Shine Box Capital Corp. — Annual Report 2021

Sep 7, 2021

Shine Box Capital Corp. Financial Statements For the years ended June 30, 2021 and 2020 (Expressed in Canadian Dollars)

Independent Auditor's Report

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To the Shareholders of Shine Box Capital Corp.:

Opinion

We have audited the financial statements of Shine Box Capital Corp. (the "Company"), which comprise the statements of financial position as at June 30, 2021 and June 30, 2020, and the statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2021 and June 30, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

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

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

In connection with our audits of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

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

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

Auditor's Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Brad Frampton.

Calgary, Alberta

September 7, 2021

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Chartered Professional Accountants

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As at:

Shine Box Capital Corp. Statements of Financial Position

Assets Current Cash_(Note 5)_ $	June 30, 2021 176,335 $	June 30, 2020
		272,983
Total assets $	176,335 $	272,983
Liabilities Current Accounts payable and accruals $	12,983 $	19,133
	12,983	19,133
Shareholders' Equity Share capital_(Note 6)_ $ Contributed surplus Deficit	315,395 $ 76,065 (528,108)	315,395 76,065 (137,610)
Totalshareholders’equity	163,352	253,850
Total liabilities and shareholders’ equity $	176,335 $	272,983

Proposed qualifying transaction (Note 9)

Approved on behalf of the Board of Directors

Signed “David McGoey” Signed “Nebojsa Dobrijevic” Director Director

The accompanying notes are an integral part of these financial statements

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Statements	Shine Box Capital Corp. of Loss and Comprehensive Loss For theyears ended June 30, 2021 and 2020 2021 2020 - $ 54,594 9,805 41,562 100,693 27,781 (20,000) - (90,498) $ (123,937)	Shine Box Capital Corp. of Loss and Comprehensive Loss For theyears ended June 30, 2021 and 2020 2021 2020 - $ 54,594 9,805 41,562 100,693 27,781 (20,000) - (90,498) $ (123,937)
Expenses Stock-based compensation_(Note 6) $ Filing and communication fees Professional fees Expenserecovery (Note 9)_	2021 - $ 9,805 100,693 (20,000)
Net loss and comprehensive loss $	(90,498) $
Net loss per share Basic and diluted $ Weighted average number of shares(Note 6)	(0.03) $ 3,000,000	(0.07) 1,758,904

The accompanying notes are an integral part of these financial statements

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Shine Box Capital Corp. Statement of Changes in Shareholders’ Equity

	Share Capital	Contributed Surplus	Deficit	Shareholders’ Equity
	($)	($)	($)	($)
As at June 30, 2019	150,000	-	(13,673)	136,327
Net loss	-	-	(123,937)	(13,673)
Issued share capital (Note 6)	300,000	-	-	300,000
Stock based compensation (Note 6)	-	54,594	-	54,594
Stock issue costs (Note 6)	(134,605)	21,471	-	(13,134)
As at June 30, 2020	315,395	76,065	(137,610)	253,850
Net loss	-	-	(90,498)	(90,498)
As at June 30, 2021	315,395	76,065	(228,108)	163,352

