discounted for the duration of the strict vesting schedule in the Share Purchase Agreement. The share value after discounting was $343,563. Of the shares provided for consideration, 250,000 shares vest 4 months from the purchase date, 250,000 vest 9 months after the purchase, 406,250 vest 12 months after the purchase, and the remainder vest 14 months after the purchase.

Warrants

		Weighted average	Weighted average
Issued	Number		exerciseprice

Balance as at December 31, 2020	13,120,000	$	0.1320
Issued (a)	26,397,796	$	0.2650
Exercised warrants (b)	(2,250,000)	$	0.2650
Exercised warrants (b)	(13,120,000)	$	0.1200
Balance as at December 31, 2021	24,147,796	$	0.1200
Issued (a)	1,250,000	$	0.2000
Issued (a)	11,441,588	$	0.9000
Exercised warrants (b)	(1,250,000)	$	0.2000
Exercised warrants (b)	(1,525,000)	$	0.2650
Repricing of warrants (c)	(10,007,000)	$	0.9000
Repricing of warrants (c)	10,007,000	$	0.5300
Balance as at September 30, 2022	34,064,384	$	0.2668

(a) Warrants issued
a. On February 18, 2022, the Company issued 10,007,000 warrants in connection with a private placement. The warrants were recorded as a reduction of the share capital in the amount of $48,831. Each warrant entitled its holder to purchase an additional common share at $0.90 per share for a period of 12 months. On June 3, 2022, these warrants were repriced to entitle its holder to purchase an additional common share at $0.53. On August 29, 2022, these warrants were extended to expire on February 18, 2024.
b. On February 18, 2022, the Company issued 1,023,921 finders’ warrants in connection with a private placement. Each warrant entitles its holder to purchase an additional common share at $0.90 per share for a period of 12 months. The fair value of the warrants is $26,498. An additional 410,667 finders’ warrants in connection with the same private placement were issued on July 11, 2022. The fair value of these warrants were $10,628 and have the same expiration date as the earlier ones.
c. On April 30, 2021, the Company issued 1,397,796 finders’ warrants. Each finders’ warrant entitles the holder to acquire one common share of the Company at a price of $0.265 for a period of 18 months following the closing. The fair value of the warrants is $112,244.
d. On February 17, 2021, 25,000,000 warrants were issued pursuant to a private placement. They are recorded as a reduction of the share capital in the amount of $2,007,513. Each whole warrant entitles its holder to purchase an additional common share at $0.20 per share for a period of 18 months following the closing of the private placement. On August 29, 2022, the 22,622,796 unexercised, remaining warrants were extended to expire on September 5, 2023.

(b) Warrants exercised

a. On January 5, 2022, 1,250,000 warrants issued as part of a settlement agreement with a former employee were executed at a price of $0.020 per warrant for a total value of $250,000.

b. Between January 20, 2022 and March 3, 2022, 1,525,000 warrants were exercised at a strike price of $0.265 for a value of $404,125.
c. On July 29, 2021, 100,000 warrants were exercised at a price of $0.265 per warrant for a total value of $26,500.
d. Between November 2, 2021 and December 29, 2021, 13,120,000 warrants were exercised at a price of $0.120 per warrant for a total value of $1,574,000.
e. Between November 21, 2021 and December 8, 2021, 2,268,868 warrants were exercised at a price of $0.265 for a total value of $632,750.
(c) Warrants repriced
a. On June 3, 2022, the 10,007,000 warrants issued at $0.90 as part of the private placement were repriced to $0.53 as mentioned above.

