Roxmore Resources Inc. — Audit Report / Information 2021

Apr 30, 2021

NETCOINS HOLDINGS INC.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (EXPRESSED IN CANADIAN DOLLARS)

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of Netcoins Holdings Inc.

Opinion

We have audited the consolidated financial statements of Netcoins Holdings Inc. (the “Company”) which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statements of income (loss) and comprehensive income (loss), changes in cash flows and equity for the year then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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 Auditors’ Responsibilities for the Audit of the Consolidated 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 consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the accompanying consolidated financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information, which comprises the information included in the Company’s Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

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

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

Other Matter

The consolidated financial statements of the Company as of December 31, 2019 and for the year then ended, which are presented for comparative purposes, were audited by another auditor who expressed a qualified opinion on those consolidated financial statements on July 15, 2020.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 consolidated financial statements.

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

• Identify and assess the risks of material misstatement of the consolidated 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 auditors’ report to the related disclosures in the consolidated 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 auditors’ 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 auditors’ report is Fernando J. Costa.

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, Canada April 29, 2021

NETCOINS HOLDINGS INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars)

AS AT DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars)
		December 31,		December 31,
		2020		2019
ASSETS
Current Assets
Cash and cash equivalents	$	164,729	$	1,934,390
GST receivable		-		266,815
Prepaid expenses		-		65,355
		164,729		2,266,560
Marketable securities (Note 7)		2,927,000		-
Equipment		233		792
Total Assets	$	3,091,962	$	2,267,352
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables (Note 8)	$	620,769	$	368,005
Income taxespayable(Note 12)		-		78,158
Total Liabilities		620,769		446,163
EQUITY
Share capital (Note 9)		22,353,190		22,353,190
Contributed surplus		760,511		760,511
Reserves (Notes 10 and 11)		4,991,141		4,991,141
Deficit		(25,633,649)		(26,283,653)
		2,471,193		1,821,189
Total Liabilities and Equity	$	3,091,962	$	2,267,352

Going Concern (Note 2) Subsequent Events (Note 20)

Approved on behalf of the Board of Directors

/s/ Kevin Ma /s/ Desmond Balakrishnan Kevin Ma, Desmond Balakrishnan, Director Director

The accompanying notes are integral to these consolidated financial statements

NETCOINS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars)

		December 31,		December 31,
		2020		2019
REVENUE
Cryptocurrency sales	$	-	$	43,379,204
Cryptocurrency purchases		-		(43,035,168)
Gross Profit		-		344,036
Listingrevenue		-		323,675
NET REVENUE		-		667,711
OPERATING EXPENSES
Accretion expense		-		23,363
Marketing and advertising		39,221		43,837
Bad debts		306,854		123,088
Consulting fees (Note 19)		98,250		682,000
Depreciation		559		101,246
Office and administrative (Note 19)		458,114		1,365,369
Legal and professional fees (Note 19)		310,613		748,411
Share-based payments (Note 11)		-		699,722
Transfer agent and regulatory fees		29,961		43,833
Travel		48,329		29,438
Operating Expenses		1,291,901		3,860,307
OTHER INCOME (EXPENSES)
Interest income (Note 6)		15,000		-
Foreign exchange gain (loss)		250		(147,659)
Gain on sale of subsidiaries (Note 17)		-		2,159,723
Gain on fair value of investments (Note 17)		-		187,500
Gain on sale of marketable securities		235,975		-
Gain on fair value of marketable securities (Note 7)		1,777,000		-
Other income		-		67,988
Write-offofdeposit		(86,320)		-
Other Income		1,941,905		2,267,552
NET INCOME (LOSS) BEFORE INCOME TAXES		650,004		(925,044)
TAXES
Income taxexpense (Note12)		-		(82,913)
		-		(82,913)
NET INCOME(LOSS) ANDCOMPREHENSIVE INCOME(LOSS)	$	650,004	$	(1,007,957)
Basic and diluted earnings (loss) per share(Note 18)	$	0.13	$	(0.26)
Weighted average number of shares outstanding (basic) (Note 18)		4,856,589		3,868,824
Weighted average number of shares outstanding (diluted)(Note
18)		4,910,960		3,868,824

The accompanying notes are integral to these consolidated financial statements

NETCOINS HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars)

