TrustBIX Inc. — Interim / Quarterly Report 2023

Aug 23, 2023

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TrustBIX Inc.

Interim Condensed Consolidated Financial Statements (Unaudited) June 30, 2023

Notice of No Auditor Review of Interim Condensed Consolidated Financial Statements

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

The accompanying unaudited interim condensed consolidated financial statements of TrustBIX Inc. (the “Company”) have been prepared by and are the responsibility of the Company’s management.

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

As at June 30, 2023

TrustBIX Inc. Interim Condensed Consolidated Statements of Financial Position (Unaudited)

Assets Current assets Cash Accounts receivable Share subscriptions receivable (note 12(a)) Inventory Deposits and prepaid expenses Property and equipment(note 5) Intangible assets (note 6) Right-of-use assets(note 7) Investment(note 8) Liabilities Current liabilities Bank overdraft Accounts payable and accrued liabilities Unearned revenue Promissory notes (note 9) Convertible debenture (note 10) Loan payable – current portion (note 11) Lease liability – current portion (note 7) Loan payable (note 11) Lease liability(note 7) Shareholders’ Equity (Deficiency) Share capital issued(note 12(a)) Warrants(note 12(b)) Contributed surplus Deficit Nature of operations and going concern(note 1) Approved by the Board of Directors	June 30, 2023 $ September 30, 2022 $ - 126,881 49,623 70,385 53,395 - 63,112 74,811 10,470 86,067
	176,600 358,144 26,761 32,424 1,027,711 1,475,615 24,612 32,389 178,101 180,244
	1,433,785 2,078,816
	19,991 - 1,254,287 655,325 288,663 390,170 - 251,250 37,487 - 36,000 121,568 5,268 8,039
	1,641,696 1,426,352 565,981 613,045 21,964 26,017
	2,229,641 2,065,414
	13,572,063 12,764,699 370,630 370,630 3,405,068 3,156,389 (18,143,617) (16,278,316)
	(795,856) 13,402
	1,433,785 2,078,816

(Signed) “Hubert Lau”__ Director ___(Signed) “Lap Shing (Andrew) Kao” __ Director

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

TrustBIX Inc.

Interim Condensed Consolidated Statements of Changes in (Deficiency) Equity (Unaudited)

For the nine-month periods ended June 30, 2023 and 2022

Balance – October 1, 2022 Net loss for the period Common shares issued in private placement, net of share issue costs (note 12(a)) Issuance of convertible debenture (note 10) Partial repayment of convertible debenture (note 10) Stock-based compensation (note 12(c)) Balance – June 30, 2023 Balance – October 1, 2021 Net loss for the period Common shares issued for asset acquisition, net of share issue costs (Note 4) Common shares and warrants issued in private placement, net of share issue costs (note 12(a)) Common shares issued on exercise of options (note 12(a)) Expiration of warrants (note 12(b)) Stock-based compensation (note 12(c)) Balance – June 30, 2022	Share capital $ Warrants $ Contributed surplus $ Deficit $ Total $ 12,764,699 370,630 3,156,389 (16,278,316) 13,402 - - - (1,865,301) (1,865,301) 807,364 - - - 807,364 - - 10,170 - 10,170 - - (7,797) - (7,797) - - 246,306 - 246,306
	13,572,063 370,630 3,405,068 (18,143,617) (795,856)
	9,457,445 468,408 1,923,782 (12,061,545) (211,910) - - - (2,934,362) (2,934,362) 1,771,125 - - - 1,771,125 1,436,129 370,630 - - 1,806,759 60,000 - - - 60,000 - (468,408) 468,408 - - - - 442,835 - 442,835
	12,724,699 370,630 2,835,025 (14,995,907) 934,447

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

TrustBIX Inc.

Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited)

For the three and nine month periods ended June 30, 2023 and 2022

Revenue Licence Hardware and installation Professional and development services Maintenance Expenses Wages and benefits Professional fees Consulting fees Amortization and depreciation Office Research and development Hardware for resale and supplies Travel, trade shows and conferences Advertising and promotion Foreign exchange loss Loss before other (expenses) income and income taxes Other (expenses) income Foreign exchange remeasurement on investment Interest income Interest expense Accretion expense Gain on refinancing of loan payable (note 11) Loss before income taxes Income taxes Net loss and comprehensive loss for the period Basic and diluted loss per share(note 13)	Three months ended June 30, 2023 $ June 30, 2022 $ 72,429 48,100 113,623 72,551 29,058 73,410 217,800 196,435	Nine months ended
		June 30, 2023 $ June 30, 2022 $ 200,441 104,821 482,206 260,818 188,699 240,583 658,947 618,261
	432,910 390,496	1,530,293 1,224,483
	417,637 708,504 20,776 229,985 228,039 228,034 152,960 162,754 82,717 85,360 (47,103) 127,894 71,799 59,421 17,223 40,953 1,146 13,428 7,308 (1,885)	1,320,230 1,693,407 345,611 753,629 757,262 644,426 462,454 215,830 252,011 256,448 (84,122) 241,236 311,593 169,083 84,483 64,536 41,631 27,811 13,684 3,964
	952,502 1,654,448	3,504,837 4,070,370
	(519,592) (1,263,952)	(1,974,544) (2,845,887)
	- 10,730 608 115 (1,260) (1,894) (27,999) (30,688) - -	(2,804) 3,795 1,753 1,128 (12,478) (5,297) (81,747) (88,101) 204,519 -
	(28,651) (21,737)	109,243 (88,475)
	(548,243) (1,285,689) - -	(1,865,301) (2,934,362) - -
	(548,243) (1,285,689)	(1,865,301) (2,934,362)
	(0.01) (0.02)	(0.03) (0.05)

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

TrustBIX Inc.