The accompanying notes are an integral part of these financial statements

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	Shine Box Capital Corp. Statements of Cash Flows For theyears ended June 30, 2021 and 2020 2021 2020 Cash provided by (used) by the following activities Operating activities Net loss $ (90,498) $ (123,937) Change in non-cash working capital: Stock-based compensation_(Note 6)_ - 54,594 Accounts payables and accruals (6,150) 19,133	Shine Box Capital Corp. Statements of Cash Flows For theyears ended June 30, 2021 and 2020 2021 2020 Cash provided by (used) by the following activities Operating activities Net loss $ (90,498) $ (123,937) Change in non-cash working capital: Stock-based compensation_(Note 6)_ - 54,594 Accounts payables and accruals (6,150) 19,133	Shine Box Capital Corp. Statements of Cash Flows For theyears ended June 30, 2021 and 2020 2021 2020 Cash provided by (used) by the following activities Operating activities Net loss $ (90,498) $ (123,937) Change in non-cash working capital: Stock-based compensation_(Note 6)_ - 54,594 Accounts payables and accruals (6,150) 19,133
	Cash provided by (used) by the following activities Operating activities Net loss $ Change in non-cash working capital: Stock-based compensation_(Note 6)_ Accounts payables and accruals	2021 (90,498) $ - (6,150)
			(123,937) 54,594 19,133
	Cash flows used in operating activities $	(96,648) $	(50,210)
	Financing activities Accounts payables and accruals Share issue costs_(Note 6) Issuance of common shares(Note 6)_ $	- - - $	(31,000) (68,384) 300,000
	Cash flows provided by financing activities	-	200,616
	Increase (decrease) in cash Cash, beginning of year	(96,648) 272,983	154,406 122,577
	Cash, end ofyear $	176,335 $	272,983

The accompanying notes are an integral part of these financial statements

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

1. Incorporation and operations

Shine Box Capital Corp. (the "Company") was incorporated on March 6, 2018 by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act (Alberta). The Company is classified as a Capital Pool Company as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange"). The principal business of the Company is to identify and evaluate assets or businesses with a view to potentially acquire them or an interest therein by completing a purchase transaction, by exercising of an option or by any concomitant transaction. The purpose of such an acquisition is to satisfy the related conditions of a qualifying transaction under the Exchange rules.

The address of the registered office is 1900, 520 – 3[rd] Avenue SW, Calgary Alberta, T2P 0R3.

The Company issued 3,000,000 common shares for an amount of $150,000 and the Company’s prospectus for an Initial Public Offering (“IPO”) of the Company’s common shares was receipted by the regulatory authorities. The IPO closed on November 29, 2019, with 3,000,000 common shares being issued at a price of $0.10 per common share. The Company’s shares commenced trading on November 29, 2019, under the symbol RENT.P.

Where an acquisition or participation is warranted, additional funding may be required. The ability of the Company to fund its potential future operations and commitments is dependent upon the ability of the Company to obtain additional financing.

There is no assurance that the Company will identify a business or asset that warrants acquisition or participation within the time limitations permissible under the policies of the Exchange, at which time the Exchange may suspend or de-list the Company's shares from trading. See Note 9.

The COVID-19 outbreak was declared a pandemic by the World Health Organization on March 11, 2020. This has resulted in significant economic uncertainty and governments worldwide are enacting emergency measures to contain the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global financial markets have experienced significant volatility and weakness as a consequence of this economic uncertainty. The duration and impact of the COVID-19 outbreak is unknown as this time, as is the effectiveness of interventions by governments and central banks as well as the impact on the Company.

2. Basis of preparation

Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”) in effect on July 1, 2020.

These financial statements were authorized for issue in accordance with a resolution of the directors on September 7, 2021.

Basis of measurement

These financial statements are stated in Canadian dollars which is the Company’s functional currency and were prepared on a going concern basis, under the historical cost convention.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

3. Significant accounting policies

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Areas where estimates are significant to the financial statements are disclosed in Note 4.

Cash

Cash consists of the proceeds generated from share receipts, which is being held in trust by legal counsel for the Company.

Deferred financing costs

Financing costs related to proposed financings are recorded as deferred financing costs. These costs will be deferred until the financing is completed, at which time the costs will be charged against the proceeds received. If the financing does not close, the costs will be charged to operations.

Share-based payments

The Company applies a fair value-based method of accounting to all share-based payments. Employee and director stock options are measured at their fair value of each tranche on the grant date and recognized over its respective vesting period. Non-employee stock options are measured based on the service provided to the reporting date and at their then-current fair values. The cost of stock options is presented as stock-based compensation expense when applicable with a corresponding credit to contributed surplus. On the exercise of stock options share capital is credited for consideration received and for fair value amounts previously credited to contributed surplus. The Company uses the Black-Scholes option pricing model to estimate the fair value of sharebased payments.