Summary table of outstanding and exercisable warrants as at September 30, 2022:

	Number of	Average remaining	Weighted average	Weighted average
Expiry date	warrants	term(years)		exerciseprice
February 2024	10,007,000	1.39	$	0.5300
February 2023	1,434,588	0.39	$	0.9000
September 2023	22,622,796	0.93	$	0.2650

Summary table of the warrants as at September 30, 2022:

	Expiry	Expiry	Expiry	Expiry	Expiry	Expiry
	Feb-23		Feb-23		Sep-22
Fair value	$	0.0259	$	0.0259	$	0.4025
Stock price	$	0.2700	$	0.2700	$	0.6000
Exercise price	$	0.5300	$	0.9000	$	0.2650
Expected life (years)		1.0		1.0		1.5
Volatility		100%		100%		100%
Expected dividend yield		0.00%		0.00%		0.00%
Expected risk-free rate		1.65%		1.65%		0.49%

Incentive stock option plan

The shareholders of the Company have adopted a stock option plan (the “Plan”) under which members of the Board of Directors may award stock options for common shares to directors, officers, employees and consultants. The conditions and the exercise price of each option are determined by the Board of Directors.

The total number of common shares reserved for stock option plan to directors, officers and employees shall not represent, over a 12-month period, more than 10% of the Company’s common shares issued and outstanding, that number being calculated on the grant date.

The total number of common shares reserved pursuant to the stock option plan to consultants and investor relations services providers shall not represent, over a 12-month period, more than 2% of the Company’s common shares issued and outstanding, that number being calculated on the grant date.

The purchase price of the common shares upon the exercise of each option granted under the stock option plan will be the price determined by the Board of Directors or the Compensation Committee at the time of each option grant, but that price may not be less than the “Expected price” which means the market price at the time of each option grant less a discount according to the accepted rules by TSX Venture Exchange, subject to a minimum price of $0.10. The market price at the time of each option grant means the TSX Venture Exchange market closing price on the day before they are granted. If there is no trading on the day before, the closing price is replaced by the average of the bid and offered price.

The stock options are exercisable at any time and expire 180 days after the departure date of the holder for directors, officers, and employees, and 30 days for consultants.

The Company recognized a share-based compensation expense of $1,226,489 during the period ended September 30, 2022 (December 31, 2021 – $260,161), in accordance with the vesting of the stock options. The total fair value of options granted during the period was $1,295,001 (December 31, 2021 – $485,831).

The grant date fair value of these options was determined based on the Black-Scholes formula. Expected volatility is estimated by considering historic average share price volatility in consideration with industry averages.

Change in the stock options are detailed as follows:

	September 30,	September 30,	2022		December	December	31,	2021
		Weighted						Weighted
	Number of	average exercise			Number of	average exercise
	options		price		options			price
Outstanding, beginning of year	3,685,000	$		0.3297	2,600,000		$	0.2350
Issued during the period	7,629,412	$		0.4245	2,920,000		$	0.3654
Forfeited during the period	(1,295,000)	$		0.4941	(1,835,000)		$	0.3394
Outstanding	10,019,412	$		0.3806	3,685,000		$	0.3297

Exercisable	7,654,412	$		0.4373	1,375,000		$	0.4801

The outstanding stock options details of the Company are as follows:

		Weighted
	average exercise		Number of	Vested and
Expiry date		price	options	exercisable
February 18, 2024	$	0.5000	3,529,412	3,529,412
December 17, 2025	$	0.2350	1,715,000	650,000
February 8, 2026	$	0.2550	675,000	375,000
February 18, 2027	$	0.5000	2,500,000	2,500,000
June 28, 2027	$	0.1400	1,600,000	600,000
Total	$	0.3806	10,019,412	7,654,412

A summary table of the outstanding stock options as at September 30, 2022:

		Exercise	Share price	Share price	Expected life	Expected	Risk-free	Expected	Options
Approval date		price	at	grant date	(years)	volatility	interest rate	dividends	issued	Expiry date
February 18, 2022	$	0.5000	$	0.3300	2.00	100%	1.65%	0.00%	3,529,412	February 18, 2024
December 17, 2020	$	0.2350	$	0.1300	5.00	100%	0.57%	0.00%	2,600,000	December 17, 2025
February 8, 2021	$	0.2550	$	0.2400	5.00	100%	0.32%	0.00%	2,420,000	February 8, 2026
February 18, 2022	$	0.5000	$	0.3300	2.00	100%	1.65%	0.00%	2,500,000	February 18, 2027
June 28,2022	$	0.1400	$	0.1800	5.00	100%	3.18%	0.00%	1,600,000	February18,2027

