Usha Resources Ltd. — Interim / Quarterly Report 2020

Feb 28, 2020

USHA RESOURCES LTD.

CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

DECEMBER 31, 2019

(UNAUDITED)

(The accompanying condensed interim financial statements have been prepared by management and approved by the Audit Committee and the Board of Directors.) The Company’s independent auditors have not performed a review of these condensed interim financial statements)

USHA RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars) (Unaudited) AS AT

	December 31, 2019	March 31, 2019
ASSETS Current Cash Receivables Prepaid expenses Exploration and evaluation assets(Note 3)	$ 497,111 1,422 - 498,533 161,568 $ 660,101	$ 176,701 1,088 4,095 181,884 678 $ 182,562
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities Flow-through shares premium liability (Note 4) Shareholders' equity Share capital (Note 4) Reserves Deficit	$ 55,089 42,000 97,089 785,436 42,201 (264,625) 563,012 $ 660,101	$ 35,591 - 35,591 206,246 42,201 (101,476) 146,971 $ 182,562

Nature and continuance of operations (Note 1)

Approved and authorized for issue by the Board of Directors on February 26, 2020:

“Navin Varshney” Director “Deepak Varshney” Director Navin Varshney Deepak Varshney

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

USHA RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian Dollars) (Unaudited)

EXPENSES Rent and administration charges (Note 5) Consulting fees Shareholder communications Office and miscellaneous Professional fees Property investigation Regulatory and filing fees Share-based payments Transfer agent fees Travel and entertainment Interest income Loss and comprehensive loss for the period		Three months ended December 31, 2019	Three months ended December 31, 2018	Nine months ended December 31, 2019	Nine months ended December 31, 2018
		$ 4,650 2,776 - 365 22,215 11,264 4,053 - 2,295 1,886 49,504 (387) $ 49,117	$ 4,725 - - 430 7,010 - - 31,575 3,770 677 48,187 (417) $ 47,770	$ 14,100 4,062 383 6,338 82,947 28,900 19,062 - 6,544 1,886 164,222 (1,073) $ 163,149	$ 4,725 - - 572 17,973 - 353 31,575 3,770 2,254 61,222 (554) $ 60,668
Basic and diluted loss per common share		$ 0.01	$ 0.03	$ 0.03	$ 0.10
Weighted average number of common shares outstanding		5,837,772	1,739,130	4,747,909	581,518

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

USHA RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Expressed in Canadian Dollars) (Unaudited)

Share Capital (Note 3)

	Shares	Amount	Reserves Deficit	Total Shareholders’ Equity
Balance, March 31, 2018 Common shares issued at $0.10 (Note 4b) Share issue costs (Note 4b) Fair value of agent’s options (Note 4b) Share-based payments Loss and comprehensive loss for the period Balance,December 31,2018	2,200,000 2,000,000 - - - - 4,200,000	$ 110,000 200,000 (93,128) (10,626) - - $ 206,246	$ - $ (10,004) - - - - 10,626 - 31,575 - - (60,668) $ 42,201 $ (70,672)	$ 99,996 200,000 (93,128) - 31,575 (60,668) $ 177,775
Balance, March 31, 2019 Qualifying transaction (Note 4b) Private placements (Note 4b) Flow-through premium liability (Note 4b) Loss and comprehensive loss for the period Balance,December 31,2019	4,200,000 1,500,000 4,527,000 - - 10,227,000	$ 206,246 150,000 471,190 (42,000) - $ 785,436	$ 42,201 $ (101,476) - - - - - - - (163,149) $ 42,201 $ (264,625)	$ 146,971 150,000 471,190 (42,000) (163,149) $ 563,012