Taxes

Tax expense comprises current and deferred tax. Tax is recognized in the statement of loss and comprehensive loss except to the extent it relates to items recognized in other comprehensive income or directly in equity.

Current tax

Current tax expense is based on the results for the year as adjusted for items that are not taxable or not deductible. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

Deferred taxes are the taxes expected to be payable or recoverable on differences between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

3. Significant accounting policies (continued)

Financial Instruments

Classification and measurement of financial instruments

The Company measures its financial assets and financial liabilities at fair value on initial recognition, which is typically the transaction price unless a financial instrument contains a significant financing component. Subsequent measurement is dependent on the financial instrument’s classification which in the case of financial assets, is determined by the context of the Company’s business model and the contractual cash flow characteristics of the financial asset. Financial assets are classified into two categories: (1) measured at amortized cost and (2) fair value through profit and loss (“FVTPL”). Financial liabilities are subsequently measured at amortized cost, other than financial liabilities that are measured at FVTPL or designated as FVTPL where any change in fair value resulting from an entity’s own credit risk is recorded as other comprehensive income (“OCI”). The Company does not employ hedge accounting for its risk management contracts currently in place.

The Company classifies its accounts payable and accruals as measured at amortized cost. The contractual cash flows received from the financial assets are solely payments of principal and interest and are held within a business model whose objective is to collect the contractual cash flows. These financial assets and financial liabilities are subsequently measured at amortized cost using the effective interest method. All other financial assets are measured at their fair values at each subsequent reporting period, with any changes recorded through profit or loss or through other comprehensive income or loss. The Company has classified its cash at FVTPL.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Impairment of financial assets

Financial assets are assessed at each reporting date in order to determine whether objective evidence exists that the assets are impaired as a result of one or more events which have had a negative effect on the estimated future cash flows of the asset.

If there is objective evidence that a financial asset has become impaired, the amount of the impairment loss is calculated as the difference between its carrying amount and the present value of the estimated future cash flows from the asset discounted at its original effective interest rate. Impairment losses are recorded in earnings. If the amount of the impairment loss decreases in a subsequent period and the decrease can be objectively related to an event occurring after the impairment was recognized, the impairment loss is reversed up to the original carrying value of the asset. Any reversal is recognized in earnings.

Loss per share

Basic earnings or loss per share is calculated by dividing loss by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding is calculated by adjusting the shares issued at the beginning of the period by the number of shares bought back or issued during the period, multiplied by a time-weighting factor.

Diluted earnings or loss per share is calculated by adjusting the number of common shares for the effects of dilutive options and other dilutive potential units. Shares held in escrow that are only released upon contingent events are not included in the calculation of the weighted average number of common shares.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

4. Significant accounting estimates and judgements

Estimates

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:

Fair value of financial instruments

The estimated fair value of financial assets and liabilities, by their very nature, are subject to measurement uncertainty.

Taxes

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the 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.

Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Determining the fair value of such share-based awards requires estimate as to the appropriate valuation model and the inputs for the model require assumptions including the rate of forfeiture of options granted, the expected life of the option, the Company’s share price and its expected volatility, the risk-free interest rate and expected dividends.

Judgements

The key areas of judgement that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:

Taxes

The Company recognizes deferred tax assets to the extent that it is probable that future taxable profits will be available to utilize the Company’s deductible temporary differences which are based on management’s judgement on the degree of future taxable profits. To the extent that future taxable profits differ significantly from the estimates impacts the amount of the deferred tax assets management judges is probable.

Financial instruments

The Company is required to classify its various financial instruments into certain categories for the financial instruments’ initial and subsequent measurement. This classification is based on management’s judgement as to the purpose of the financial instrument and to which category is most applicable.

