Surface Metals Inc. - Interim / Quarterly Report 2022

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ACME LITHIUM INC.

(FORMERLY HAPUNA VENTURES INC.)

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIODS ENDED DECEMBER 31, 2021, AND 2020 (with Comparative AUDITED Figures as at SEPTEMBER 30, 2021) (In Canadian dollars)

Notice of No Auditor Review of Interim Condensed Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared by management and approved by the Audit Committee.

The Company’s independent auditors have not performed a review of these interim condensed financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditors.

February 24, 2022

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31 AND SEPTEMBER 30, 2021

(Expressed in Canadian dollars)

	Notes	December 31, 2021	September 30,2021
		(Unaudited)	(Audited)

ASSETS
Current assets
Cash and cash equivalents		$ 3,742,387	$ 2,802,252
GST receivable		20,240	16,122
Prepaid expenses		174,774	178,707
	5
		3,937,401	2,997,081

Exploration and evaluationproperties		1,044,893	945,699

Total assets		$ 4,982,294	$ 3,942,780
	11 12 10,11
SHAREHOLDERS’ EQUITY AND LIABILITIES

Current liabilities
Accounts payable and accrued liabilities		$ 56,274	$ 202,334
Flow-through premium liability		183,333	-
Due to relatedparties		7,102	47,923
Total liabilities		246,709	250,257
	7 7 8, 9
Shareholders’ equity
Share capital		6,106,606	4,810,051
Subscription receivable		-	(48,000)
Reserves		846,106	822,744
Deficit		(2,217,127)	(1,892,272)

Total equity		4,735,585	3,692,523

Total shareholders’ equity and liabilities		$ 4,982,294	$ 3,942,780

Nature and continuation of operations (Note 1) Commitments (Note 16) Subsequent events (Note 18) APPROVED ON BEHALF OF THE BOARD OF DIRECTORS ON FEBRUARY 24, 2022

/s/ Vivian Katsuris /s/ Ioannis Tsitos

Vivian Katsuris, Director Ioannis Tsitos, Director The accompanying notes are an integral part of these interim condensed consolidated financial statements.

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE PERIODS ENDED DECEMBER 31, 2021 AND 2020

(Unaudited – Prepared by Management)

(Expressed in Canadian dollars)

	Three months ended	Three months ended	Three months ended
	Notes	December 31, 2021	December 31,2020

Expenses
Accounting and legal	10	$ 37,213	$ 22,577
Advertising and corporate development		220,481	5,050
Consulting fees	10	-	6,244
Interest expense and bank charges	6	208	4,049
Management fees	10	35,000	-
Regulatory and filing fees		16,648	23,140
Office expenses		5,679	2,968
Rent		9,000	-

Net loss before other income(expense)		(324,229)	(64,028)

Other income (expense)
Amalgamation expense	7	-	(48,300)
Forex gain or loss		(2,293)	-
Interest income		1,667	-
Loss from continuing operations		$ (324,855)	$ (112,328)
Income from discontinued operations	17	-	820,461
Loss and comprehensive loss for theperiod		$(324,855)	$708,133

Weighted average number of shares – basic		37,509,920	4,601,237
Weighted average number of shares – diluted		37,509,920	5,259,094

Earnings (loss) per common share
Loss per share from continuing operations – basic and diluted		$ (0.01)	$ (0.02)
Earnings per share from discontinued operations - basic		$ (0.01)	$ 0.18
Earnings per share from discontinued operations - diluted		$ (0.01)	$ 0.16

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

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) FOR THE PERIODS ENDED DECEMBER 31, 2021 AND 2020

(Unaudited – Prepared by Management)

(Expressed in Canadian dollars)

		SHARE CAPITAL
	Note	Number of shares Amount Reserves Subscriptions receivable Deficit Total
Balances, September 30, 2020		613,646 $ 269,997 $ - $ - $(1,274,816) $(1,004,819)
Shares issued for:
Cash		10,300,000 309,000 - - - 309,000
Amalgamation		13,350,001 400,500 - - - 400,500
Mineral Properties		100,000 3,000 - - - 3,000
Shares issued to finders		2,100,000 - - - - -
Finders' warrants		- (959) 959 - - -
Net loss and comprehensive loss for theperiod		- - - - 708,133 708,133
Balances, December 31, 2020		26,463,647 $ 981,538 $ 959 $ - $(566,683) $ 415,814
	7 7, 9 7 7, 9
Balances, September 30, 2021		36,327,814 $4,810,051 $822,744 $ (48,000) $(1,892,272) $ 3,692,523
Shares issued for cash:
Private placement		833,334 816,667 - 48,000 - 864,667
Finders' warrants		- (23,362) 23,362 - - -
Share Issuance costs		- (70,000) - - - (70,000)
Shares issued for warrants exercised		5,413,750 573,250 - - - 573,250
Net loss and comprehensive loss for the period		- - - - (324,855) (324,855)


Balances, December 31, 2021		42,574,898 $6,106,606 $846,106 $ - $(2,217,127) $ 4,735,585

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

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED DECEMBER 31, 2021, AND 2020

(Unaudited – Prepared by Management)

(Expressed in Canadian dollars)

	December 31,	December 31,
	2021	2020

OPERATING ACTIVITIES

Net income(loss) for the period	$ (324,855)	$ 708,133
Adjustments for:
Interest on promissory note payable	-	4,049
Amalgamation expense (Note 7)	-	48,300
Changes in assets and liabilities
Increase in accounts receivable	(4,118)	(1,237)
Decrease in accounts payable and accrued liabilities	(186,881)	(92,298)
Decrease inprepaid expenses	3,933	-
Cash used in operating activities	(511,921)	666,947
Cash used in operating activities - discontinued operations(Note 17)	-	(820,461)
Cash used in operating activities	(511,921)	(153,514)