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

USHA RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars) (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES Loss and comprehensive loss for the period Adjustment for item not involving cash: Share-based payments Changes in non-cash working capital items: (Increase) decrease in accounts receivable Decrease in prepaid expenses Increase (decrease) in accounts payable and accruals Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation assets Net cash (used) in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Share capital proceeds Share issue costs Net cash provided (used) in financing activities Increase in cash for the period Cash, beginning of period Cash, end of period		Three months ended December 31, 2019	Three months ended December 31, 2018	Nine months ended December 31, 2019	Nine months ended December 31, 2018
		$ (49,117) - (684) 1,365 13,684 (34,752) 60 60 302,940 - 302,940 268,248 228,863 $ 497,111	$ (47,770) 31,575 (417) - (44,073) (60,685) - - 200,000 (34,700) 165,300 104,615 83,999 $ 188,614	$ (163,149) - (334) 4,095 19,498 (139,890) (10,890) (10,890) 471,190 - 471,190 320,410 176,701 $ 497,111	$ (60,668) 31,575 (554) - 1,393 (28,254)
					- - 200,000 (93,128)
					106,872 78,618 109,996 $ 188,614
Cash paid during the period for interest		$ -	$ -	$ -	$ -
Cashpaid during theperiod for income taxes		$ -	$ -	$ -	$ -

Supplemental information:

During the nine-month period ended December 31, 2019, the Company i) recorded a flow-through share premium liability of $42,000 in connection with a flow-through share offering and ii) issued 1,500,000 shares with a deemed value of $150,000 as consideration for the interest purchased in its Qualifying Transaction property.

During the nine-month period ended December 31, 2018, the Company recorded a fair value of $10,626 in the reserves account as share issue costs on 200,000 agent’s warrants granted in connection with the IPO.

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

USHA RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

1. NATURE AND CONTINUANCE OF OPERATIONS

Usha Resources Ltd. (the "Company") was incorporated as a private company by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act on February 26, 2018. The Company was classified as a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4 and was not to carry on any business other than the identification and evaluation of assets or a business with a view to completing a Qualifying Transaction which would be subject to approval by regulatory authorities. The Qualifying Transaction was approved by the regulatory authorities during the quarter ended December 31, 2019 (Note 3).

The Company’s head office address is 1575 Kamloops Street, Vancouver BC, V5K 3W1, Canada. The registered and records office address is 400 – 725 Granville Street, Vancouver BC, V7Y 1G5, Canada.

These condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption 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. While the Company has been successful in obtaining its required financing in the past, there is no assurance that such financing will be available or be available on favourable terms. An inability to raise additional financing may impact the future assessment of the Company as a going concern. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.

2. BASIS OF PREPARATION

These condensed interim financial statements have been prepared using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. These condensed interim financial statements, presented in Canadian dollars, should be read in conjunction with the Company’s audited annual financial statements for the year ended March 31, 2019.

i) Basis of Measurement

The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgement in applying the Company’s accounting policies. Critical estimates and judgements are discussed more fully in the Company’s audited annual financial statements for the year ended March 31, 2019.

ii) Significant Accounting Policies

Statement of Compliance

These condensed interim financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” using accounting policies consistent with IFRS as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

USHA RESOURCES LTD.

2. BASIS OF PREPARATION (cont’d…)

• ii) Significant Accounting Policies (cont’d…)

The accounting policies and methods of computation followed in preparing these condensed interim financial statements are substantially the same as those followed in preparing the most recent audited annual financial statements. Changes to accounting policies adopted on April 1, 2019 as a result of changes to standards resulted in no material impact to the financial statements. For a summary of significant accounting policies and expected changes to accounting standards that have been announced but are not yet effective, please refer to the Company’s audited annual financial statements for the year ended March 31, 2019.

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of 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. Uncertainty about these judgments, estimates and assumptions could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Adoption of New Standards and Interpretations, and Recent Accounting Pronouncements

Other accounting standards or amendments to existing accounting standards that have been issued are either not applicable or are not expected to have a significant impact on the Company's financial statements. The Company has adopted these standards:

• IFRS 16, Leases: New standard to establish principles for recognition, measurement, presentation and disclosure of leases with an impact on lessee accounting, effective for annual periods beginning on or after January 1, 2019. The Company anticipates the standard will have no significant impact on its financial statements.