5. Cash

The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that not more than the lesser of 30% of the gross proceeds and $210,000 may be used to cover prescribed costs of issuing the common shares or administrative and general expenses of the Company. These restrictions may apply until completion of a Qualifying Transaction by the Company as defined under the policies of the Exchange.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

6. Share capital

Authorized

Unlimited number of voting Common Shares

Unlimited number of non-voting Preferred Shares issuable in series

Issued Common Shares

Issued Common Shares
	Number of Shares $
Issued on incorporation Issued at $0.05 per share (i) As at June 30, 2019 Issued on IPO (ii) Share issue costs As at June 30, 2021 and 2020	- - 3,000,000 150,000
	3,000,000 150,000 3,000,000 300,000 (134,605)
	6,000,000 315,395

• (i) These common shares issued are held in escrow and released as follows: 10% of the common shares will be released on the completion of a Qualifying Transaction and an additional 15% will be released on the dates 6 months, 12 months, 18 months, 24 months, 30 months and 36 months following the initial release.

These common shares, which are considered contingently issuable until the Company completes a Qualifying Transaction, are not considered to be outstanding for the purpose of the loss per share calculation.

• (ii) On November 29, 2019, the Company successfully completed its IPO raising gross proceeds of $300,000 on the issuance of 3,000,000 common shares. The agent received a cash commission of 10% of the gross proceeds of the offering, an agent’s fee of $10,000 and an option to purchase 300,000 shares at a price of $0.10 for a period of 24 months from the date of the listing valued at $21,471 using the Black-Scholes pricing model. The Company incurred a total of $134,605 share issue costs, including the value of the agent options and $44,750 relating to the June 30, 2019 deferred financing costs, which have been applied against share capital.

Share-based payments

The Company has adopted an incentive stock option plan which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and consultants to the Company, non-transferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance will not exceed 10% of the issued and outstanding Common Shares. However, other than in connection with a Qualifying Transaction, during the time that the Company is a CPC, the aggregate number of Common Shares issuable upon exercise of all options granted under the Option Plan shall not exceed 10% of the Common Shares of the Company issued and outstanding at the closing of the Company's initial public offering. Such options will be exercisable for a period of up to five years from the date of grant.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

6. Share capital (continued)

As part of the close of the initial public offering (IPO), the Company granted 600,000 options at $0.10 per share to the directors and officers of the Company exercisable for a period of five years that all vested at the time of the grant. The fair value is recognized as stock-based compensation expense and at the time of vesting the estimated fair value of these options as calculated using the Black-Scholes pricing model, is $54,594 .

The Contributed Surplus balance is comprised of:

he Contributed Surplus balance is comprised of:
Directors’ & officers’ options Agents’ options Balance, June 30, 2021 and 2020	Total
	$ 54,594 21,471
	$76,065

The assumptions for the Black-Scholes Pricing Model for all the stock options:

Stock price Exercise price Risk free interest rate Expected life (years) Expected annual volatility Expected dividend yield Expected forfeiture rate	Directors & Officers Agent
	$0.10 $0.10 $0.10 $0.10 1.49% 1.58% 5 2 150% 150% 0% 0% 0% 0%

The following table reflects the continuity of options granted under the Plan:

Balance, beginning of year Issued to directors & officers Issued to agent Balance, June 30, 2021 and 2020	June 30, 2021
	Number of Options Fair Value Recorded
	- 600,000 $ 54,594 300,000 21,471
	900,000 $76,065

As at June 30, 2021 the remaining contractual life for option outstanding to directors and officers is 3.45 years and agent options 0.45 years.