INVESTING ACTIVITIES
Sale of intangible asset	-	1
Exploration and evaluationpropertyexpenditures	(99,194)	(50,000)
Cash used in investing activities	(99,194)	(49,999)

FINANCING ACTIVITIES
Proceeds from shares to be issued	-	358,500
Proceeds from issuance of common shares	1,621,250	309,000
Share issuance cost	(70,000)	-
Repayment of due to Kona Bay	-	(80,000)
Proceeds from loan payable	-	42,000
Shareholder loan	-	(12,800)
Cashprovided by financing activities	1,551,250	616,700

Increase (decrease) in cash and cash equivalents	940,135	413,187
Cash and cash equivalents (bank indebtedness), beginning ofperiod	2,802,252	2,907

Cash and cash equivalents, end ofperiod	$ 3,742,387	$416,094

Supplemental cash flow information (Note 15)

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

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIODS ENDED DECEMBER 31, 2021 AND 2020 (Unaudited – Prepared by Management) (Expressed in Canadian dollars)

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1. NATURE AND CONTINUANCE OF OPERATIONS

ACME Lithium Inc. (formerly Hapuna Ventures Inc.) (the “Company”) was incorporated under the provisions of the Business Corporations Act of British Columbia on January 31, 2017. On November 23, 2020, the Company changed its name to ACME Lithium Inc. and changed its principal business from technology to a mineral exploration company.

The Company’s corporate office is located at 300 – 2015 Burrard Street, Vancouver, British Columbia, Canada, V6J 3H4 and its registered and records office address is at 2900, 595 Burrard Street, Vancouver, British Columbia, Canada V7X 1J5. The Company’s common shares are traded on the Canadian Securities Exchange (“CSE”) under the symbol “ACME” and on the OTCQB Venture Market (“OTCQB”) under the symbol “ACLHF”.

The Company is a mineral exploration company engaged in the acquisition, exploration and evaluation of natural resource properties located in the state of Nevada, USA and Manitoba, Canada. To date, no mineral development projects have been completed and no commercial development or production has commenced.

As at December 31, 2021, the Company has not yet determined whether the properties are economically recoverable. The recoverability of amounts shown for exploration and evaluation properties is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain the necessary financing to complete the development of and future profitable production from the properties or realizing proceeds from their disposition.

The Company is a reporting issuer in the Province of British Columbia. All public filings for the Company can be found on the SEDAR website www.sedar.com

Background

ACME Lithium Inc. (formerly Hapuna Ventures Inc.) (the “Company”) was incorporated under the provisions of the Business Corporations Act of British Columbia on January 31, 2017, as a wholly-owned subsidiary of Kona Bay Technologies Inc. (“Kona Bay”) whose line of business was in technology. By December 19, 2020, the Company had disposed of all of its digital business and related outstanding obligations to an arm-length purchaser.

On December 29, 2020, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with 1281524 B.C. Ltd. (“Subco”) and 1266291 B.C. Ltd. (“Fundco”) which closed on December 30, 2020. Pursuant to the Amalgamation Agreement, the following occurred: (i) Subco and Fundco amalgamated. (ii) The unit holders of Fundco received an equivalent number of units of the Company; and (iii) The amalgamated Company, “Amalco” became a wholly owned subsidiary of the Company.

Going concern

These interim condensed consolidated financial statements (the “financial statements”) have been prepared on a going concern basis, assuming 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. As at December 31, 2021, the Company had a deficit of $2,217,127 (2020 - $1,892,272) and a working capital surplus of $3,690,692 (September 30, 2021 –$2,746,824).

As the Company is in early-stage exploration and no longer generates revenues, the continuing operations of the Company are dependent upon obtaining, in the short term, the necessary financing to meet the Company’s operating commitments as they come due and generating profitable operations in the future. As at December 31, 2021, the Company had sufficient working capital to cover its expenditures over the next 12 months.

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1. NATURE AND CONTINUANCE OF OPERATIONS (continued)

COVID-19

To the date of this report, the spread of COVID-19 has severely impacted many local economies around the globe. In many countries, including Canada, businesses are being forced to cease or limit operations for long or indefinite periods of time.

Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. As a result, global stock markets have also experienced great volatility. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. As at the date of this report, the Company has not been significantly impacted by the spread of COVID-19 as the Company’s operations are identification of exploration and evaluation assets, and this sector was not impacted by COVID19 significantly. The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.

2. BASIS OF PREPARATION

a) Statement of compliance

These financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), and in accordance with the same accounting policies and methods of computation as compared with the most recent annual financial statements, being for the year ended September 30, 2021.

These financial statements were approved and authorized for issue in accordance with a resolution from the Board of Directors on February 24, 2022.

b) Basis of Measurement

These financial statements have been prepared on a historical cost basis, except for certain financial instruments, classified as financial instruments at fair value through profit or loss which are stated at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

c) Basis of Consolidation

These financial statements include the accounts of the Company and its subsidiary, ACME Lithium US Inc. (“ACME US”). Effective December 16, 2021, the Company amalgamated with its previously wholly owned subsidiary, 1266291 BC Ltd. and will continue to act as one company under the name ACME Lithium Inc. The financial statements of the Company’s subsidiaries have been consolidated from the date that control commenced. Control is achieved when the Company has the power to govern the financial operating policies of an entity so as to obtain the benefits from its activities. All intercompany balance and transactions and income and expenses have been eliminated upon consolidation.

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2. BASIS OF PREPARATION (continued)

d) Presentation and Functional Currency

These financial statements are presented in Canadian dollars, which is the functional currency of the Company and Amalco. The functional currency of the Company’s wholly owned US subsidiary, ACME US, is in US dollars.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Revenues and expenses are translated at the exchange rates prevailing on the dates of the transactions. Exchange gains and losses arising on translation are included in profit or loss.