Interim Condensed Consolidated Statements of Cash Flows (Unaudited)

For the three and nine month periods ended June 30, 2023 and 2022

Cash provided by (used in) Operating activities Net loss for the period Adjustments to reconcile net loss to cash flows from operating activities: Gain on refinancing of loan payable (note 11) Stock-based compensation (note 12(c)) Amortization and depreciation Accretion expense Interest expense Unrealized foreign exchange (gain) loss on investment Interest income on investment Cash used in operating activities before changes in items of working capital Net change in items of non-cash working capital (note 16) Investing activities Purchase of property and equipment Financing activities Proceeds from issuance of convertible debenture (note 10) Partial repayment of convertible debenture (note 10) Proceeds from issuance of common shares and warrants in private placement (note 12(a)) Proceeds from exercise of options (note 12(a)) Repayment of promissory note (note 9) Repayment of loan payable (note 11) Share issue costs (note 12(a)) Lease payments (note 7) Decrease in cash during the period Cash – Beginning of period Cash (Bank Overdraft) – End of period	Three months ended June 30, 2023 $ June 30, 2022 $ (548,243) (1,285,689) - - 25,545 266,983 152,960 162,754 27,999 30,688 1,261 1,894 - (10,730) - -	Nine months ended
		June 30, 2023 $ June 30, 2022 $ (1,865,301) (2,934,362) (204,519) - 246,306 442,835 462,454 215,830 81,747 88,101 3,979 5,297 2,143 (3,795) - (899)
	(340,478) (834,100) 338,831 65,055	(1,273,191) (2,186,993) 604,263 141,495
	(1,647) (769,045)	(668,928) (2,045,498)
	- (1,317)	(1,110) (3,217)
	- - (40,000) - 4,500 160,800 - 40,000 - - (2,000) - - - (2,423) (13,337)	150,000 - (115,000) - 759,287 1,843,380 - 60,000 (250,000) - (5,000) - (5,318) (65,496) (10,803) (39,888)
	(39,923) 187,463	523,166 1,797,996
	(41,570) (587,899) 21,579 782,347	(146,872) (250,719) 126,881 450,167
	(19,991) 199,448	(19,991) 199,448

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

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

1 Nature of operations and going concern

TrustBIX Inc.’s (the “Company” or “TrustBIX”) business operations consist of information solutions for the agrifood industry including:

• the sale, installation and support of software and computer systems for auction markets and livestock dealers;

• the sale, installation and support of software for livestock feedlots;

• the sale, installation and support of data capture and carcass grading systems for pork plants;

• internet based applications that provide animal tracking and management;

• the sale, installation and support for Business InfoXchange (“BIX”); and

• the sale of solutions to track, protect and identify the movement of high-value moveable equipment

The Company and its wholly owned subsidiaries, ViewTrak Technologies Inc. (“ViewTrak”), Insight Global Technology Inc. (“Insight”) and BIX Operations Inc. (“BIX Operations”) are incorporated and domiciled in Canada. The Company and its subsidiaries’ principal office is located at 2[nd] Floor, 10607 – 82 Street, Edmonton, Alberta, T6A 3N2.

Going concern

These interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”), which contemplates the realization of assets and satisfaction of liabilities in the normal course of business as they come due.

As at June 30, 2023, the Company had a net working capital deficit of $1,465,096 (September 30, 2022 - $1,068,208). For the three and nine-month periods ended June 30, 2023, the Company incurred a net loss of $548,243 and $1,865,301, respectively (2022 – $1,285,689 and $2,934,362, respectively), and net cash used in operating activities of $1,647 and $668,928, respectively (2022 – $769,045 and $2,045,498, respectively). As at June 30, 2023, the Company had an accumulated deficit of $18,143,617 (September 30, 2022– $16,278,316). In addition, the Company also has lease commitments in the amount of $37,835 as disclosed in note 7.

Current operations have been financed primarily from the issue of promissory notes totaling $250,000 (note 9), convertible debentures (note 10) and non-brokered private placements (note 12(a)).

Management is actively pursuing new business opportunities related to the BIX and BIX Location Services (formerly Insight) platforms.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

1 Nature of operations and going concern (continued)

Going concern (continued)

Additionally, the Company continues to apply for provincial and/or federal government grant and funding programs. The Company also has a contribution agreement with Western Economic Diversification Canada (“WD”) for a repayable financial contribution under the Regional Relief and Recovery Fund (note 11).