NOTE 18 – INFORMATION ON CASH FLOWS

	Nine months ended	Nine months ended	Nine months ended	Nine months ended
Working capital items	September 30, 2022		September 30, 2021
Decrease (increase) in:
Restricted cash	$	(217,240)	$	-
Trade and other receivables		(204,181)		(321,005)
Inventory		4,837		-
Prepaid expenses		51,737		(85,985)
Deposits		7,972		-
Employee benefits		107,968		(154,503)
Accounts payable and other liabilities		146,722		260,814
Net changes in working capital items	$	(102,185)	$	(300,679)

NOTE 19 – RELATED PARTY TRANSACTIONS

The Company's key management personnel are members of the Board of Directors, the President and Chief Executive Officer, and the Chief Financial Officer. Key management personnel remuneration includes the following expenses:

		Three months ended		Three months ended		Nine months ended		Nine months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Salaries and benefits	$	174,222	$	30,268	$	279,972	$	260,418
Share based compensation		7,654		45,547		577,344		45,547
Professional fees		24,010		34,493		69,010		34,493
Total	$	205,886	$	110,308	$	926,326	$	340,458

Directors and officers of the Company subscribed for a total of 1,036,000 units in the $10,007,000 private placement dated February 18, 2022.

An officer of the Company subscribed for a total of 500,000 units in the $5,000,000 private placement dated March 8, 2021.

NOTE 20 – FINANCIAL RISKS AND FINANCIAL INSTRUMENTS

Fair value hierarchy

Financial instruments carried at fair value in the statement of financial position are classified using a hierarchy that reflects the significance of the inputs used in making the measurements. Hierarchy for fair value consists of the following levels:

Level 1 – fair value based on the quoted price within the bid-ask spread that is most representative of fair value in the circumstance.

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).

Level 3 – valuations techniques based on a significant part of data for the asset or liability that are not based on observable market data (unobservable inputs).

The hierarchy that applies as part of the determination of fair value requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

The fair values of accounts receivable, accounts payable and accrued liabilities approximate their carrying values given their short-term maturities. The fair value of the short-term and long-term debt approximates the carrying value due to the variable interest rate of the debt. The fair value of the other non-current liabilities approximates the carrying value based on the expected settlement amount of these liabilities.

The carrying value of current financial assets and liabilities approximate their fair value due to their expected realization in the short term.

The following tables show the classification of financial instruments as well as their carrying amount and fair value at September 30, 2022, and December 31, 2021:

					As	at September 30, 2022
		Financial assets		Assets and		Financial liabilities		Total carrying
		at amortized cost	liabilities at fair value			at amortized cost		value		Fair value
Financial assets
Cash and cash equivalents	$	351,142	$	-	$	-	$	351,142	$	351,142
Restricted cash		838,788		-		-		838,788		838,788
Trade and other receivables		674,675		-		-		674,675		674,675
Total financial assets	$	1,864,605	$	-	$	-	$	1,864,605	$	1,864,605
Financial liabilities
Employee benefits	$	-	$	-	$	216,981	$	216,981	$	216,981
Accounts payable and other liabilities		-		-		3,800,436		3,800,436		3,800,436
Short-term debt		-		-		390,883		390,883		390,883
Performance contigency		-		1,154,202		-		1,154,202		1,154,202
Long-term debt		-		-		2,247,640		2,247,640		2,247,640
Total financial liabilities	$	-	$	1,154,202	$	6,655,940	$	7,810,142	$	7,810,142
					As at December 31, 2021
		Financial assets		Assets and		Financial liabilities		Total carrying
		at amortized cost	liabilities at fair value			at amortized cost		value		Fair value
Financial assets
Cash and cash equivalents	$	2,949,609	$	-	$	-	$	2,949,609	$	2,949,609
Restricted cash		8,983,100		-		-		8,983,100		8,983,100
Trade and other receivables		164,000		-		-		164,000		164,000
Subscriptions receivable		1,023,900		-		-		1,023,900		1,023,900
Total financial assets	$	13,120,609	$	-	$	-	$	13,120,609	$	13,120,609
Financial liabilities
Accounts payable and other liabilities	$	-	$	-	$	603,417	$	603,417	$	603,417
Subscription receipt liability		-		-		10,007,000		10,007,000		10,007,000
Long-term debt		-		-		362,438		362,438		362,438
Total financial liabilities	$	-	$	-	$	10,972,855	$	10,972,855	$	10,972,855

Financial risk management

The Company operates in an industry with a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. To minimize the negative effects on its financial performance, the Company has centralized cash management for defining, assessing, and hedging financial risks. The Company does not enter contracts for financial instruments including financial derivatives for speculative purposes.