NETCOINS HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars)
		December 31,		December 31,
		2020		2019
Cash Flows (used in) Operating Activities
Net income (loss)	$	650,004	$	(1,007,957)
Adjustments for items not affecting cash
Accretion on lease liability		-		23,363
Bad debt expense		306,854		123,088
Depreciation		559		19,827
Depreciation expense – right-of-use assets		-		81,419
Share-based payments (Note 11)		-		699,721
Unrealized fair value gain on cryptocurrency inventory		-		(47,694)
Gain on sale of subsidiaries (Note 17)		-		(2,159,723)
Gain on fair value of investments (Note 17)		-		(187,500)
Gain on sale of marketable securities		(235,975)		-
Gain on fair value of marketable securities (Note 7)		(1,777,000)		-
Interest income (Note 6)		(15,000)		-
Income tax expense		-		78,158
Write-offofdeposit		86,320		-
		(984,238)		(2,377,298)
Changes in non-cash working capital:
Cryptocurrency inventory		-		(68,373)
Trade and other receivables		(40,039)		(227,845)
Prepaid expenses		(20,965)		(34,782)
Trade and other payables		174,606		32,624
Customer deposits		-		(46,827)
		(870,636)		(2,722,501)
Cash Flows (used in) Investing Activities
Purchase of marketable securities		(1,350,000)		-
Sale of marketable securities		550,975		-
Loan advanced (Note 6)		(100,000)		-
Purchase ofequipment		-		(668)
		(899,025)		(668)
Cash Flows (used in) Financing Activities
Cash disposed of in sale of subsidiaries		-		(841,941)
Payment of leaseliabilities		-		(99,212)
		-		(941,153)
Changes in cash during the year		(1,769,661)		(3,664,322)
Cash and cash equivalents – Beginning ofyear		1,934,390		5,598,712
Cash and cash equivalents – End ofyear	$	164,729	$	1,934,390

Supplemental Information (Note 15)

The accompanying notes are integral to these consolidated financial statements

NETCOINS HOLDINGS INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except number of shares)

	Common Shares Number of Shares Amount Contributed Surplus Reserves Deficit Total
Balance – December 31, 2018 Net loss for the year Adoption of IFRS 16 (Note 3) Vesting of stock options (Note 11) Cancellation of options (Note 11) Shares issued for: Restricted share units (Note 9) Distributionof Purchaser’s shares (Note17)	4,816,589 $ 22,203,190 $ 760,511 $ 4,441,419 $ (22,263,455) $ 5,141,665 - - - - (1,007,957) (1,007,957) - - - - (12,241) (12,241) - - - 494,656 - 494,657 - - - 116,879 - 116,879 40,000 150,000 - (61,813) - 88,187 - - - - (3,000,000) (3,000,000)
Balance – December 31, 2019 Netincomeforthe year	4,856,589 22,353,190 760,511 4,991,141 (26,283,653) 1,821,189 - - - - 650,004 650,004
Balance – December 31, 2020	4,856,589 $ 22,353,190 $ 760,511 $ 4,991,141 $ (25,633,649) $ 2,471,193

The accompanying notes are integral to these consolidated financial statements

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

1. General Information

Netcoins Holdings Inc. (“NHI” or “Netcoins” or the “Company”) was incorporated on February 20, 1987 under the Business Corporation Act (Ontario). These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.

Netcoins is a public company which is listed on the Canadian Securities Exchange (“CSE”) under the symbol “NETC”. The Company's head office is 800 West Pender Street, Suite 1430, Vancouver, BC, V6C 2V6, and registered and records office is located 1055 W. Georgia Street, Suite 1500, PO Box 11117, Vancouver, BC, V6E 4N7.

Disposal of Subsidiaries

On May 27, 2019, the Company announced it entered into a share purchase agreement with an unrelated third party (the “Purchaser”) regarding the sale of Netcoins Inc., NTC Holdings Corp. and NTC Holdings USA Corp. (collectively, the “Subsidiaries”).

Please refer to the Disposal of Subsidiaries (Note 17) for more details.

Covid-19

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has already affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. Other than the pandemic delaying the Company’s plans for investments, the Company’s business and results were not materially affected by the pandemic.

2. Going Concern

These consolidated financial statements have been prepared by management on a going concern basis, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Should the Company be unable to continue as going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

For the year ended December 31, 2020, the Company had a working capital deficiency of $456,040, has an accumulated deficit of $25,633,649, and negative cash flow from operations of $870,636. The Company's ability to continue as a going concern is dependent upon its ability to achieve and maintain profitable operations and to generate funds therefrom. These factors cast significant doubt on the Company’s ability to continue as a going concern.