The outcome of such efforts is dependent on a number of factors outside of the Company’s control. The nature of the technology sector, availability of government grants and current financial equity market conditions, including macroeconomic conditions, make the success of any future financing ventures and the other management strategies uncertain. There can be no assurance that management’s efforts will be successful. This uncertainty casts significant doubt upon the Company’s ability to continue as a going concern and, accordingly, the appropriateness of the use of accounting principles applicable to going concern.

These interim condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

2 Basis of presentation

Statement of compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (the “IASB”). Accordingly, certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) have been omitted or condensed and accordingly, these condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Company as at and for the year ended September 30, 2022.

These interim condensed consolidated financial statements were authorized for issue by the Board of Directors on August 22, 2023.

Basis of measurement

These interim condensed consolidated financial statements have been prepared in Canadian dollars, which is the Company’s and its subsidiaries’ presentation and functional currency, and are prepared on a historical cost basis, except for certain financial instruments, which are measured at fair value.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions

The preparation of condensed interim consolidated financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim consolidated financial statements and the reported amounts of revenues and expenses recorded during the reporting period. In making estimates and judgments, management relies on external information and observable conditions where possible, supplemented by internal analysis as required. Actual results may differ from those estimates. Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The critical accounting estimates and judgments made by management in applying the Company’s accounting policies were the same as those described in note 5 to the Company’s consolidated financial statements for the years ended September 30, 2022 and 2021 with the addition of the below.

i) Compound financial instruments

The fair value of a convertible debenture issued is allocated to each respective component on a relative fair value basis. The fair value of a convertible debenture is allocated between the liability and equity components with the fair value of the liability component determined first, based on a discounted cash flow approach using the interest rate estimated to be equal to the rate of interest of a similar debt instrument without a conversion feature, and with the residual value being assigned to the equity component.

3 Significant Accounting Policies

The significant accounting policies applied by the Company in these condensed interim consolidated financial statements are consistent with those applied by the Company in its annual consolidated financial statements for the years ended September 30, 2022 and 2021 with the addition of the below:

Compound Financial Instruments

Compound financial instruments issued by the Company comprise a convertible debenture that can be converted to common shares of the Company at the option of the holder, when the number of common shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest rate method. The equity component of a compound financial instrument is not remeasured.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

3 Significant Accounting Policies (continued)

Compound Financial Instruments (continued)

Interest related to the financial liability is recognized in the condensed interim consolidated statements of loss and comprehensive loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

New accounting pronouncements not yet adopted

The following IFRS standards have been recently issued by the IASB. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.

i) Amendments to IAS 1: Classification of Liabilities as Current or Non-current

The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2024. The Company is currently evaluating the potential impact of these amendments on the Company’s consolidated financial statements.

4 Acquisition of Insight

On March 7, 2022, pursuant to the terms of the definitive agreement, the Company acquired 100% of the issued and outstanding shares of Insight for up to 30,000,000 common shares of the Company priced at $0.18 per share (the “Consideration Shares”). The Insight shareholders received 10,000,000 Consideration Shares (subject to certain resale restrictions) on closing, and an additional amount of up to 20,000,000 Consideration Shares (subject to applicable escrow and resale restrictions) may have been issued by the Company based on the satisfaction of certain financial metrics over the twelve months after the closing of the transaction, as follows:

• i) a further 5,000,000 Consideration Shares on Insight attaining Net Revenue of $500,000 and Target Profit of $150,000;

• ii) a further 7,500,000 Consideration Shares on Insight attaining cumulative Net Revenue of $750,000 and cumulative Target Profit of $225,000; and

• iii) a further 7,500,000 Consideration Shares on Insight attaining cumulative Net Revenue of $1,000,000, cumulative Target Profit of $300,000, and achieving a minimum of 50% recurring revenue (continuing subscriptions and rollover renewals of the Insight Solution).

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

4 Acquisition of Insight (continued)

Net Revenue includes the sales of Insight products and related services, net of returns, discounts, shipping, taxes, duties and other such amounts. Target Profit is defined as Net Revenue, minus cost of goods sold, including installation and support, and direct operating expenses, including all sales and technical activities. Net Revenue and Target Profit are calculated in accordance with the Company’s accounting standards and corporate policies.

As of June 30, 2023, no Consideration Shares were released pursuant to the escrow agreement. The additional 20,000,000 Consideration Shares that were not released can be cancelled without recourse.

The Company applied the optional concentration test permitted under IFRS 3 Business combinations to the acquisition which resulted in the acquired assets being accounted for as an asset acquisition. The amounts recognized on the date of acquisition of the identifiable assets were as follows:

Assets acquired: Inventory Software Assets acquired Share consideration (30,000,000 common shares)	$ 9,450 1,790,550
	1,800,000
	1,800,000

Software acquired is amortized over the useful life of three years on a straight-line basis (note 6).