For the purpose of presenting financial statements, the assets and liabilities of ACME US are expressed in Canadian dollars using the exchange rates prevailing at the end of each reporting period. The assets and liabilities are translated into Canadian dollars at the rate of exchange prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during the period, in which case exchange rates at the dates of the transactions are used. Exchange differences are recognized in other comprehensive income and reported as a currency translation adjustment in equity.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Critical accounting judgments, estimates and assumptions – The preparation of the Company’s financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions 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 circumstances. However, actual outcomes can differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Critical judgments in applying accounting policies:

Critical Judgments

Going concern of operations - Management has made the determination that the Company will continue as a going concern for the following year.

Title to exploration assets - Although the Company has taken steps to verify title to its exploration properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfer and title may be affected by undetected defects.

Estimates

Share-based compensation - Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Estimates (continued)

Impairment of exploration and evaluation assets - The application of the Company’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available.

Deferred income taxes - The determination of deferred income tax assets or liabilities requires subjective assumptions regarding future income tax rates and the likelihood of utilizing tax carry forwards. Changes in these assumptions could materially affect the recorded amounts, and therefore do not necessarily provide certainty as to their recorded values.

Cash and cash equivalents - The Company considers deposits with banks or highly liquid short-term interestbearing securities that are readily convertible to known amounts of cash and those that have maturities of three months or less when acquired to be cash equivalents. As at period ended December 31, 2021, the Company had a total of $Nil held in trust classified as cash equivalents (September 30, 2021 – $83,107).

Intangible assets - Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite. The Company’s online advertising leads database had a finite life. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of loss and comprehensive loss in the expense category consistent with the function of the intangible assets. The Company amortized its intangible assets on a straight line over three years.

Exploration and evaluation assets – Once the legal right to explore a property has been acquired, all expenditures related to acquisition, exploration and evaluation of the properties (“E&E assets”) (including option payments and annual fees to maintain the property in good standing) are capitalized and deferred by property until the project to which they relate is sold, abandoned, impaired or placed into production. Costs not directly attributable to exploration and evaluation activities, are expensed in the period in which they occur. Upon commencement of commercial production, the related accumulated costs are amortized against projected income using the units of production method over estimated recoverable reserves.

Management assesses carrying values of properties for which events and circumstances may indicate possible impairment on an annual basis. Impairment of a property is generally considered to have occurred if (1) the period for which the entity has the right to explore the area has expired or is not expected to be renewed; (2) substantive expenditures on further exploration is neither budgeted nor planned; (3) exploration has not led to discovery of commercially viable quantities; or (4) the carrying amount is unlikely to be recovered in full from successful development or sale. When a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess of estimated recoveries, are written down to profit or loss.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share capital - The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates the value to the more easily measurable component based on fair value and then the residual value, if any, to the less measurable component. Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred share issuance costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise, they are expensed as incurred. Share issuance costs are charged to share capital when the related shares are issued. Deferred share issuance costs related to financing transactions that are not completed are charged to expenses.

Income taxes - Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

The Company provides for income taxes using the liability method of tax allocation. Under this method deferred income tax assets and liabilities are determined based on temporary differences between the accounting and tax bases of existing assets and liabilities and are measured using enacted or substantially enacted tax rates expected to apply when these differences reverse. Deferred income tax assets are recognized to the extent that management has determined it is probable to be realized.

Revenue recognition - The Company used a single model for recognizing revenue from contracts with customers. Revenue was recognized at a point in time or over time in a manner that depicts the transfer of promise goods or services to a customer and at an amount that reflects the expected consideration receivable in exchange for transferring those goods or services. The Company did not recognize any revenue during the period ended December 31, 2021 (2020 – $Nil).

Share-based payments - The Company records all share-based payments at their fair value. Share-based payments to employees are measured at the fair value of the instruments issued and amortized 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 corresponding amount is charged to reserves. The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based payments.

The share-based payments costs are charged to operations over the stock option vesting period. Agents’ options and warrants issued in connection with common share placements are recorded at their fair value on the date of issue as share issuance costs. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of stock options expected to vest. On the exercise of stock options and agents’ options and warrants, share capital is credited for consideration received and for fair value amounts previously credited to reserves.

Earnings (Loss) per share - The Company uses the treasury stock method in computing earnings (loss) per share. Under this method, basic earnings (loss) per share is computed by dividing earnings (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by adjusting the weighted average number of common shares outstanding using the treasury stock method, to reflect the potential dilution of securities that could result from the exercise of in-themoney stock options and warrants. Diluted loss per share excludes all dilutive potential equity instruments if their effect is anti-dilutive.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments – The Company determines the classification of its financial instruments at initial recognition. The classification and measurement of financial assets after initial recognition at fair value depends on the business model for managing the financial asset and the contractual terms of the cash flows. Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortized cost at each subsequent reporting period. 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 (which designation is made as an irrevocable election at the time of recognition).

After initial recognition at fair value, financial instruments are classified and measured at either:

i. Amortized cost;
ii. FVTPL, if the Company has made an irrevocable election at the time of recognition, or when required (for items such as instruments held for trading or derivatives); or
iii. FVTOCI, when the change in fair value is attributable to changes in the Company’s credit risk.

The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified. Transaction costs that are directly attributable to the acquisition or issuance of a financial asset or financial liability classified as subsequently measured at amortized cost are included in the fair value of the instrument on initial recognition. Transaction costs for financial assets and financial liabilities classified at fair value through profit or loss are expensed in profit or loss.

Impairment

The Company assesses all information available, including on a forward-looking basis the expected credit losses associated with any financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportable forward-looking information.