These consolidated financial statements do not reflect the adjustments to the carrying value of assets and liabilities and the reported expenses and consolidated statement of financial position classifications that would be necessary were the going concern assumption inappropriate. These adjustments could be material.

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

3. Basis of Preparation

a. Statement of Compliance

These consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all years presented, unless otherwise stated.

These consolidated financial statements were approved and authorized for issuance by the Board of Directors on April 29, 2021.

These consolidated financial statements have been prepared on a historical cost basis, modified where applicable. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

b. Functional and Presentation Currency

These consolidated financial statements are presented in Canadian dollars. The functional currency of the Company is measured using the principal currency of the primary economic environment in which each entity operates. The functional currency of the Canadian entity is in Canadian dollars.

c. Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its controlled entities. Control is achieved when the Company has the power to govern the financial operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases.

The following subsidiaries were consolidated until July 31, 2019; thereafter, the Company deconsolidated these subsidiaries as it no longer has control over them:

Subsidiary	Ownership	Location	Currency
NetcoinsInc.	100%	Canada	CAD
NTCHoldings Corp.	100%	Canada	CAD
NTCHoldings USACorp.	100%	USA	CAD

All inter-company transactions, balances, income and expenses are eliminated in full upon consolidation.

4. Significant Accounting Policies

(i) Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Classification

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

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

• (i) Financial Instruments (continued)

Measurement

Financial assets and liabilities at amortized cost

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

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gain and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the consolidated statements of operations and comprehensive income (loss) in the period in which they arise.

Impairment of financial assets at amortized cost

An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the consolidated statements of operations and comprehensive income (loss).

(ii) Impairment of Non-Financial Assets

The Company performs impairment tests on its long-lived assets, including property, plant and equipment when new events or circumstances occur, or when new information becomes available relating to their recoverability. When the recoverable amount of each separately identifiable asset or cash generating unit (“CGU”) is less than its carrying value, the asset or CGU’s assets are written down to their recoverable amount with the impairment loss charged against profit or loss. A reversal of the impairment loss in a subsequent period will be charged against profit or loss. A reversal of the impairment loss in a subsequent period will be charged against profit or loss if there is a significant reversal of the circumstances that caused the original impairment. The impairment will be reversed up to the amount of the depreciated carrying value that would have otherwise occurred if the impairment loss had not occurred.

The CGU’s recoverable amount is evaluated using fair value less costs of disposal calculations. In calculating the recoverable amount, the Company utilizes discounted cash flow techniques to determine fair value when it is not possible to determine fair value when active markets or a written offer to purchase. Management calculates the discounted cash flows based upon its best estimate of a number of economic, operating, engineering, environmental, political and social assumptions. Any changes in the assumptions due to changing circumstances may affect the calculation of the recoverable amount.

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

• (iii) Cash and Cash Equivalents

Cash and cash equivalents consist of amounts held in current bank accounts.

• (iv) Revenue Recognition

IFRS 15 provides a comprehensive five-step revenue recognition model for all contracts with customers. IFRS 15 revenue recognition model requires the Company to exercise significant judgment and make estimates that affect revenue recognition and is based on the principle that revenue is recognized when control of good or service transfers to a customer.

The standard contains a single model that applies to contracts with customers and two approaches to recognizing revenue, at a point in time or over time, the assessment of which requires judgment. The model features the following contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized.

1. Identifying the contract with a customer;

2. Identifying the performance obligation(s) in the contract;

3. Determining the transaction price;

4. Allocating the transaction price to the performance obligation(s) in the contract, and

5. Recognizing revenue when or as the Company satisfies the performance obligation(s).

Revenue from cryptocurrency sale transactions are recognized based on the gross proceeds received from the customer or receivable from vendors acting on behalf of the Company. Revenue is recognized at the time of transfer of control over the cryptocurrency, which is when the cryptocurrency is credited to the customer’s virtual wallet. Proceeds collected by vendors on behalf of the Company are typically settled within 1 to 15 days.

Listing revenues are recognized monthly or annually from companies wanting to list their digital asset on the Company’s platform when performance obligation is satisfied, based on the agreed upon invoiced amount.

• (v) Cryptocurrency Inventory

Cryptocurrencies held for sale in the ordinary course of business are measured at fair value determined by reference to quoted prices published by bitcoin exchange brokers, with charges in fair value recorded in profit or loss.