3. EXPLORATION AND EVALUATION ASSETS

The Company entered into an agreement dated March 7, 2019 with Emerald Lake Development Corporation (the “Vendor”) for the right to purchase an undivided 51% interest in certain patented mining property (the “Property”), located in the Dobie Township, Northwest Ontario. The purchase price of the Property was the issuance of 1,500,000 common shares of the Company to the Vendor; the shares were issued during the quarter ended December 31, 2019 at a deemed value of $150,000. In addition, the Company and a third-party company that holds a 15% interest in the Property shall pay the Vendor a 2.0% net smelter returns royalty upon the commencement of commercial production from the Property. The Company and the third-party company shall have the right at any time to acquire up to 1.5% of the royalty from the Vendor for the price of $2,000,000.

This agreement constituted the Company’s Qualifying Transaction under the Capital Pool Companies policy of the TSX-V.

USHA RESOURCES LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

3. EXPLORATION AND EVALUATION ASSETS (cont’d…)

The Company has incurred expenditures on the Property as follows:

Acquisition Costs: Balance, March 31, 2019 Issuance of common shares Balance, December 31, 2019 Exploration Expenditures: Balance, March 31, 2018 Geological report Balance, March 31, 2019 Geological consulting and reports Balance, December 31, 2019 Total costs, December 31, 2019	$ - 150,000 150,000 - 678 678 10,890 11,568 $ 161,568	$ - 150,000
		150,000
		- 678
		678 10,890
		11,568

4. SHARE CAPITAL

a) Authorized:

Unlimited common shares with no par value and unlimited preferred shares with no par value.

b) Issued:

The Company issued 2,200,000 common shares during the period ended March 31, 2018 at $0.05 per share for proceeds of $110,000. These common shares are held in escrow under an escrow agreement. Following the completion of its Qualifying Transaction the common shares will be released from escrow under the following terms: 10% to be released from the date the Transaction bulletin is issued, and 15% to be released every six months thereafter.

During the year ended March 31, 2019, the Company issued 2,000,000 common shares at a price of $0.10 per share for proceeds of $200,000 by way of its Initial Public Offering (the “Offering” or “IPO”) pursuant to Policy 2.4 “Capital Pool Companies” of the TSX-V. A cash commission of 10% of the gross proceeds of the Offering was paid to the Agent. The Agent was also paid an administration fee of $15,000 and was reimbursed by the Company for its expenses and legal fees plus disbursements. The Company paid an aggregate of $93,128 in cash commission, administration fee, legal and other expenses (all disclosed as share issue costs). The Agent was granted Agent’s warrants to purchase up to 200,000 common shares at a price of $0.10 per common share, exercisable for a period of 24 months from the date of listing of the common shares on the TSX-V. The Agent’s warrants were recorded at a fair value of $10,626.

During the nine months ended December 31, 2019, the Company issued 1,500,000 common shares at a price of $0.10 per share for deemed proceeds of $150,000 upon the completion of its Qualifying Transaction (Note 3). Concurrent to the completion of the Qualifying Transaction, the Company completed a non-brokered private placement of 4,527,000 units, consisting of 1,200,000 flow-through units at $0.13 per flow-through unit and 3,327,000 non-flow through units at $0.095 per unit.

USHA RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

4. SHARE CAPITAL (cont’d…)

b) Issued (cont’d…)

Under the flow-through units offering (each unit consisting of one flow-through share and one common share purchase warrant) the Company issued 1,200,000 flow-through units at a price of $0.13 per unit for proceeds of $156,000. Each warrant is exercisable to purchase an additional non-flow-through common share at $0.26 per share for a period of two years from the date of issuance. A flow-through premium liability of $42,000 was recorded.