Assets carried at amortized cost. If there is objective evidence that an impairment loss on assets carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is then reduced by the amount of the impairment. The amount of the loss is recognized in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed to the extent that the carrying value of the asset does not exceed what the amortized cost would have been had the impairment not been recognized. Any subsequent reversal of an impairment loss is recognized in profit or loss.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derecognition of 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 statements of loss and comprehensive loss.

Related party transactions - Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Leases - At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset over a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all of the economic benefits from the use of the asset during the term of the contract and it has the right to direct the use of the asset.

The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. The right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted by the interest rate implicit in the lease or, if that rate cannot be readily determined the incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments, and amounts expected to be payable at the end of the lease term.

The Company does not recognize the right-of-use assets and lease liabilities for short-term leases that have a lease term of twelve months or less. The lease payments associated with these leases are charged directly to income on a straight-line basis over the lease term.

For the period ended December 31, 2021, the Company recognized $9,000 in short-term leases as rent expense in its statement of loss and comprehensive loss (2020 – $Nil). There are $21,000 in payments remaining over the term of the lease and $3,000 is included in prepaids.

4. INTANGIBLE ASSETS

The Company was formerly a technology company specializing in digital customer acquisition. Its customers were primarily higher education institutions that promoted campus and online degree programs to consumers through digital media such as websites, mobile apps, social media networks and direct e-mail. The Company utilized an online advertising leads database which was acquired during the year ended September 30, 2018. The database was subsequently impaired and written down to $1.

On December 19, 2020, the Company disposed of its digital customer acquisition business to an arm’s length purchaser in consideration of the sum of $1 and the purchaser assuming all outstanding obligations.

As at December 31 and September 30, 2021, intangible assets amounted to $Nil.

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5. EXPLORATION AND EVALUATION ASSETS

The Company’s exploration and evaluation expenditures for the period ended December 31, 2021 are as follows:

	Fish Lake Valley, Nevada	Clayton Valley, Nevada	Euclid and Shatford Lakes, Manitoba	Total
	$	$	$	$
Acquisition costs
Balance,September 30,2021	53,000	433,947	120,000	606,947
Balance, December 31, 2021	53,000	433,947	120,000	606,947

Exploration and evaluation costs
Balance,September 30,2021	53,960	257,792	27,000	338,752
Consulting	17,057	1,895	-	18,952
Geological	-	44,578	-	44,578
Stakingand claims fees	34,356	-	-	34,356
Reports and administration	726	-		726
Travel	582	-	-	582
Balance, December 31, 2021	106,681	304,265	27,000	437,946
Total, December 31, 2021	159,681	738,212	147,000	1,044,893

The Company’s exploration and evaluation expenditures for the period ended September 30, 2021 are as follows:

	Fish Lake Valley, Nevada	Clayton Valley, Nevada	Euclid and Shatford Lakes, Manitoba	Total
	$	$	$	$
Acquisition costs
Balance,September 30,2020 and 2019	-	-	-	-
Additions - cash	50,000	133,947	120,000	303,947
Additions - shares	3,000	300,000	-	303,000
Balance, September 30, 2021	53,000	433,947	120,000	606,947

Exploration and evaluation costs
Balance,September 30,2020 and 2019	-	-	-	-
Consulting	29,361	2,569	-	31,930
Geological	860	221,535	27,000	249,395
Maintenance fees	-	29,886	-	29,886
Stakingand claims fees	18,867	-	-	18,867
Travel	4,872	3,802	-	8,674
Balance, September 30, 2021	53,960	257,792	27,000	338,752
Total, September 30, 2021	106,960	691,739	147,000	945,699

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5. EXPLORATION AND EVALUATION ASSETS (continued)

FLV Property (Fish Lake Valley, Nevada)

On November 9, 2020, the Company entered into a mineral property purchase and sale agreement (the “FLV agreement”) with an arm’s length party whereby it acquired 81 lode mining claims located in Esmeralda County, Nevada, USA. Under the terms of the FLV agreement, the vendor’s right, title and interest in the FLV claims was purchased by paying consideration of $50,000 (paid) and by issuing 100,000 common shares. On January 14, 2021, the Company issued 100,000 common shares with a fair value of $3,000 to the arm’s length party (Note 7). As at December 31, 2021, the FLV project has a carrying value of $159,681 (2020 - $106,960).

On October 9, 2021, the Company staked 63 new claims on its FLV Project located in Fish Lake Valley, Esmeralda County, Nevada (the “FLV new claims”) by paying $34,982 (US$ 28,047).

Clayton Valley, Nevada

On May 12, 2021, the Company entered into an assignment agreement with an arm’s length party to acquire a 100% interest in 64 claims, comprising the CC, CCP and SX placer lithium claims (the "Project Claims"), located in Clayton Valley, Esmeralda County, Nevada. Under the terms of the agreement, the Company needs to undertake the following to exercise its option: pay total cash payments of US$278,500 ($103,629 - US$88,500 paid), issue 5,250,000 common shares (750,000 issued), and incur a total of US$2,750,000 in exploration and development expenditures ($257,792 - US$193,634 incurred). The Company also paid the initial deposit of $6,416 (US$5,000) to reimburse the arm’s length party. The property shall be subject to a 3.0% Gross Overriding Royalty. The Company has the right to buyback one-half of the royalty for US$1,500,000 for a period of 3 years following the commencement of commercial production.

In June 2021, the Company expanded its Clayton Valley property position by 58 claims. Total cost incurred to obtain the claims was $23,902 (US$19,362).