• (vi) Cost of Sales

Cryptocurrency purchases are measured based on the price paid by the Company in fiat to purchase cryptocurrency from cryptocurrency exchanges.

(vii) Property, Plant and Equipment

Equipment is measured at cost, less accumulated depreciation and accumulated impairment losses. Cost included expenditures that are directly attributable to bring an asset to productive use at its intended location. Additions are depreciated commencing in the month that they are available for use. The cost of repairs and maintenance is expensed as incurred.

Depreciation is provided on a straight-line method over the estimated useful lives of assets. Upon sale or disposition of a depreciable asset, cost and accumulated depreciation are removed from equipment and any gain or loss is reflected as a gain or loss from operations. Equipment is depreciated over 3 years.

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

(vii) Property, Plant and Equipment (continued)

Leasehold improvements are depreciated on a straight-line method over the term of the lease, which is 3 years.

An asset’s depreciation method, useful life and residual value are reviewed at the end of each reporting period and adjusted prospectively if appropriate.

(viii) Share-Based Payments

Share-based payments to officers, directors and consultants are measured at the fair value of the instruments issued and recognized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The fair value of options, as determined using the Black-Scholes Option Pricing Model which incorporates all market vesting conditions, is expensed in profit or loss. The corresponding amount is recorded to reserves. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that will eventually vest.

When the terms of a share-based payment are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification over the remaining vesting period.

• (ix) Income Taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when the related asset is realized or liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

• (x) Foreign Currency Translation

The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates.

Transactions and Balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange date. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive income to the extent that gains or losses arising on those non-monetary items are also recognized in other comprehensive income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

Exchange differences arising on translation of foreign operations are recognized in other comprehensive income and recorded in the Company’s foreign currency translation reserve is equity. These differences are recognized in profit or loss in the period in which the operation is disposed.

• (xi) Fair Value Measurement

Where fair value is used to measure assets and liabilities in preparing these financial statements, it is estimated at the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. Fair values are determined from inputs that are classified within the fair value hierarchy defined under IFRS as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Inputs for the asset or liability that are unobservable

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants acts in their economic best interest.

The Company holds marketable securities consisting of common shares and warrants held in public and non-public companies. At the end of each financial reporting period, the Company’s management estimates the fair value of its investments based on the criteria below and records such valuations in the consolidated financial statements. Warrants of non-public companies are valued using option pricing models when there are sufficient and reliable observable market inputs.

Page 13

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

• (xi) Fair Value Measurement (continued)

Marketable securities are initially recorded at cost at the time of acquisition. At each reporting period thereafter, the fair value of an investment may, depending on circumstances, be adjusted by taking into account the following circumstances:

• There has been a significant subsequent equity financing provided by outside investors at a valuation above or below the current fair value of the investee, in which case the fair value of the investment is adjusted to reflect the value at which the financing took place;

• Based on financial information received from the investee it is apparent to the Company that the investee is unlikely to be able to continue as a going concern, in which case the fair value of the investment is adjusted downward;

• The investee is placed into receivership or bankruptcy;

• There has been significant corporate, political, operating or economic events affecting the investee that, in the Company’s opinion, have a positive or negative impact on the investee’s prospects and, therefore, its fair value. In these circumstances, the adjustment to the fair value of the investment will be based on management’s judgment and any value estimated may not be ultimately realized or realizable. Such events include, without limitation:

• receipt or denial of necessary approvals that allow or prevent the investee to proceed with its project(s);

• release by the investee of positive or negative technical results, which either proves or disproves its technical prospects; and

• management personnel changes at the investee level that the Company’s management believes will have a very positive or negative impact on the investee’s ability to achieve its objectives and build value for shareholders.

In addition to the circumstances described above, the Company will take into account general market conditions when determining if an adjustment to the fair value of an investment is warranted at the end of each reporting period. Absent the occurrence of any of these events, or any significant change in general market conditions, the fair value of the investment is left unchanged.

Application of the valuation techniques described above may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these techniques may not be realized. The amount at which an investment could be disposed of may differ from its carrying value due to the availability and/or reliability of information available to, and determinations reached by, the Company. Any fair value estimated by the application of these techniques may not ultimately be realized. Transaction costs incurred in the purchase and sale of investments are recorded as an expense in the consolidated statement of comprehensive income and loss.

(xii) Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.

The number of additional shares is calculated by assuming that outstanding stock options and share purchase warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods.

Page 14

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

4. Significant Accounting Policies (continued)

(xiii) Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

(xiv) Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment.