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

5 Property and equipment

Cost Balance, September 30, 2022 Addition Balance, June 30, 2023 Accumulated amortization Balance, September 30, 2022 Amortization Balance, June 30, 2023 Net book value Balance, September 30, 2022 Balance, June 30, 2023 Intangible assets Cost Balance, September 30, 2022 and June 30, 2023 Accumulated amortization Balance, September 30, 2022 Amortization Balance, June 30, 2023 Net book value Balance, September 30, 2022 Balance, June 30, 2023	Computer hardware $ Computer software $ Office furniture and equipment $ Total $ 109,304 19,708 15,086 144,098 1,110 - - 1,110
	110,414 19,708 15,086 145,208
	(81,686) (19,009) (10,979) (111,674) (5,810) (383) (580) (6,773)
	(87,496) (19,392) (11,559) (118,447)
	27,618 699 4,107 32,424 22,918 316 3,527 26,761
	BIX software $ Trademarks $ Insight software $ Total $ 244,959 8,092 1,790,550 2,043,601
	(244,692) - (323,294) (567,986) (267) - (447,637) (447,904)
	(244,959) - (770,931) (1,015,890)
	267 8,092 1,467,256 1,475,615 - 8,092 1,019,619 1,027,711

6 Intangible assets

Trademarks are indefinite-lived intangible assets and are not amortized. Insight software was acquired as part of the purchase of Insight (note 4).

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

7 Leases and right-of-use asset

Right-of-use asset

Below is a summary of the activity related to the Company’s right-of-use (“ROU”) asset for the period ended June 30, 2023.

ROU asset as at September 30, 2022 Depreciation ROU asset as at June 30, 2023	$ 32,389 (7,777)
	24,612

Lease liability

The following is a summary of the activity related to the Company’s lease liabilities for the period ended March 31, 2023:

ROU lease liabilities as at September 30, 2022 Lease payments Accretion of lease liabilities ROU lease liabilities as at June 30, 2023 Of which are Current lease liabilities Non-current lease liabilities	$ 34,056 (10,803) 3,979
	27,232
	5,268 21,964
	27,232

The Company’s estimated cash outflows related to the lease obligation for the 12 months ending are as follows:

June 30, 2024 June 30, 2025 June 30, 2026 June 30, 2027	$ 9,754 10,002 10,251 7,828
	37,835

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

8 Investment

On November 7, 2019, TrustBIX invested US$250,000 in a Calgary, Alberta-based company, Provision Analytics Inc. (“Provision Analytics”), through a convertible debenture offering maturing in 24 months. It accrued simple interest on an annual basis at the rate of 2.5% per annum.

The investment plus accrued interest was converted into non-marketable preferred shares on November 23, 2021 at the transaction price of US$262,997 (or Canadian $333,427). No significant changes were recorded to initial fair value measurement as at June 30, 2023 (note 14). As at June 30, 2023, the Company holds nonmarketable equity securities in Provision Analytics carried at $178,101, after selling half of the investment during the year ended September 30, 2022.

The Company does not have control or significant influence over Provision Analytics and has no participation in its policy-making processes. Each preferred share is convertible, at the option of the holder, into common shares of Provision Analytics.

9 Promissory notes

On August 15, 2022 the Company issued a promissory note totaling $50,000 repayable in 60 days at an interest rate of 1% per month on the unpaid principal.

On September 15, 2022 the Company issued a promissory note totaling $200,000 repayable in 60 days at an interest rate of 0.5% per month on the unpaid principal.

During February and March 2023, the Company repaid the principal balance of the promissory notes of $250,000 and accrued interest, to the date of repayment, of $9,750.

10 Convertible debenture

Proceeds from issuance of convertible debenture Amount classified as equity for conversion feature Convertible debenture at initial recognition Partial repayment of convertible debenture Amount classified as equity for conversion feature Interest accretion	$ 150,000 (10,170)
	139,830 (115,000) 7,797
	(107,203) 4,860
	37,487

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

10 Convertible debenture (continued)

On January 27, 2023, the Company issued a convertible debenture with a principal balance of $150,000 at an interest rate of 10% per annum, with the interest to be paid only in cash, for a term of one (1) year. The convertible debenture is convertible into units of the Company, composed of one (1) common share and one half (1/2) warrant exercisable at a price of $0.05 per common share for a term of one (1) year, at a price of $0.05 per unit. During the nine months ended June 30, 2023, the Company repaid $115,000 of the principal balance of the convertible debenture.

The liability component of the convertible debenture was initially recognized at the fair value of a similar liability that did not have an equity conversion option and using a discount rate of 18%. The equity component of the convertible debenture was recognized at the difference between the fair value of the convertible debenture as a whole and the fair value of the liability component.

11 Loan payable

On July 27, 2020, the Company entered into a contribution agreement with WD for a repayable financial contribution under the Regional Relief and Recovery Fund. Under the contribution agreement, WD supported the Company with an investment of $1,000,000 for general working capital requirements (the “Contribution”). Repayment of the Contribution was to commence on January 31, 2023 and continue in equal monthly instalments until the Contribution was fully repaid by December 31, 2025. The Contribution is unsecured and non-interest bearing, unless repayment is not made as scheduled. Interest is calculated at an average bank rate plus 3%, compounded monthly, on repayments not made as scheduled. The interest calculation ends when repayments are back on schedule.

The loan payable was initially recognized at a fair value of $506,300. The initial carrying value of the loan payable was calculated using the effective interest rate method, discounting estimated cash flows using the Company’s effective interest rate of 18%.