As at December 31, 2021, the Clayton Valley project has a carrying value of $738,212 (September 30, 2021 – $691,739) with $304,265 (September 30, 2021 – $257,792) in exploration expenditures. Following are the terms of the agreement:

	Cash	Common	Exploration
	Payment	Shares	expenditures
	$ (in USD)	#	$ (in USD)
Earlier of 60 days following execution of the Letter of Intent
and the Approval Date (paid and issued)
March 2, 2021,	78,500	750,000
On or before the 1stanniversary date of closing
March 2, 2022	50,000	750,000	250,000
On or before the 2ndanniversary date of closing
March 2, 2023,	50,000	750,000	500,000
On or before the 3rdanniversary date of closing
March 2, 2024	50,000	1,000,000	1,000,000
On or before the 4thanniversary date of closing
March 2,2025	50,000	2,000,000	1,000,000
Total	278,500	5,250,000	2,750,000

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5. EXPLORATION AND EVALUATION ASSETS (continued)

Clayton Valley, Nevada (continued)

In connection with the option agreement entered with the arm’s length party, the Company is required pay the Vendor an advance royalty payment of US$200,000 on the 5[th] anniversary of the effective date of the agreement, and continuing on each annual anniversary date thereafter, until property is in production. The cash advances will be credited against future royalty payments due.

Manitoba Properties

On September 9, 2021, the Company entered into a staking agreement to acquire mineral rights in Euclid and Shatford Lake areas of Southeast Manitoba. The Euclid groups has 6 claim blocks and the Shatford group has 21 claim blocks. These claims are royalty-free and not subject to any agreement. For period ended December 31, 2021, initial staking, claim fees and geological surveys were incurred for two properties in Manitoba – the Euclid Lake (December 31, 2021 – $49,500) and Shatford Lake (December 31, 2021 – $97,500) Properties.

6. PROMISSORY NOTE PAYABLE

Y NOTE PAYABLE
	December 31, 2021	September 30,2021
Principal	$ -	$ 325,000
Accrued interest	-	58,650
Settlement of debt	-	(383,650)
Total	$ -	$-

As at December 31 and September 30, 2021, the Company had a promissory note payable of $Nil due to Kona Bay by way of ACT360. The note payable had a principal balance of $325,000 with an original maturity date of December 13, 2020. The note accrued interest daily at a rate of 6% per annum from the date of issue, payable on a semi-annual basis commencing on June 13, 2018. The promissory note could be negotiated, assigned, discounted or pledged by ACT360.

At the time of issuance, the fair value of the promissory note was determined using an income approach. An income approach is a present value technique that takes into account the future cash flows that would be expected to be received from holding the promissory note as an asset. Present value was calculated using the following attributes – semi-annual interest payments of $9,750, repayment of $325,000 principal at maturity number of months to maturity and a discount rate of 6% discounted annually.

On October 15, 2020, the Company entered into a debt settlement agreement with Kona Bay whereby the principal and interest amounts of the promissory note payable were forgiven by Kona Bay (Note 11).

During the period ended December 31, 2021, the Company recognized interest expense of Nil (2020 - $4,049) on the promissory note.

7. SHARE CAPITAL

Authorized

The Company has authorized share capital of an unlimited number of common shares and preferred shares without par value. Common and/or preferred shares are entitled to receive dividends if and when they are declared by the Board of Directors.

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7. SHARE CAPITAL (continued)

Issued and Outstanding Common Shares

As of December 31, 2021, the Company has a total issued and outstanding common shares: 42,574,898 (September 30, 2021 – 36,327,814).

Private Placement Financing and Share Issuances

During the period ended December 31, 2021, the Company had the following capital transactions:

On December 16, 2021, the Company closed its flow-through financing – a non-brokered private placement – through the issuance of 833,334 units at a price of $1.20 per unit for aggregate proceeds of $1,000,001. Part of the proceeds were recognized as Flow-through premium liability amounting to $183,333 and shall be recognized as income over a period of 12 months from closing date (Note 12). Each Unit consists of one flowthrough common share and one-half of one non-flow through common share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a price of $1.50 per share for two years. Finders’ fees totaling $70,000 cash and 58,333 compensation warrants exercisable for two years at an exercise price of $1.20 were paid to an arm’s length party.

During the period ended December 31, 2021, 5,413,750 warrants were exercised into common shares at $0.10$0.60 per share for total gross proceeds of $573,250.

During the year ended September 30, 2021, the Company had the following capital transactions:

On September 2, 2021, the Company issued 80,000 common shares for gross proceeds of $48,000 through the exercise of share purchase warrants.

On July 2, 2021, the Company issued 2,388,650 units at a price of $0.40 per unit for gross proceeds of $955,460 from the second tranche of a non-brokered private placement financing. Each unit is comprised of one common share and one-half common share purchase warrant. Each warrant is exercisable into one common share at a price of $0.60 per share and expires on July 2, 2023. Finder’s fees and other share issuance costs totaling $30,028 in cash were paid to third parties.

On June 21, 2021, the Company closed a private placement of 6,645,517 units at a price of $0.40 per unit for gross proceeds of $2,658,207. Each unit consisted of one common share and one half-warrant. Each full warrant is exercisable at $0.60 for one common share until June 21, 2023. In connection with the private placement, the Company paid $140,385 in finders’ fees.

On May 13, 2021, the company issued 750,000 common shares at a price of $0.40 per share to GeoXplor Corp. for a total value of $300,000 in relation to an option agreement for the acquisition of 100% interest of several mineral claims located in Clayton Valley, Nevada (Note 5).

On January 25, 2021, the Company issued 13,350,001 units in relation to its Amalgamation agreement in exchange for all the outstanding common shares of Fundco at a price of $0.03 per share (see Amalgamation below) for a total value of $400,500. In connection with the Amalgamation, the Company also issued 1,610,000 common shares priced at $0.03 per share for a total value of $48,300 as finder’s fee.

On January 14, 2021, the Company issued 100,000 at a price of $0.03 per share for a total value of $3,000 to an arm’s length party in connection with the FLV Mineral Property (Note 5).