Under the non-flow-through units offering (each unit consisting of one common share and one common share purchase warrant) the Company issued 3,327,000 non-flow through units at $0.095 per unit for gross proceeds of $316,065. $875 was paid as a cash finder’s fee. Each warrant is exercisable to purchase an additional non-flow-through common share at $0.19 per share for a period of two years from the date of issuance. No value was attributed to the warrants component of the units.

c) Stock options :

The Company maintains a Stock Option Plan (the “Plan”) under which it is authorized to grant stock options to executive officers, directors, employees, and consultants. Under the Plan, the number of options that may be issued is limited to no more than 10% of the Company’s issued and outstanding shares immediately prior to the grant. While the Company is a CPC until completion of a Qualifying Transaction, the aggregate number of common shares that may be reserved for issuance under the Plan shall not exceed 10% of the common shares to be outstanding as at the closing of the Company’s IPO. The exercise price of each stock option shall equal the market price of the Company's shares, less any applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of five years and vest at the discretion of the Board of Directors. The Company approved the stock option plan during the year ended March 31, 2019. Upon the closing of the Offering, the Company approved the grant to directors and officers of stock options to purchase 420,000 common shares exercisable at $0.10 per share and expiring five years from the date of grant (until October 12, 2023).

Stock option transactions are summarized as follows:

	Number	Weighted Average Exercise Price
Outstanding, March 31, 2018 Granted Outstanding, March 31, 2019 and December 31, 2019	- 420,000 420,000	$ - 0.10 $ 0.10

USHA RESOURCES LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

4. SHARE CAPITAL (cont’d…)

c) Stock options (cont’d…)

The following stock options were outstanding at December 31, 2019:

	Number of			Remaining
	options	Exercise		contractual
	outstanding	Price	Expiry Date	life (years)
Options	420,000	$ 0.10	October 12, 2023	3.79

Using the Black-Scholes option pricing model, the stock options were recorded at a fair value of $31,575 as reserves on the statement of financial position.

d) Warrants:

Agents’ warrants expire on October 12, 2020 and are summarized as follows:

	Number of Agents’Warrants Weighted Average Exercise Price
Outstanding and exercisable at March 31, 2018 Granted Outstanding and exercisable at March 31 and Dec. 31, 2019	- $ - 200,000 0.10 200,000 $ 0.10

Private placement warrants expire on December 6, 2021 and are summarized as follows:

	Number of Shares Weighted Average Exercise Price
Outstanding and exercisable at March 31, 2019 Flow-through units Non-flow-through units Outstanding and exercisable at Dec. 31, 2019	- $ - 1,200,000 0.26 3,327,000 0.19 4,527,000 $ 0.21

USHA RESOURCES LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

5. RELATED PARTY TRANSACTIONS

The Company incurred rent and office administration charges of $14,100 for the nine months ended December 31, 2019 (2018: $4,725) to a company controlled by a director. These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

6. FINANCIAL INSTRUMENTS

Fair value

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 for identical assets or liabilities;

• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3 – Inputs that are not based on observable market data.

Cash is carried at fair value using a level 1 fair value measurement. The recorded values of receivables and accounts payable and accrued liabilities approximate their fair values due to their short term to maturity.

Financial risk management

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below.

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company limits its exposure to credit risk by placing its cash with a major financial institution. Management feels that the Company’s credit risk with respect to cash is remote.

Interest rate risk

The Company is exposed to interest rate risk to the extent that the cash maintained at the financial institutions is subject to a floating rate of interest. The interest rate risk on cash is not considered significant.

Liquidity risk

All of the Company’s financial liabilities are classified as current and are anticipated to mature within the next fiscal year. The Company intends to settle these with funds from its positive working capital position.

USHA RESOURCES LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 (Expressed in Canadian Dollars) (Unaudited)

6. FINANCIAL INSTRUMENTS (cont’d…)

Financial risk management (cont’d…)

Foreign currency risk

Currency risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate due to changes in foreign exchange rates. As at December 31, 2019, the Company did not have any financial instruments denominated in foreign currencies and considers foreign currency risk to be insignificant.

Price risk

Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

7. CAPITAL MANAGEMENT

Capital is comprised of all the components of the Company’s shareholders’ equity. As at December 31, 2019 and March 31, 2019, the Company’s shareholders’ equity was $563,012 and $146,971 respectively and there was no longterm debt outstanding. The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company. The Company is not subject to any externally imposed capital requirements or debt covenants. There were no changes in the Company’s approach to capital management during the nine-month period ended December 31, 2019.