				Remaining
	Exercise	Outstanding		Contractual
Expiry Date	Price	June 30, 2021	Exercisable	Years
November 2024	$0.10	600,000	600,000	3.45
November 2021	$0.10	300,000	300,000	0.45

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

7. Income taxes

The tax recovery differs from the amount that would be computed by applying the expected tax rate to the loss before taxes. The reasons for the difference are as follows:

		2021		2020
Loss before taxes	$	(90,498)	$	(123,937)
Statutory tax rate		23.5%		26.5%
Expected tax recovery		(21,267)		(32,843)
				14,467
Stock-based compensation		-
Share issue costs		-		(23,812)
Tax asset not recognized		21,267		42,188
Tax recovery	$	-	$	-

The Canadian statutory tax rate per the rate reconciliation above represents the average combined federal and provincial corporate tax rate. The federal corporate tax rate is 15.0% and the average provincial tax rate in Alberta was 8.5% during 2020. On June 28, 2019, the Alberta government enacted legislation which reduced the Alberta corporate income tax rate from 12% to: 11% effective July 1, 2019; 10% effective January 1, 2020; 9% effective January 1, 2021; and 8% effective January 1, 2022 and thereafter.

The Company has gross timing differences related to the following:

The Company has gross timing differences related to	the following:
	2021	2020
Share issue costs	73,300	100,200
Loss carry-forwards	234,800	117,400
Total timingdifferences	308,100	217,600

The Company’s loss carry-forward balance is available to reduce future years’ income for tax purposes, and if not fully utilized, will begin to expire in 2039.

8. Capital disclosures

The Company’s capital consists of share capital. The Company’s objective for managing capital is to maintain sufficient capital to identify, evaluate and complete an acquisition or other transaction as disclosed in Note 1.

The Company sets the amount of capital in relation to risk and manages the capital structure and makes adjustments to it in light of changes to economic conditions and the risk characteristics of the underlying assets.

The Company is not subject to any externally or internally imposed capital requirements at year end

The Company’s objectives when managing capital are:

• i. to maintain a flexible capital structure, which optimizes the cost of capital at acceptable risk; and,

• ii. to maintain investor, creditor and market confidence in order to sustain the future development of the business.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

9. Proposed Qualifying Transaction

The Company entered a non-binding letter of intent (“LOI”) dated June 9, 2021, for a business combination (the “Transaction”) with Interfield Solutions Ltd. (“Interfield”) an unrelated party. It is expected that upon completion of the Transaction, the combined entity (the “Resulting Issuer”) will meet the listing requirements for a Tier 2 Technology issuer under the policies of the TSX Venture Exchange (the “TSXV”). For consideration Interfield has paid into trust $20,000 that will be applied to the expenses of the Company if the transaction closes and will be non-refundable if (i) an agent to lead the Proposed Financing is not signed within 90 days or (ii) if the agent has not been able to close the Proposed Financing by September 30 solely because of an act or omission by Interfield.

Interfield was incorporated under the International Business Companies Act, 1994 of the Republic of the Seychelles in June 2014 and is based in Dubai, United Arab Emirates. As part of a pre-Transaction restructuring it is expected that Interfield will either continue from the Republic of the Seychelles into the Province of Alberta, or alternatively, complete a restructuring transaction that will result in an Alberta incorporated parent company being the transacting party to the Transaction, such structuring to be determined following input from legal and tax advisors.

Terms of the Transaction

The Transaction is expected to be completed by way of a share exchange, amalgamation or other form of business combination determined with input from the legal and tax advisors to each of the Company and Interfield, which will result in Interfield (or an Alberta incorporated parent entity) becoming a wholly-owned subsidiary of the Company.

Upon the satisfaction or waiver of the conditions set out in the definitive transaction agreement to be entered into by the Company and Interfield (the “Definitive Agreement”), the following, among other things, will be completed in connection with the Transaction:

the holders of common shares of Interfield (“Interfield Shares”) will receive common shares of the Resulting Issuer (on a post-consolidation basis) in exchange for their Interfield Shares on the basis of an exchange ratio establishing an agreed valuation of the Company of $1,725,000 (the “Exchange Ratio”);all outstanding warrants of Interfield will be replaced with equivalent convertible or exchangeable securities of the Resulting Issuer entitling the holders thereof to acquire common shares of the Resulting Issuer in lieu of common shares of Interfield adjusted to reflect the Exchange Ratio, and otherwise bearing the same terms of the securities they replace;The management and board of directors of the Resulting Issuer will be determined by Interfield and announced in further press releases; and

The Company will change its name to Interfield Solutions Ltd.