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7. SHARE CAPITAL (continued)

On November 27, 2020, the Company closed a private placement of 10,300,000 units at a price of $0.03 per unit for proceeds of $309,000. Each unit consisted of one common share and one half-warrant. Each full warrant is exercisable at $0.10 for one common share until November 27, 2022. In connection with the private placement, the Company issued 490,000 common shares with a total value of $14,700 as finders’ fee. The Company also paid $12,000 in legal fees.

On November 23, 2020, the Company completed a 7:1 share consolidation of its common shares. All common share and per share amount in these financial statements are retroactively presented on a post-share consolidation basis, including the number and exercise price of all share warrants.

Amalgamation

On December 30, 2020, the Company entered into an Amalgamation Agreement (Note 1) . The asset purchase agreement did not meet the definition of a business and therefore, was accounted for as an asset acquisition in accordance with IFRS 2.

Under the terms of the agreement, the Company issued 13,350,001 units in exchange for the issued and outstanding common shares of Fundco at a price of $0.03 per unit. Each unit consists of one common share and one-half share purchase warrant. Each full warrant entitles the holder to purchase one additional common share at $0.10, of which 6,525,001 warrants will expire on November 27, 2022, and remaining 150,000 warrants will expire on October 9, 2022. The warrants were assigned a residual value of $nil on the transaction. In connection with the transaction, the Company also issued, 1,610,000 common shares as finder’s fees with a total value of $48,300 ($0.03 per share) and paid $15,000 in legal fees. A breakdown of the transaction is as follows:

	September 30, 2021	September 30, 2021
Consideration
Common shares (13,350,001 units – issued on January 25, 2021)	$	400,500
Finders’ fees (1,610,000 common shares)		48,300
Legal fees		15,000
		463,800
Assets acquired
Cash		358,500
Loan receivable		42,000
		400,500
Amalgamation expense	$	63,300

During the year ended September 30, 2021, the Company received a working capital advance of $42,000 from Fundco in advance of closing the Amalgamation Agreement. On the closing of the transaction, the loan payable balance on the Company’s books was offset with the loan receivable acquired.

Shares held in Escrow

Pursuant to an escrow agreement dated March 25, 2021, (the “ Escrow Agreement”), a total of 3,242,244 common shares held by principals of the Company were placed under escrow. Of that number, as of December 31, 2021, a total of 2,431,683 remained in escrow. Of the remaining shares held in escrow, 486,337 will be released every six months with the final shares being released on April 28, 2024.

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8. STOCK OPTIONS

The Company has a stock option plan for directors, officers, employees, and consultants. The aggregate number of shares issuable pursuant to options granted under the plan is limited to 10% of the Company's issued and outstanding common shares at the time the options are granted. The number of shares reserved for issuance to any individual director, officer or consultant shall not exceed 5% of the issued and outstanding common shares. The exercise price of each option is determined by the Board.

As at December 31, 2021, the Company has 1,325,000 incentive stock options outstanding (September 30, 2021 – 1,325,000). A summary of the movements of the stock options is presented below:

Period ended	December 31, 2021	December 31, 2021	September 30,2021	September 30,2021
	Number of options	Weighted Average Exercise Price	Number of options	Weighted Average Exercise Price
Outstanding,beginning	1,325,000	$ 0.80	-	$-
Granted	-	-	1,325,000	0.80
Outstanding,end	1,325,000	$ 0.80	1,325,000	$0.80
Exercisable	1,325,000		1,250,000

On July 9, 2021, the Company granted $1,325,000 incentive stock options to directors and a consultant with an exercise price of $0.80 per share for a period of five years from date of grant. A total of 1,250,000 options vested immediately. The remaining 75,000 options were fully vested by November 9, 2021. The estimated fair value of the options was $845,285, of which $822,744 has been recorded during the year ended September 30, 2021, in connection with the issuance of these options. The options were fair valued using Black-Scholes Option Pricing Model with the following assumptions: average risk-free rate - 0.94%; expected life – 5 years; expected volatility – 100%; forfeiture rate – Nil and expected dividends – Nil.

9. WARRANTS

The following table summarizes information regarding share purchase warrants outstanding as of December 31, 2021:

Date issued	Number of warrants	Exerciseprice	Expiry date
July 17, 2020	142,857	$ 0.70	February 21, 2023
November 27, 2020	6,325,000	0.10	November 27, 2022
December 30, 2020	150,000	0.10	October 9, 2022
June 21, 2021	3,317,758	0.60	June 21, 2023
July 2, 2021	1,055,575	0.60	July 2, 2023
December 16,2021	475,000	1.50	December 16,2023
	11,466,190

The following table summarizes information regarding share purchase warrants outstanding as of September 30, 2021:

21:
Date issued	Number of warrants	Exercise Price	Expiry date
September 25, 2018	142,857	$ 0.70	February 21, 2023
November 27, 2020	5,150,000	0.10	November 27, 2022
December 30, 2020	6,525,000	0.10	November 27, 2022
December 30, 2020	150,000	0.10	October 9, 2022
June 21, 2021	3,317,758	0.60	June 21, 2023
July2,2021	1,119,325	0.60	July2,2023
	16,404,940

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9. WARRANTS (continued)

On December 16, 2021, the Company granted $58,333 warrants to finders with an exercise price of $1.50 per share for a period of two years from date of grant. The estimated fair value of the warrants was $23,362, recorded during the period ended December 31, 2021, in connection with the issuance of these warrants. The warrants were fair valued using Black-Scholes Option Pricing Model with the following assumptions: average risk-free rate - 0.90%; expected life – 2 years; expected volatility – 100%; forfeiture rate – Nil and expected dividends – Nil.

The weighted average exercise price of the warrants as at December 31, 2021 is $0.36, and the remaining life of the warrants is 1.17 years (September 30, 2021 – $0.24 and 1.31 years, respectively).