On December 29, 2022, the repayment terms were revised, changing the amount of the monthly installment payments and extending the final installment payment to December 31, 2027. The original Contribution was derecognized from the interim condensed consolidated statements of financial position and a new loan payable was recognized at a fair value of $563,649, resulting in a gain on refinancing of loan payable of $204,519 in other income in the interim condensed consolidated statements of loss and comprehensive loss.

The short-term and long-term components of loan payable at June 30, 2023 are as follows:

Current loan payable Non-current loan payable	$ 36,000 565,981
	601,981

During the three and nine months ended June 30, 2023, the Company incurred $26,340 and $76,887, respectively, (2022 - $30,688 and $88,102) of interest accretion expense on the loan payable.

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

11 Loan payable (continued)

The Company’s anticipated cash outflows related to the loan payable for the 12 months ending are as follows:

June 30, 2024 June 30, 2025 June 30, 2026 June 30, 2027 June 30, 2028	$ 36,000 184,668 309,336 309,336 154,660
	994,000

12 Share capital

Authorized

Unlimited common shares, with no par value

Unlimited preferred shares, voting, convertible, designated as Series 1 and Series 2

a) Common shares issued

Balance as at September 30, 2021 Issued pursuant to private placement (i) Issued pursuant to exercise of options (note 12(c)) Issued pursuant to acquisition of Insight (ii) Issued pursuant to private placement (iii) Balance as at June 30, 2022 Balance as at September 30, 2022 Issued pursuant to private placement (iv) Balance as at June 30, 2023	Number $ 38,385,913 9,457,445 4,406,250 684,591 333,334 60,000 30,000,000 1,771,125 6,324,334 751,538
	79,449,831 12,724,699
	79,649,831 12,764,699 23,219,499 807,364
	102,869,330 13,572,063

• i) On December 31, 2021, the Company completed a non-brokered private placement, which consisted of the issuance of 4,406,250 common shares at a subscription price of $0.16 per common share for gross proceeds of $705,000. Share issue costs of $20,409 were netted against share capital issued.

• ii) In connection with the acquisition of Insight, the Company issued 30,000,000 common shares, of which 20,000,000 common shares will be cancelled as the required milestones were not achieved (note 4). Share issue costs of $28,875 have been netted against share capital issued.

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

12 Share capital (continued)

a) Common shares issued (continued)

iii) On February 2, 2022, the Company announced a non-brokered private placement financing for up to 11,111,111 units (“Units”) at a price of $0.18 per Unit for gross proceeds of up to $2,000,000. Each Unit consisted of one common share and one common share purchase warrant, which entitles the holder to purchase one common share at a price of $0.30 for a period of eighteen months from the date of closing, subject to certain acceleration provisions. On March 14, 2022 and April 5, 2022, the Company partially closed on the non-brokered private placement and issued 1,475,445 Units and 4,848,889 Units, respectively, at a subscription price of $0.18 per Unit for gross proceeds of $265,580 and $872,800, respectively. The gross proceeds of $1,138,380 were allocated between share capital and warrants in the amounts of $762,396 and $375,984 (note 12(b)), respectively. Share issue costs of $16,212 have been allocated between share capital and warrants in the amounts of $10,858 and $5,354, respectively.

• iv) During the three months ended March 31, 2023, the Company completed a non-brokered private placement, in four tranches, which consisted of the issuance of 23,219,499 common shares at a subscription price of $0.035 per common share for gross proceeds of $812,682 of which $57,895 remained receivable at March 31, 2023. Share issue costs of $5,318 have been netted against share capital issued.

b) Warrants

Balance as at September 30, 2021 Issued (note 12(a)(iii)) Expired Balance as at June 30, 2022 Balance as at September 30, 2022 and June 30, 2023	Number $ 10,749,645 468,408 6,324,334 370,630 (10,749,645) (468,408)
	1,475,445 370,630
	6,324,334 370,630

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

12 Share capital (continued)

b) Warrants (continued)

The expiration dates of warrants outstanding as at June 30, 2023 were as follows:

Expiration date September 13, 2023 October 4, 2023	Warrants outstanding number Exercise price $ 1,475,445 0.30 4,848,889 0.30
	6,324,334 0.30

On March 14, 2022, the Company issued warrants in connection with a private placement (note 12(a)(iii)). The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions: stock price of $0.18, exercise price of $0.30, volatility of 99.1%, an expected life of eighteen (18) months, a dividend yield of nil% and a risk-free interest rate of 1.6%.

c) Stock options and compensation expense

The Company has adopted a twenty percent (20%) fixed stock option plan (the “Stock Option Plan”) for directors, officers, employees, management company employees and consultants. In accordance with the Stock Option Plan, the Company can reserve up to a total of 15,849,996 common shares for issuance. The Board of Directors determines the price per common share and the number of common shares which may be allocated to each director, officer, employee and consultant and all other terms and conditions of the options, subject to the rules of the TSX Venture Exchange. At the Annual General and Special Meeting of Shareholders on April 14, 2023, the number of common shares reserved for issuance was increased to 18,886,094.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