• (xv) Right-of-Use Assets and Lease Liability

The Company has applied IFRS 16, Leases, as at January 1, 2019. The Company assesses whether a contract is or contains a lease at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term unless another systematic basis is more representative of the usage of the economic benefits from the leased asset.

The lease liability is initially measured at the present value of the future lease payments at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrow rate. The lease liability is subsequently measured by increasing the carrying amount to reflect on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, payments made on or before the lease commencement and any direct costs. They are subsequently measured at cost less depreciation and any impairment losses. Right-of-use assets are depreciated over the shorter period of the lease term and useful of the underlying asset.

(xvi) Dividends

IFRSs do not provide guidance on how an entity should measure distributions to its owners (commonly referred to dividends). IAS 1 requires an entity to present details of dividends, recognized as distributions to owners either in the consolidated statement of changes in shareholders’ equity or in the notes to the consolidated financial statements.

In August 2019, the Company distributed all 37,500,000 Purchaser’s shares from the sale of its subsidiaries to its shareholders as a non-cash dividend. The dividend was measured at the fair value of the Purchaser’s shares at $0.08.

(xvii) Disposal of Subsidiaries

When the Company losses control over a subsidiary, it:

• Derecognizes the assets and liabilities of the subsidiary;

• Derecognizes the translation differences recorded in equity;

• Recognizes the fair value of the consideration received;

• Recognizes any surplus or deficit in the consolidated statement of loss and comprehensive loss;

• Reclassifies the parent’s share of components previously recognized as OCI to the consolidated statement of loss and comprehensive loss, as appropriate, as would be required of the Company had directly disposed of the related assets or liabilities.

Page 15

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

5. Critical Accounting Estimates and Judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments in applying its accounting policies and estimates and assumptions about the future. These judgments, estimates, and assumptions affect the reported amounts of assets and liabilities at the reporting date and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstance. Actual results may differ from these estimates under different assumptions or conditions. The following discusses the most significant accounting judgments, estimates and assumptions that the Company has made in the preparation of its financial statements.

Areas of judgement

• (i) Going Concern

Determining if the Company has the ability to continue as a going concern is dependent on its ability to achieve profitable operations. Certain judgments are made when determining if the Company will be able to continue as a going concern. Further disclosure is included in Note 2.

• (ii) Deferred Tax Asset

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probably that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Management applies judgment in determining the likelihood of future taxable profits.

Assumptions and critical estimates

• (i) Determination of Fair Values

Certain of the Company’s assets and liabilities are measured at fair value. In estimating fair value, the Company uses market-observable data to the extent it is available. For marketable securities not quoted in an active market, where Level 1 inputs are not available the Company estimates the fair value based on the criteria described under Note 4(xi).

(ii) Tax Assets and Liabilities

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

Deferred tax assets and liabilities contain estimates about the nature and timing of future permanent and temporary differences as well as the future tax rates that will apply to those differences. Changes in tax laws and rate as well as changes to the expected timing of reversals may have a significant impact on the amounts recorded for deferred tax assets and liabilities. Management closely monitors current and potential changes to tax law and bases its estimates on the best available information at each reporting date.

(iii) Share-Based Payments

The Company utilizes the Black-Scholes Option Pricing Model (“Black-Scholes”) to estimate the fair value of stock options granted to directors, officers and consultants. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the share-based compensation calculation value, however, the most significant estimate is the volatility.

Page 16

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

6. Loans Receivable

On February 24, 2020, the Company entered into a loan agreement with an unrelated company (the “Borrower”) for principal of $100,000 with interest bearing at 15% per annum and the loan is due on demand when the Borrower completes its next financing. The accrued interest is payable in common shares of the Borrower at $0.20 per share. The Borrower also agreed to issue warrants at a rate of 15% of the loan principal to the Company. These warrants are exercisable at $0.20 per share.

On December 7, 2020, The Company and the Borrower agreed to convert the loan principal of $100,000 and its accrued interest of $15,000 into the shares of the Borrower at a price of $0.20 per share. Subsequent to the conversion, the Company considered the loan to be fully repaid.