A summary of changes in the Company’s share purchase warrants outstanding for the periods ended December 31 and September 30, 2021, and 2020, is as follows:

	December 31, 2021	December 31, 2021	September 30,2021	September 30,2021
	Number of warrants	Weighted Average Exercise Price	Number of warrants	Weighted Average Exercise Price
Outstanding, beginning	16,404,940	$ 0.24	142,857 16,342,083 (80,000)	$ 0.70 0.24 0.60
Issued	475,000	1.50
Exercised	(5,413,750)	0.11
Outstanding,end	11,466,190	$ 0.36	16,404,940	$0.24

Warrants held in escrow

Pursuant to an escrow agreement dated March 25, 2021, (the “ Escrow Agreement”), a total of 1,575,000 warrants held by principals of the Company were placed under escrow. Of that number, as of December 31, 2021, a total of 1,181,250 remained in escrow. Of the remaining warrants, 236,250 will be released every six months with the final warrants being released on April 28, 2024.

10. RELATED PARTY TRANSACTIONS

The Company has identified its directors and certain senior officers as its key personnel and the compensation costs for key personnel and companies related to them were recorded at their exchange amounts as agreed upon by transacting parties.

During the periods ended December 31, 2021, and 2020, the Company entered into the following transactions with related parties:

ith related parties:
Period Ended	December 31, 2021	December 31,2020
Management fees	$ 35,000	$ -
Accountingfees	7,079	-
Total	$ 42,079	$-

(a) Management fees of $35,000 in the current year were paid to companies controlled by the CEO: $20,000 (2020-$Nil) and CFO: $15,000 (2020-$Nil).
(b) Accounting fees of $7,079 was paid to a company controlled by the Company’s current CFO (2020 – $Nil).

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10. RELATED PARTY TRANSACTIONS (continued)

The breakdown of expenses by key management personnel is as follows:

Period Ended	December 31, 2021	December 31,2020

Chief Executive Officer	$ 20,000	$ -
Chief Financial Officer	22,079	-
Total relatedparty expenses by key managementpersonnel	$ 42,079	$-

As at December 31, 2021, $7,102 (September 30, 2021 – $47,923) were owing to companies controlled by key management personnel for fees and expenses and the amounts were included in due to related parties.

Due to relatedparties	December 31, 2021	September 30,2021
CEO, Director	$ -	$ 36,767
CFO	7,102	11,103
Director	-	53
Total	$ 7,102	$47,923

On July 2, 2021, management and a board member participated in a non-brokered private placement financing of units for gross proceeds of $10,000 at a price of $0.40 per unit. Each unit consists of one common share and one-half common share purchase warrant. Each warrant is exercisable into one common share at a price of $0.60 per share and expires on July 2, 2023.

11. SETTLEMENT OF DEBT

On October 15, 2020, the Company entered into a series of debt settlement agreements to extinguish most of the Company’s accounts payable and accrued liabilities and loan balances with related parties.

The Company paid a total of $166,350 to settle $418,950 in accounts payables and accrued liabilities, $225,385 due to Kona Bay, $12,800 in shareholder loan and the $383,650 promissory note payable, resulting in a gain on settlement of $874,435. The total debt and settlement for each party is as follows:

	Total Debt	Settlement Amount	Gain on Settlement
Former CEO	$ 217,550	$ 43,510	$ 174,040
Former Consultant	214,200	42,840	171,360
Kona Bay	609,035	80,000	529,035
Total Debt	$ 1,040,785	$ 166,350	$ 874,435

Concurrent with the debt settlement, the Company offset the balance due from ACT360 of $45,658 against the remaining amounts owed to Kona Bay. The Company wrote-off $8,316 of GST receivable related to certain accrued expenditures from related parties.

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12. FLOW-THROUGH PREMIUM LIABILITY

During the period ended December 31, 2021, the Company issued 833,334 flow-through units for gross proceeds of $1,000,001 and recognized a deferred flow-through premium of $183,333, non-cash, as the difference between the amounts recognized in common shares and the amounts the investors paid for the units.

As at December 31, 2021, the flow-through premium liability outstanding relating to these flow-through shares was $183,333 (September 30, 2021 – $Nil). The Company is required to spend approximately $1,000,001 in eligible exploration expenditures.

During the period ended December 31, 2021, the Company recognized flow-through income of $Nil (2020 – $Nil).

13. CAPITAL MANAGEMENT

The Company's capital currently consists of common shares of $6,106,606. The Company's objective when managing capital is to safeguard the entity's ability to continue as a going concern, meet financial obligations, have sufficient capital to achieve and maintain profitable operations and to provide returns for shareholders and benefits for other stakeholders. As of December 31, 2021, the Company had a working capital surplus of $3,696,192 (September 30, 2021 – $2,746,824). Management expects to raise additional capital from the capital markets or from private placements of securities.

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company is exposed through its operations to the following financial risks:

Market Risk
Credit Risk
Liquidity Risk

In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies, and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

General Objectives, Policies, and Processes

The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below.

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14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Fair value of financial instruments

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Quoted prices in markets that are not active, or inputs that are not observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The fair value of the Company’s financial instruments approximates their carrying values due to their short term to maturity. The fair value of cash is based on level 1 inputs of the fair value hierarchy.

Risk Management

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of four types of risk: foreign currency risk, interest rate risk, commodity price risk and equity price risk.

Foreign Currency Risk

Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and United States dollar or other foreign currencies will affect the Company’s operations and financial results. The Company is exposed to currency risk to the extent that monetary assets and liabilities held by the Company are not denominated in Canadian dollars. The Company has not entered into any foreign currency contracts to mitigate this risk.