The following analysis assesses the nature and extent of the risks to the statement of financial position date, September 30, 2022.

Market risk

Risk management policies are established to identify and analyze the risks, to set appropriate risk limits and controls and to monitor risks and adherence to limits. The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures. The Audit Committee is assisted in its oversight role by Internal Audit, who undertakes regular reviews of risk management controls and utilizes the annual risk assessment process as the basis for the annual internal audit plan.

Credit risk

Cash and cash equivalents are held or issued by Canadian chartered financial institutions. Thus, the Company considers the risk of non-performance of those instruments to be negligible.

The Company's credit risk is primarily attributable to its trade and other receivables. The Company provides credit to its customers in the normal course of business. It carries out ongoing credit evaluations regarding its customers and closely monitors outstanding balances. As at September 30, 2022, there were no doubtful accounts receivable.

Accounts receivables are recognized in the statement of financial position net of allowance for doubtful accounts. This provision is based on the best estimates of the Company regarding the ultimate recovery of balances for which collection is uncertain. The uncertainty about the probability of perception can arise from various indicators such as deterioration in the creditworthiness of a customer or deferral of perception when the aging of invoices exceeds the normal payment terms. Management regularly reviews accounts receivables, monitors past due balances and assesses the appropriateness of the allowance for doubtful accounts. Given the above, the Company believes that the credit risk is not significant.

For other receivables, the Company continuously evaluates the probable losses and establishes a provision for losses based on their estimated realizable value.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations as they come due. Management reviews the level of liquidity of the Company to continuously ensure they have sufficient cash to meet its commitments. To ensure sufficient liquidity to meet its current obligations, the Company maintains payment terms with its customers similar to those it has with its suppliers. In addition, the financing of the Company is ensured by short-term and long-term borrowings and short-term credit facilities to ensure adequate financial resources to meet its obligations as they come due.

The following table summarizes the contractual maturities of financial liabilities:

		Carrying	Contractual	Contractual				6 to 12		12 to 24	Greater than	Greater than
As at September 30, 2022		value		cash flow	0	to 6 months		months		months		24 months
Trade and accrued payables	$	3,800,436	$	3,800,436	$	1,944,814	$	205,305	$	825,159	$	825,159
Short-term debt		390,883		90,883		90,883		-		-		-
Performance contingency		1,154,202		1,500,000		-		-		1,500,000		-
Long-term debt		2,247,640		2,209,069		181,115		2,019,392		8,562		-
Total	$	7,593,161	$	7,600,388	$	2,216,812	$	2,224,697	$	2,333,721	$	825,159

		Carrying	Contractual					6 to 12		12 to 24	Greater than
As at December 31, 2021		value		cash flow	0	to 6 months		months		months		24 months
Accounts payable and other liabilities	$	109,013	$	109,013	$	109,013	$	-	$	-	$	-
Subscription receipt liability		10,007,000		10,007,000		10,007,000		-		-		-
Long-term debt		362,468		388,598		182,898		21,175		42,350		142,175
Total	$	10,478,481	$	10,504,611	$	10,298,911	$	21,175	$	42,350	$	142,175

50 basis point decrease/increase in interest rates would result in an increase/decrease in income before income taxes of approximately $nil for the three months ended September 30, 2022 (2021 – $nil).

NOTE 21 – INFORMATION ON THE MANAGEMENT OF CAPITAL

As part of managing its capital, the Company's objectives are to ensure that sufficient liquidity is available to pursue its organic growth or to make strategic acquisitions, to ensure that the external requirements imposed under its credit facilities are complied with, provide services to its clients, and provide a satisfactory return to shareholders. The Company defines capital as the sum of its equity.