7. Marketable Securities

The Company’s marketable securities are comprised of investments in common shares of Canadian publicly traded and non-public companies. The Company measures its marketable securities at fair value through profit or loss (“FVTPL”). The cost and fair values of the marketable securities at December 31, 2020 and December 31, 2019 are as follows:

31, 2019 are as follows:
		December 31, 2020		December 31, 2019
Opening Balance	$	-	$	-
Additions		1,465,000		-
Disposals		(315,000)		-
Fair value gain		1,777,000		-
EndingBalance	$	2,927,000	$	-

8. Trade and Other Payables

Trade and Other Payables
		December	31, 2020		December 31, 2019
Taxes payable	$		48,263	$	48,263
Trade payables			572,506		319,742
	$		620,769	$	368,005

Trade and other payables comprise primarily of trade payables incurred in the normal course of business. Included in trade payables are amounts total $57,236 (December 31, 2019 - $590) due to related parties (see Note 19).

9. Share Capital

a. Authorized Share Capital

The Company is authorized to issue unlimited number of common shares without par value. At December 31, 2020, the Company had 4,856,589 (December 31, 2019 – 4,856,589) common shares outstanding.

b. Issued Share Capital

In November 2019, the Company completed a consolidation of its authorized and issued common shares on the basis of one post-consolidated common share for every twenty-five pre-consolidation common shares. All references to shares, per share amounts, warrants and options in these financial statements have been retroactively restated to reflect the share consolidation.

In April 2019, the Company issued 40,000 common shares to RSU holders upon the vesting of the remaining RSU.

Page 17

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

9. Share Capital (continued)

c. Restricted Share Units

Pursuant to the Company’s fixed number restricted share unit (“RSU”) plan, the Company awarded a total of 80,000 RSU to certain directors, officers and employees in October 2018. 50% of the awarded RSU vested immediately and the remaining 50% vested on April 17, 2019. The shares awarded pursuant to the RSU are equity settled and based on the fair value at date of grant.

10. Warrants

Details regarding warrants issued and outstanding are summarized as follows:

		Weighted	Number of shares
		Average exercise	issued or issuable
		price	on exercise
Balance – December 31, 2018	$	2.50	171,199
Expiry of warrants		2.50	(171,199)
Balance–December 31, 2020 and 2019	$	-	-

During the year ended December 31, 2019, all issued and outstanding warrants expired unexercised.

11. Stock Options

The Company adopted a stock option plan (the “Plan”) whereby it can grant stock options to directors, officers, employees, and consultants of the Company. The maximum number of shares that may be reserved for issuance under the Plan is limited to 10% of the issued common shares of the Company at any time.

The changes in stock options outstanding are summarized as follows:

		Weighted	Number of
		Average	shares issued
		exercise	or issuable on
		price	exercise
Balance – December 31, 2018	$	8.00	459,000
Stock options cancelled		7.88	(404,629)
Balance– December31,2020 and2019	$	8.75	54,371

On July 31, 2019, the Company cancelled majority of the outstanding options due to the sale of its subsidiaries; as such, the Company is accelerated recognition of the unvested amounts for a total of $116,879.

The Company recorded a total of $nil (2019 - $699,722) in share-based expenses for the year ended December 31, 2020.

Page 18

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

11. Stock Options (continued)

Stock options outstanding and exercisable as at December 31, 2020 and 2019 are summarized as follows:

	Options Outstanding	Options Outstanding		**Options **	Exercisable
	Number of	Weighted	Weighted	Number of	Weighted
	Shares	Average	Average	Shares	Average
	Issuable	Remaining	Exercise	Issuable on	Exercise
Exercise	on	Life	Price	Exercise	Price
Price	Exercise	(Years)
$8.75	54,371	3.20	$8.75	54,371	$8.75

12. Income Taxes

The following table reconciles the expected income tax expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the consolidated statement of loss and comprehensive loss:

		December 31, 2020		December 31, 2019
Income (loss) before income tax	$	650,004	$	(925,045)
Statutory income tax rate		27%		27%
Expected income tax expense (recovery)		175,501		(249,762)
Non-deductible expenses		309		221,281
Tax effect of debt forgiveness		-		855,263
Tax effect on disposition of subsidiaries		-		(4,274,799)
Non-taxable portion of capital gain		(271,752)		(25,294)
Other differences		(354,451)		56,420
Deferred tax asset not recognized		450,393		3,495,050
Total income tax expense	$	-	$	78,158
		December 31, 2020		December 31, 2019
Current tax expense	$	-	$	78,158
Deferred tax expense		-		-
Totaltaxexpense	$	-	$	78,158