The Company is exposed to currency risk through the following monetary assets and liabilities denominated in foreign currencies:

		December 31, 2021	September 30, 2021
Cash and cash equivalents	USD$	6,985	13,099
Accountspayable and accrued liabilities	USD$	10,103	47,103

Based on the above net exposures and assuming that all other variables remain constant, a 10% change in the value of the foreign currency against the Canadian dollar would result in an increase or decrease of $2,279 (September 30, 2021: $4,332) in income/loss from operations.

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14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

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. Financial instruments which are potentially subject to credit risk for the Company consists of cash and cash equivalents. The majority of the Company’s cash and cash equivalents is maintained with a federally regulated financial institution with reputable credit and may be redeemed upon demand. The Company considers this risk to be minimal as of December 31, 2021.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. They key to success in managing liquidity is the degree of certainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.

The Company’s objective is to ensure that it has sufficient cash on demand to meet expected operational expenses. To achieve this objective, the Company will prepare annual capital expenditure budgets which will be regularly monitored and updated as necessary. The Company monitors its risk of shortage of funds by monitoring the maturity dates of existing trade and other accounts payable.

15. SUPPLEMENTAL CASH FLOW INFORMATION

The Company incurred the following non-cash financing and operating transactions during the period ended December 31, 2021, and 2020:

December 31, 2021, and 2020:
Period ended	December 31, 2021	December 31,2020
Non-cash financing activities:
Shares issued for finders	$ -	14,700
Shares issued for finders	23,362	-

During the period ended December 31, 2021, the Company paid $nil in interest and taxes (2020 – interest of $4,049; taxes of $Nil).

16. COMMITMENTS

On August 1, 2021, the Company entered into a 12-month lease agreement for its office premises for annual rental fees of $36,000.

On September 1, 2021, the Company entered into a marketing agreement with an arm’s length party for annual payment of $25,000. The contract is automatically renewed annually unless terminated by either party.

The Company has certain commitments in connection with its mineral properties (Note 5).

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17. DISCONTINUED OPERATION

A discontinued operation is a component of the Company that either has been abandoned, disposed of, or is classified as held for sale, and: (i) represents a separate major line of business or geographical area of operation; (ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operation; or (iii) is a subsidiary acquired exclusively with a view to resell.

On November 23, 2021, the Company disposed its technology operations and changed its business to mineral exploration. As a result of the change in operations, the technology segment has been recorded as a discontinued operation on the statement of loss and comprehensive loss and as cash flow from discontinued operations respectively, for each of the periods ended December 31, 2021, and 2020.

Net income (loss) from discontinued operations:

Sales Wages and salaries Gain on settlement of debt (Note 11) Write-off of due from ACT360 (Note 11) Write-off of GST receivable (Note 11)	December 31, 2021 December 31,2020
	$ $ - - - - - 874,435 - (45,658) - (8,316)
	- 820,461

18. SUBSEQUENT EVENTS

On January 24, 2022, the Company paid $30,561 ($24,197) in reclamation bond for its Clayton, Nevada properties. On the same date, the Company filed a Notice of Intent (NOI) to drill before the State of Nevada. On February 7, 2022, the NOI was approved.

On February 3, 2022, the Company entered into a term sheet with an arm’s length party for its Manitoba Properties. Under the agreement, the Company with receive US$650,000 from the grant of project royalties and US$2,350,000 by way of non-brokered private placement. The transaction is expected to close on or before March 17, 2022.

Subsequent to December 31, 2021, the Company issued 622,500 common shares for warrants exercised at $0.60 per share for total proceeds of $373,500.

AI assistant

Surface Metals Inc. — Interim / Quarterly Report 2022

47518_rns_2022-02-24_94aa29ba-979a-4d98-9153-590bfbbe8eb4.pdf

ACME LITHIUM INC.

Notice of No Auditor Review of Interim Condensed Financial Statements

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE PERIODS ENDED DECEMBER 31, 2021 AND 2020

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) FOR THE PERIODS ENDED DECEMBER 31, 2021 AND 2020

ACME LITHIUM INC. (FORMERLY HAPUNA VENTURES INC.) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED DECEMBER 31, 2021, AND 2020

1. NATURE AND CONTINUANCE OF OPERATIONS

Background

Going concern

1. NATURE AND CONTINUANCE OF OPERATIONS (continued)

COVID-19

2. BASIS OF PREPARATION

a) Statement of compliance

b) Basis of Measurement

c) Basis of Consolidation

2. BASIS OF PREPARATION (continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Critical Judgments

Estimates

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Estimates (continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derecognition of financial assets

4. INTANGIBLE ASSETS

5. EXPLORATION AND EVALUATION ASSETS

5. EXPLORATION AND EVALUATION ASSETS (continued)

FLV Property (Fish Lake Valley, Nevada)

Clayton Valley, Nevada

5. EXPLORATION AND EVALUATION ASSETS (continued)

Manitoba Properties

6. PROMISSORY NOTE PAYABLE

7. SHARE CAPITAL

Authorized

7. SHARE CAPITAL (continued)

Issued and Outstanding Common Shares

Private Placement Financing and Share Issuances

7. SHARE CAPITAL (continued)

Amalgamation

Shares held in Escrow

8. STOCK OPTIONS

9. WARRANTS

9. WARRANTS (continued)

Warrants held in escrow

10. RELATED PARTY TRANSACTIONS

10. RELATED PARTY TRANSACTIONS (continued)

11. SETTLEMENT OF DEBT

12. FLOW-THROUGH PREMIUM LIABILITY

13. CAPITAL MANAGEMENT

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

General Objectives, Policies, and Processes

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Fair value of financial instruments

Risk Management

Market Risk

Foreign Currency Risk

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Credit Risk

Liquidity Risk

15. SUPPLEMENTAL CASH FLOW INFORMATION

16. COMMITMENTS

17. DISCONTINUED OPERATION

18. SUBSEQUENT EVENTS

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Surface Metals Inc. Interim / Quarterly Report 2022