On September 30, 2022, the total equity increased to $9,777,586 ($3,205,021 in 2021).

The change in total equity during the period ended September 30, 2022, was $6,567,565 ($3,106,282 in 2021).

The Company manages its capital structure to ensure that cash flows from operations and cash flows in the statement of financial position are greater than the interest expense and principal payments to be paid.

The Board of Directors reviews and approves all significant transactions outside the ordinary course of business, including proposals on acquisitions or other major investments or provisions, long-term debt payments and operating budgets and capital expenditures.

NOTE 22 – CONTINGENCIES

The Company has contention with four former employees: they are initiating actions before the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST) in connection with the termination of their employment and their employment contract. The Company has contested these claims, and, in management's opinion, they are groundless. Neither the possible outcome nor the amount of possible settlement can be foreseen. The full amounts of the claims have been provisioned.

NOTE 23 – SEGMENT REPORTING

The Company has reviewed its activities and determined that it leads them in a single reportable operating segment. This single reportable operating segment derives its revenues from the gaming revenue.

The main assets of the Company are in Canada and Belize.

NOTE 24 – SUBSEQUENT EVENTS

On October 24, 2022, the Company initiated a financing of up to $5,000,000 of units consisting in one common share of the Company priced at $0.10 and one warrant at an exercise price of $0.12 for a period of 48 months. The Company closed a first tranche of 6,450,000 units for gross proceeds of $635,000 thus far.

AI assistant

React Gaming Group Inc. — Interim / Quarterly Report 2022

45148_rns_2022-11-29_a14f52ed-b0c5-4e44-8def-58a9b2b655e1.pdf

Condensed Consolidated Interim Financial Statements

NOTICE TO READER

TABLE OF CONTENTS

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Financial Position (in Canadian dollars)

REACT GAMING GROUP INC. (Formerly Intema Solutions Inc.) Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity For the nine months ended September 30, 2022, and the year ended December 31, 2021 (in Canadian dollars)

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

Going concern

NOTE 2 – BASIS OF PREPARATION

Basis of presentation

Statement of compliance and application of new International Financial Reporting Standards (“IFRS”).

Presentation of financial statements

Use of estimates and judgments

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Revenue from games (GGR)

Basis of consolidation

NOTE 4 – SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES, AND UNCERTAINTIES

NOTE 5 – OPERATING EXPENSES

NOTE 6 – FINANCIAL INCOME AND EXPENSES

NOTE 7 – LOSS PER SHARE

NOTE 8 – TRADE AND OTHER RECEIVABLES

NOTE 9 – PROPERTY AND EQUIPMENT

Cost

Net book value

NOTE 11 – INTANGIBLE ASSETS

NOTE 12 – BUSINESS ACQUISITIONS

Acquisition of Livestream (Belize)

Acquisition of Parabellum Media Inc.

Acquisition of HypeX.gg Plateforme de Jeux Sociaux Inc.

Acquisition of Team Bloodhounds Inc.

Acquisition of Champion eSports Inc.

NOTE 13 – ACCOUNTS PAYABLE AND OTHER LIABILITIES

NOTE 14 – SHORT-TERM DEBT

NOTE 15 – PERFORMANCE CONTINGENCY

NOTE 16 – LONG-TERM DEBT

NOTE 17 – SHAREHOLDERS’ EQUITY

Share capital

(a) Private placement

Warrants

(b) Warrants exercised

Incentive stock option plan

NOTE 18 – INFORMATION ON CASH FLOWS

NOTE 19 – RELATED PARTY TRANSACTIONS

Fair value hierarchy

Financial risk management

Market risk

Credit risk

Liquidity risk

NOTE 21 – INFORMATION ON THE MANAGEMENT OF CAPITAL

NOTE 22 – CONTINGENCIES

NOTE 23 – SEGMENT REPORTING

NOTE 24 – SUBSEQUENT EVENTS

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React Gaming Group Inc. Interim / Quarterly Report 2022