The unrecognized deductible temporary differences as at December 31, 2020 and December 31, 2019 is comprised of the following:

comprised of the following:
		December 31, 2020		December 31, 2019
Non-capital loss carry forward	$	6,834,138	$	4,872,580
Capital loss carry forward		14,865,470		14,112,267
Financing cost		159,178		318,356
Exploration and evaluation assets		644,700		644,700
Plant, property, equipment		2,137		416
Marketable securities		(888,500)		-
Other items		-		682
Totalunrecognized temporary differences	$	21,617,123		19,949,001

Page 19

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

12. Income Taxes (continued)

The Company has not recognized a deferred tax asset in respect of non-capital loss carry forward of approximately $6,834,138 (2019 - $4,872,580) which may be carried forward to apply against future income for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the following years:

following years:
	$
Non-capital losses expire as follows:
2036	93,879
2037	99,314
2038	3,521,958
2039	1,598,540
2040	1,520,447
	6,834,138

13. Capital Management

The Company manages its capital structure, consisting of share capital, and will make adjustments to it depending on the funds available to the Company for its future operations. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The Company is dependent on external financing to fund its activities. In order to carry out its planned operations and pay for future general and administrative expenses, the Company expects to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the years ended December 31, 2020 and 2019.

14. Financial Instruments

The Company’s financial assets and liabilities by category and information about financial assets and liabilities measured at fair value on a recurring basis in the consolidated statement of financial position are classified and measured as follows:

measured as follows:
			December 31,		December 31,
	Category		2020		2019
Financial Assets
Cash and cash equivalents	FVTPL	$	164,729	$	1,934,390
Marketable securities	FVTPL	$	2,927,000	$	-
Financial Liabilities
Trade and other payables	Amortized cost	$	620,770	$	368,005

Due to the short-term nature of trade and other payables, the Company determined that the carrying amounts of these financial instruments approximate their fair value.

Page 20

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

14. Financial Instruments (continued)

The following table presents the Company’s financial instruments, measured at fair value, and categorized into levels of the fair value hierarchy:

		Balance		Quoted		Significant		Significant
		at		Prices in		Other		Unobservable
		December		Active		Observable		Inputs
		31, 2020		Markets		Inputs		(Level 3)
				(Level 1)		(Level 2)
Cash and cash equivalents	$	164,729	$	164,729	$	-	$	-
Marketable securities	$	2,927,000	$	2,412,000	$	515,000	$	-

There were no transfers between the Levels of the fair value hierarchy during the years ended December 31, 2020 and 2019.

The Company’s risk management policies are established to identify, analyze and manage the risks faced by the Company and to implement appropriate procedures to monitor risks and adherence to established controls. Risk management policies and systems are reviewed periodically in response to the Company’s activities and to ensure applicability.

In the normal course of business, the main risks arising from the Company’s use of financial instruments include credit risk, liquidity risk, market risk and currency risk. These risks, and the actions taken to manage them, include:

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises from cash held with banks, cash on deposit with fiat to cryptocurrency exchanges and from outstanding trade receivables. The Company minimizes credit risk associated with its cash balance substantially by dealing with financial institutions deemed to be reliable due to their history of operations. The Company assessed its credit risk to be low.

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company attempts to ensure there is sufficient access to funds to meet on-going business requirements, taking into account its current cash position and potential funding sources. Liquidity risk is assessed as low.

(c) Currency risk

Currency risk is the risk that the value of financial assets and liabilities denominated in currencies, other than the functional currency of the Company, will fluctuate due to changes in foreign currency exchange rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company previously was exposed to foreign currency risk through cash in banks and cash on deposit with fiat to cryptocurrency exchanges which are denominated in United States dollars (USD). As at December 31, 2020 the Company was not exposed to currency risk.

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NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

14. Financial Instruments (continued)

(d) Price risk

The Company’s net income or loss, and financial condition were subject to price risk due to fluctuations of the following:

Equity Price Risk

The Company is exposed to equity price risk through its marketable securities and unfavourable market conditions could result in dispositions of marketable securities at less than favourable prices, especially during periods of overall market instability. The Company manages its equity price risk by having a portfolio of marketable securities not singularly exposed to any one issuer.

Commodity Price Risk

The profitability of the Company’s was significantly affected by changes in prices of cryptocurrency. Cryptocurrency fluctuate on a daily basis and were affected by numerous factors beyond the Company’s control. The supply and demand for crypto currency, investment decisions by large holders could all cause significant fluctuations in cryptocurrency prices. The Company is no longer exposed to commodity price risk after the sale of its subsidiaries.