12 Share capital (continued)

c) Stock options and compensation expense (continued)

A summary of the stock options outstanding as at June 30, 2023 and 2022 and changes during the periods ended on those dates is as follows:

Outstanding – Beginning of period Granted Exercised Forfeited Cancelled Expired Outstanding – End of period Options exercisable – End of period	June 30, 2023 Number Weighted average exercise price $ 12,731,848 0.21 2,900,000 0.05 - - (425,000) 0.12 (475,000) 0.11 (3,600,000) 0.08	June 30, 2022
		Number Weighted average exercise price $ 2,972,404 0.40 8,765,000 0.17 (333,334) 0.18 (147,222) 0.46 - - - -
	11,131,848 0.22	11,256,848 0.23
	10,251,848 0.20	6,500,953 0.26

On November 11, 2022, the Company issued 2,900,000 options to directors, officers, employees and non-employees, exercisable at $0.05 and vested 100% immediately, and expiring on April 30, 2023. The fair value of the options granted to non-employees was measured at the value of services the Company received.

The Company used the Black-Scholes option pricing model to estimate the fair value of the options granted to directors, officers, employees. The Company considered historical volatility of its common shares as well as industry benchmarking in estimating its future stock price volatility. The risk-free interest rate for the expected life of the options was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based on the contractual term, taking into account expected director, employee and non-employee exercise and expected post-vesting employment termination behaviour. The following assumptions were used to estimate the Black-Scholes fair value of the options granted during the six months ended March 31, 2023:

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

12 Share capital (continued)

c) Stock options and compensation expense (continued)

Annualized volatility	112.7%
Risk-free interest rate	4.3%
Expected life of options in years	0.5
Dividend rate	nil%
Exercise price	$0.05
Market price on date of grant	$0.065
Fair value	$0.027

Stock-based compensation expense for the three and nine months ended June 30, 2023 was $25,545 and $246,306, respectively, (2022 – $266,983 and $442,835, respectively), with a corresponding increase in contributed surplus included in shareholders’ equity (deficiency).

The following table summarizes information on stock options outstanding as at June 30, 2023:

Exercise price $ 0.10 0.15 0.30 0.50 0.60	Number outstanding Weighted average remaining contractual life in years 5,800,000 3.89 801,663 0.82 2,640,000 3.59 1,590,000 0.82 300,185 2.25 11,131,848 3.11	Options exercisable 5,800,000 801,663 1,760,000 1,590,000 300,185
		10,251,848

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

13 Loss per share

Net loss Weighted average number of common shares outstanding – basic and diluted Basic and diluted loss per share	Three months ended June 30, 2023 $ June 30, 2022 $ (548,243) (1,285,689)	Nine months ended
		June 30, 2023 $ June 30, 2022 $ (1,865,301) (2,934,362)
	# # 82,869,330 59,091,101	# # 69,928,629 55,964,328
	$ $ (0.01) (0.02)	$ $ (0.03) (0.05)

For the three and nine months ended June 30, 2023 and 2022, potential shares issuable in exchange for warrants, stock options and the convertible debenture have been excluded in the diluted loss per share calculation as their effects would have been anti-dilutive. Consideration Shares (note 4) that have not been released from escrow have also been excluded.

14 Financial instruments

For accounting recognition and measurement purposes, cash, accounts receivable, share subscription receivable, bank overdraft, accounts payable and accrued liabilities, promissory notes, loan payable and convertible debenture are classified as amortized cost. The carrying value of cash, accounts receivable, share subscription receivable, bank overdraft, accounts payable and accrued liabilities, promissory notes and convertible debenture approximates their fair value due to the immediate or short-term maturity of these financial instruments. The loan payable was measured using the estimated incremental borrowing rate and approximates fair value.

Financial instruments recognized on the interim condensed consolidated statements of financial position dates at fair value are classified in a hierarchy based on the significance of the estimates used in their measurement, as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Inputs for the asset or liability that are not based on observable market data.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

14 Financial instruments (continued)

The non-marketable equity securities in Provision Analytics (note 8) are an investment in a privately held company without readily determinable market values and is classified as Level 3.

During the nine months ended June 30, 2023 and 2022, there have been no transfers between levels of the fair value hierarchy.

Financial risk management

The Company’s activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by financial management in conjunction with overall corporate governance.

a) Market risk

• i) Currency risk

Some of the Company’s transactions, assets and liabilities are denominated in US dollars and Chinese RMB and thus the Company is exposed to risk arising from changes in exchange rates.

The following table presents the Company’s exposure in Canadian dollars to the US dollar and Chinese RMB as at June 30, 2023 and September 30, 2022:

Cash – USD Accounts receivable – USD Accounts payable and accrued liabilities – USD Cash - RMB Accounts receivable – RMB	June 30, 2023 $ September 30, 2022 $ 2,931 9,048 43,376 28,266 (80,499) (35,909)
	(34,192) 1,405
	- - - 19,715
	- 19,715

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

14 Financial instruments (continued)

Financial risk management (continued)

a) Market risk (continued)

i) Currency risk (continued)

	June 30,	September 30,
	2023	2022
	$	$
CAD to USD	0.7553	0. 7296
CAD to RMB	0.1825	0. 1923

Based on the Company’s foreign currency exposure noted above, varying the foreign exchange rates to reflect a 10% strengthening of the US dollar and Chinese RMB would have increased net loss by approximately $3,400 and $nil, respectively, as at June 30, 2023 (September 30, 2022 – decreased net loss by $nil and $2,000, respectively), assuming all other variables remained constant.