The Transaction constitutes an Arm’s Length Transaction under the policies of the TSXV.

Private Placement Financing

In connection with and as a condition to the Transaction, Interfield intends to complete an equity financing through a brokered private placement for minimum gross proceeds of $5,000,000 (the “Private Placement”). It is expected that the issue price per Interfield Share will be a minimum of $1.00, determined by Interfield in the context of the market and with advice from the agent engaged in respect of the Private Placement. The Interfield Shares will be sold to “accredited investors” and other exempt parties pursuant to exemptions from prospectus requirements under Canadian securities laws.

The Private Placement is intended to be completed prior to or concurrently with closing of the Transaction. The net proceeds of the Private Placement will be used to complete future acquisitions, working capital and general corporate purposes.

Listing

An application will be made to TSXV to list the Resulting Issuer Shares on TSXV subject to all applicable shareholder and regulatory approvals.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

9. Proposed Qualifying Transaction (continued)

Conditions of the Transaction

Completion of the Transaction is subject to the satisfaction of customary closing conditions, including: (i) the satisfactory completion of due diligence by each of the Company and Interfield; (ii) receipt of all required approvals and consents relating to the Transaction, including without limitation all approvals of the shareholders of the Company and Interfield, as required by the TSXV and under applicable corporate or securities laws; (iii) completion of the Private Placement; and (iv) the TSXV’s approval for listing the Resulting Issuer Shares.

Sponsorship of Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with the policies of the TSXV. Given the size and nature of the Private Placement, the Company will apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, as Interfield will be subject to TSXV Exchange Policy 2.10 concerning Emerging Market Issuers an exemption may not be available.

Trading Halt

Trading of the securities of the Company will be halted until the completion of the Transaction.

10. Financial instruments

The Company, as part of its operations, carries financial instruments consisting of cash and accounts payable and accruals. It is management's opinion that the Company is not exposed to significant credit, interest, or currency risks arising from these financial instruments except as otherwise disclosed.

Fair value

Fair value represents the price at which a financial instrument could be exchanged in an orderly market, in an arm's length transaction between knowledgeable and willing parties who are under no compulsion to act. The Company classifies the fair value of the financial instruments according to the following hierarchy based on the number of observable inputs used to value the instrument.

• Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in the active market for identical assets or liabilities.

• Level 2: Fair value measurements are those derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (derived from prices).

• Level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.

The carrying amount of cash and account payable and accruals approximates its fair value due to the short-term maturities of these items.

Credit Risk

Credit risk is the risk of loss associated with the counterparty's inability to fulfill its payment obligations. The Company believes it has no significant credit risk as its cash is held in a reputable law firm’s trust account.

Liquidity Risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at June 30, 2021, the Company had a cash balance of $176,335 (2020 - $272,983) to pay liabilities of $12,983 (2020 - $19,133). All of the Company’s financial liabilities have contractual maturities of 30 days or are due on demand and are subject to normal trade terms.

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Shine Box Capital Corp. Notes to the Financial Statements For the years ended June 30, 2021 and 2020

10. Financial instruments (continued)

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

• i. Interest rate risk

The Company has cash balances and no interest-bearing debt.

• ii. Foreign currency risk

The Company does not have assets or liabilities in foreign currency.

• iii. Commodity risk

The Company is not exposed to commodity price risk.

11. Related party transactions

Key management personnel consist of officers and directors of the Company. Other than stock options granted to directors in fiscal 2020, no compensation was paid to key management personnel during the current or prior years.

Transactions with related parties are incurred in the normal course of business.

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