15. Supplemental Cash Flow Information

The Company paid $nil (2019 - $82,913) in income taxes and did not pay any cash for interest during the years ended December 31, 2020 and 2019.

The disposition of the subsidiaries (see Note 17) is a non-cash transaction, whereby, the Purchaser issued 37,500,000 of its own shares as consideration for the subsidiaries.

On December 7, 2020, the Company and the Borrower agreed to convert the loan’s principal of $100,000 and accrued interest of $15,000 into the shares of the Borrower at a price of $0.20 per share (see Note 6).

16. Segmented Information

The Company’s operated a single business unit of cryptocurrency sales via its virtual ATMs prior to the sale of the Subsidiaries. The Company’s primary business activities are located in Canada. All of the Company’s assets, including head office, are located in Canada.

17. Disposal of Subsidiaries

The Subsidiaries were sold on July 31, 2019 for a consideration of $3 million in the form of 37,500,000 common shares of the Purchaser at a fair value of $0.075 per share. However, actual share price on disposal date was $0.08, as a result, the Company recorded a gain of $187,500 on the fair value of the shares, along with a gain of $2,159,723 on the disposal of Subsidiaries.

Page 22

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in Canadian Dollars, except per share amounts)

17. Disposal of Subsidiaries (continued)

Details of Sale of Subsidiaries

Details of Sale of Subsidiaries
		July 31,
		2019
Consideration received:
37,500,000 Purchasers’ shares at $0.075	$	2,812,500
Carryingamount of net assets sold		(652,777)
Gainonsale ofSubsidiaries	$	2,159,723

The carrying amounts of assets and liabilities as at the date of sale (July 31, 2019) were:

		July 31,
		2019
Cash	$	841,941
Trade and other receivables		32,746
Cryptocurrency inventory		154,775
Prepaid expenses		8,202
Property, plant and equipment		86,526
Right-of-use asset		173,014
Total assets	$	1,297,204
Trade and other payables	$	(37,068)
Lease liability		(190,826)
Deferred revenue		(94,062)
Customer deposit		(286,005)
Deferred income taxes		(36,465)
Total liabilities	$	(644,427)
Net assets	$	652,777

In August 2019, the Company distributed all 37,500,000 Purchaser’s common shares to its shareholders as dividend-in-kind at a fair-value share price of $0.08.

Page 23

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

18. Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the years ended December 31, 2020 and 2019:

ended December 31, 2020 and 2019:
		December 31,		December 31,
		2020		2019
Numerator
Net income (loss) for the year	$	650,004	$	(1,007,957)
Denominator
Basic – weighted average number of shares
outstanding		4,856,589		3,868,824
Effect of dilutive securities		54,371		-
Diluted – adjusted weighted average number of
shares outstanding		4,910,960		3,868,824
Earnings (loss) per share–basic and diluted	$	0.13	$	(0.26)

The basic earnings (loss) per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.

The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock options, and share purchase warrants, in the weighted average number of common shares outstanding during the year, if dilutive.

Share purchase warrants and stock options were excluded from the calculation of diluted weighted average number of common shares outstanding during the year ended December 31, 2019 as the warrants and stock options were anti-dilutive.

19. Related Party Transactions

During the years ended December 31, 2020 and 2019, the Company paid and/or accrued salaries, commissions, consulting and professional fees to management personnel and directors:

		December	31, 2020		December 31, 2019
Management	$		310,500	$	864,864
Directors			28,590		291,193
	$		339,090	$	1,156,057

During the year ended December 31, 2020, the Company had $nil (2019 - $226,566) share-based payments made to management and directors.

During the year ended December 31, 2020, the Company purchased $nil (2019 - $472,603) worth of bitcoins from a company formerly with common management.

Due to Related Parties

As at December 31, 2020 and December 31, 2019, the Company has the following amounts due to related parties:

parties:
		December	31, 2020		December 31, 2019
Accounts payable and accruedliabilities	$		57,236	$	590

Page 24

NETCOINS HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in Canadian Dollars, except per share amounts)

20. Subsequent Events

In March 2021, the Company advanced $388,000 to an unrelated company (“Borrower”) in the USA at an interest rate of 10% per annum. The principal and interest are payable upon completion of the Borrower’s next financing.

In March 2021, the Company participated in a debenture financing of an unrelated company for a principal amount of $500,000, the debenture matures on April 30, 2024.

In April 2021, the Company purchased 500,000 common shares of an exploration company for $50,000.

Page 25