An assumed 10% weakening of the US dollar and China RMB would have had an equal but opposite effect to the amounts shown above, assuming all other variables remained constant.

ii) Market price risk

The Company is exposed to market price risk on its equity investment in Provision Analytics Inc. (note 8). Market price risk is the risk of loss arising from changes in the fair value of a financial instrument as a result of changes in market prices.

The sensitivity of the fair value of the investment to changes in market prices is monitored by the Company and it estimates that a 20% increase or decrease in the market price would result in an approximately $36,000 increase or decrease, respectively, in the fair value of the investment.

iii) Interest rate risk

The Company does not have any variable rate financial liabilities and is therefore management does not believe it is exposed to significant interest rate risk as at June 30, 2023 and September 30, 2022.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

14 Financial instruments (continued)

Financial risk management (continued)

b) Credit risk

The Company, in the normal course of business, is exposed to credit risk from its customers. The allowance for doubtful accounts and past due receivables is reviewed by management at each consolidated statement of financial position reporting date. Accounts are considered past due when customers have failed to make the contractually required payment when due, which is generally within 60 days of the billing date.

The Company applied the simplified approach to provide for ECL prescribed by IFRS 9, which permits the use of the lifetime ECL provision for trade receivables and contract assets without a significant financing component.

The following table presents a summary of the activity related to the allowance for doubtful accounts:

Balance – Beginning of period ECL provision Accounts written off, net of recoveries Balance – End of period	June 30, 2023 $ September 30, 2022 $ 4,537 4,537 - 124 (321) (124)
	4,216 4,537

Management believes the risks associated with concentrations of credit risk with respect to accounts receivable are limited due to the nature of the customers and the generally short-term payment cycle. The Company has $21,528 in unsecured accounts receivable due from a customer in China and its ability to mitigate such risks may be limited.

The aging of the Company’s trade accounts receivable is as follows:

Current 31 – 60 days 61 – 90 days Greater than 90 days	June 30, 2023 September 30, 2022 $ % $ % 27,971 50 48,523 88 3,985 7 3,485 6 1,607 3 531 1 22,801 40 2,598 5
	56,364 100 55,137 100

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

14 Financial instruments (continued)

Financial risk management (continued)

c) Liquidity risk

As at June 30, 2023, the Company’s liabilities have the following amounts that mature within one year:

Bank overdraft Accounts payable and accrued liabilities Promissory notes Loans payable Convertible debenture Lease liability	June 30, 2023 $ September 30, 2022 $ 19,991 - 1,254,287 655,325 - 251,250 36,000 121,568 37,487 - 5,268 8,039

As at June 30, 2023, the Company’s long-term liabilities include a loan payable for $565,981 (September 30, 2022 - $613,045) (note 11) and a lease liability for $21,964 (September 30, 2022 - $26,017) (note 7).

Liquidity risk is the risk the Company will encounter difficultly in meeting financial obligations as they come due. See note 1 for additional disclosure on the Company’s financial condition. The Company manages its liquidity risk through the management of its capital structure and financial leverage. It also monitors its cash position to its actual cash position and timing of payments to suppliers, ensuring that sufficient funds are available when payments come due. The Board of Directors reviews and approves any material transactions out of the ordinary course of business.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

15 Related party transactions and balances

During the three and nine-month periods ended June 30, 2023 and 2022, the Company incurred the following amounts in the normal course of business and they have been valued at amounts that are considered established and agreed to by the related parties:

Sublease rental income from a company controlled by a director Exercise of options by a director and member of key management (notes 12(a) and 12(c)) Office and administrative services to companies presently and formerly controlled by a close family member of a director and member of key management Project management services to a company controlled by a former member of key management	Three months ended June 30, 2023 $ June 30, 2022 $ - 2,951 - 20,000 1,050 6,680 - 157,500	Nine months ended
		June 30, 2023 $ June 30, 2022 $ 984 8,687 - 20,000 3,716 19,247 52,500 355,950

The compensation to key management, and their close family members, during the three and nine-month periods ended June 30, 2023 and 2022 are as follows:

Salaries and other short-term employee benefits tock-based compensation Consulting fees	Three months ended June 30, 2023 $ June 30, 2022 $ 39,436 179,749 18,935 190,582 60,855 26,303	Nine months ended
		June 30, 2023 $ June 30, 2022 $ 277,984 463,600 153,290 274,953 169,623 78,909
	119,226 396,634	600,897 817,462

During the nine months ended June 30, 2023, the Company granted 1,320,000 stock options with a fair value of $35,266 to directors and members of key management, exercisable at $0.05 per option (note 12(c)).

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

15 Related party transactions and balances (continued)

Accounts payable

Accounts payable and accrued liabilities as at June 30, 2023 and September 30, 2022 include the following amounts due to:

Salaries and consulting fees due to members of key management Company controlled by a former member of key management for project management services Company controlled by a former member of key management for consulting fees Companies presently and formerly controlled by a close family member of a director and member of key management for other services	June 30, 2023 $ September 30 2022 $ 75,869 - - 78,750 5,071 17,535 3,257 2,516
	84,197 98,801

16 Supplementary cash flow information

Changes in items of non-cash working capital during the periods ended June 30, 2023 and 2022 are as follows:

Accounts receivable Inventory Deposits and prepaid expenses Accounts payable and accrued liabilities Unearned revenue	Three months ended June 30, 2023 $ June 30, 2022 $ 86,018 (13,288) 4,441 (37,423) 3,443 68,595 280,124 (32,074) (35,195) 79,245	Nine months ended
		June 30, 2023 $ June 30, 2022 $ 20,762 56,393 11,699 (43,126) 75,597 (138,524) 597,712 179,447 (101,507) 87,305
	338,831 65,055	604,263 141,495

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

17 Government assistance

Government assistance consists of grants from PIC and IRAP. These grants are accounted for as a reduction of related expenditures and are recorded when there is reasonable assurance that the Company has complied with the terms and conditions of the approved grant program.

PIC

On March 31, 2021 the Company signed an agreement with PIC, Farmers Edge Inc., and OPIsystems Inc. to create a platform for Canada's plant-based food, feed and ingredient sector. The project is partially funded through PIC, up to a maximum of $334,057.

For the three and nine months ended June 30, 2023, the Company recognized funding of $17,371 and $69,035, respectively, (2022 – $nil and $83,399, respectively) in research and development expenses.

IRAP

On April 1, 2021, the Company received approval of funding up to $300,000 from the IRAP, to develop traceability of products and sustainability metrics for poultry produced using Arden Biotechnology Ltd.’s natural feed supplement, Sustavian.

For the three and nine months ended June 30, 2023, the Company recognized funding of $30,733 and $119,628, respectively, (2022 – $43,187 and $103,218, respectively) in research and development expenses.

Wage subsidy

For the three and nine months ended June 30, 2023, the Company received $nil (2022 – $nil and $8,214, respectively) from the Canada Emergency Wage Subsidy, which is netted against wages and benefits on the interim condensed consolidated statements of loss and comprehensive loss.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

TrustBIX Inc.

18 Segment disclosures

Management has organized the Company under two reportable segments: ViewTrak, the development and sale of information solutions for the livestock industry and related services, and BIX, which leverages blockchain-derived technology and unique incentive solutions to deliver independent validation of food provenance and sustainable production practices within the agri-food supply chain.

Revenue from external customers Expenses Amortization and depreciation Other income (expenses) Net loss	Three months ended June 30, 2023 ViewTrak $ BIX $ Consolidated $ 401,620 31,290 432,910 (587,498) (212,044) (799,542) (3,748) (149,212) (152,960) (28,651) - (28,651) (218,277) (329,966) (548,243)

For the three months ended June 30, 2023, BIX includes $149,213 (2022 - $149,212) of amortization and depreciation related to Insight software (note 6).

Revenue from external customers Expenses Amortization and depreciation Other income (expenses) Net loss	Three months ended June 30, 2022 ViewTrak $ BIX $ Consolidated $ 335,482 55,014 390,496 (1,059,973) (431,721) (1,491,694) (13,013) (149,741) (162,754) (21,737) - (21,737)
	(759,241) (526,448) (1,285,689)

TrustBIX Inc.

Notes to Interim Condensed Consolidated Statements (Unaudited) June 30, 2023

18 Segment disclosures (continued)

Revenue from external customers Expenses Amortization and depreciation Other income (expenses) Net loss	Nine months ended June 30, 2023 ViewTrak $ BIX $ Consolidated $ 1,379,081 151,212 1,530,293 (2,376,894) (665,489) (3,042,383) (14,550) (447,904) (462,454) 109,243 - 109,243
	(903,120) (962,181) (1,865,301)

For the nine months ended June 30, 2023, BIX includes $447,638 (2022 - $174,081) of amortization and depreciation related to Insight software (note 6).

Revenue from external customers Expenses Amortization and depreciation Other income (expenses) Net loss	Nine months ended June 30, 2022 ViewTrak $ BIX $ Consolidated $ 1,026,597 197,886 1,224,483 (2,773,905) (1,080,635) (3,854,540) (40,162) (175,668) (215,830) (88,475) - (88,475)
	(1,875,945) (1,058,417) (2,934,362)

Geographical segmentation

The Company’s segments are managed on a worldwide basis. Substantially all of the Company’s assets are located in Canada.

The following is a summary of revenue by geographic location in which the Company’s customers are located for the three and nine months ended June 30, 2023:

Canada United States Other	Three months ended June 30, 2023 $ June 30, 2022 $ 151,118 324,951 281,792 61,930 - 3,615	Nine months ended
		June 30, 2023 $ June 30, 2022 $ 718,383 765,814 717,800 406,616 94,110 52,053
	432,910 390,496	1,530,293 1,224,483