Vision Lithium Inc. — Annual Report 2020

Dec 9, 2020

Vision Lithium Inc.

Audited Consolidated Financial Statements

As at August 31, 2020 and 2019

Independent Auditor's Report

Raymond Chabot Grant Thornton LLP 1000 Germain Street Val-d'Or, Quebec J9P 5T6

T 819-825-6226

To the Shareholders of Vision Lithium Inc.

Opinion

We have audited the consolidated financial statements of Vision Lithium Inc. (hereafter ''the Company''), which comprise the consolidated statements of financial position as at August 31, 2020 and 2019, the consolidated statements of net loss and comprehensive loss, the consolidated statements of changes in equity and the consolidated statements of cash flows for the years then ended, and notes to consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for opinion

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

Material uncertainty related to going concern

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

Information other than the consolidated financial statements and the auditor's report thereon

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis, other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

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

Auditor's responsibilities for the audit of the consolidated financial statements

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

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

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

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

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

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

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

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

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

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

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

Val-d'Or December 9, 2020

1

___________________________________

1 CPA auditor, CA public accountancy permit no. A109964

Vision Lithium Inc.

Consolidated Statements of Financial Position

(in Canadian dollars)

	Notes	2020	2019
ASSETS		$	$
Current
Cash	21	453,474	329,170
Guaranteed investment certificate, 0.55%, expiring in July 2021		51,844	51,165
Sales taxes receivable		2,268	3,755
Tax credits receivable		20,318	134,192
Prepaid expenses		7,050	21,843
Marketable securities in quoted mining exploration companies		715	1,242
		535,669	541,367
Non-current
Property and equipment		18,116	18,036
Right-of-use assets	6	71,935	-
Exploration and evaluation assets	7	13,167,739	12,707,650
		13,257,790	12,725,686
Total assets		13,793,459	13,267,053
LIABILITIES
Current
Trade and other payables		230,130	100,852
Liability related to flow-through shares		180,160	-
Provision for compensation	8	-	345,768
Current portion of lease obligations	9	26,340	-
		436,630	446,620
Non-current
Lease obligations	9	47,042	-
Loan	10	30,000	-
		77,042	-
Total liabilities		513,672	446,620
EQUITY
Share capital	11.1	48,003,635	47,201,835
Contributed surplus		3,362,769	3,276,520
Deficit		(38,086,617)	(37,657,922)
Total equity		13,279,787	12,820,433
Total liabilities and equity		13,793,459	13,267,053

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

These consolidated financial statements were approved and authorized for issue by the Board of Directors on December 9, 2020.

Approved on behalf of the Board of Directors

(signed) Yves Rougerie, Director (signed) Victor Cantore, Director

Vision Lithium Inc.

Consolidated Statements of Net Loss and Comprehensive Loss

(in Canadian dollars)
	Notes	2020	2019
		$	$
Expenses
Employee benefits expense	12.1	398,760	404,478
Insurance, taxes and permits		22,389	18,145
Consulting fees		-	52,631
Professional fees		74,493	72,990
Rent and maintenance		1,121	20,827
Business development		39,172	103,069
Advertising and sponsorship		-	3,200
Stationery and office expenses		11,235	9,717
Travel, board and lodging		2,455	11,088
Registration fees		21,247	26,295
Provision for compensation		(345,768)	(259,090)
Write-off of exploration and evaluation assets		147,119	25,497
Exploration costs of other properties (1)		14,447	31,276
Bank charges		3,525	3,537
Gain on sale of property and equipment		-	(2,500)
Part III.14 tax		2,900	2,882
Amortization of property and equipment		1,814	619
Depreciation of right-of-use assets		29,989	-
Operating loss		424,898	524,661
Other (income) expenses
Finance income	14	(720)	(5,689)
Finance cost	14	2,663	-
Government assistance	10	(10,000)	-
Net change in fair value of marketable securities in quoted mining
exploration companies		527	483
Other revenues		(7,800)	(6,300)
		(15,330)	(11,506)
Loss before income taxes		(409,568)	(513,155)
Deferred income tax	16	21,040	-
Net loss and total of comprehensive loss for the year		(388,528)	(513,155)
Loss per share
Basic and diluted net loss per share	15	(0.00)	(0.01)

(1) An amount of $8,217 ($15,991 in 2019) of tax credits was recorded as a reduction of exploration costs of other properties.

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

Vision Lithium Inc. Consolidated Statements of Changes in Equity

(in Canadian dollars)

Notes

		Share capital		Contributed		Total
		Number	Amount	surplus	Deficit	equity
			$	$	$	$
Balance as at September 1st, 2018		81,188,670	47,200,740	7,407,550	(41,412,155)	13,196,135
Exercise of warrants	11.2	6,316	1,095	(148)	-	947
Expired warrants	11.2	-	-	(4,267,388)	4,267,388	-
Share-based payments	12.2	-	-	136,506	-	136,506
Transactions with owners		6,316	1,095	(4,131,030)	4,267,388	137,453
Net loss and total of comprehensive loss for
the year		-	-	-	(513,155)	(513,155)
Balance as at August 31, 2019		81,194,986	47,201,835	3,276,520	(37,657,922)	12,820,433
Issuance of flow-through sharesIssuance of shares for the acquisition of	11.1	10,060,000	301,800	-	-	301,800
mining rights	11.1	10,000,000	500,000	-	-	500,000
Shares issue costs	11.1	-	-	-	(40,167)	(40,167)
Share-based payments	12.2	-	-	86,249	-	86,249
Transactions with owners		20,060,000	801,800	86,249	(40,167)	847,882
Net loss and total of comprehensive loss for
the year		-	-	-	(388,528)	(388,528)
Balance as at August 31, 2020		101,254,986	48,003,635	3,362,769	(38,086,617)	13,279,787

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

Vision Lithium Inc.

Consolidated Statements of Cash Flows

(in Canadian dollars)
	Notes	2020	2019
		$	$
Operating activities
Net loss		(388,528)	(513,155)
Adjustments
Amortization of property and equipment		1,814	619
Depreciation of right-of-use assets		29,989	-
Depreciation of right-use assets included in exploration and evaluation
assets		183	-
Interests on lease obligations		2,663	-
Net change in fair value of marketable securities in quoted mining
exploration companies		527	483
Share-based payments		79,349	136,506
Gain on disposal of exploration and evaluation assets		-	(2,500)
Provision for compensation	8	(345,768)	(259,090)
Write-off of exploration and evaluation assets		147,119	25,497
Tax credits (1)		(286)	(34)
Deferred income tax	16	(21,040)	-
Changes in working capital items	17	147,837	93,028
Cash flows used in operating activities		(346,141)	(518,646)
Investing activities
Acquisition of a guaranteed investment certificate		(51,844)	(51,165)
Disposal of a guaranteed investment certificate		51,165	50,452
Acquisition of property and equipment		(5,975)	(5,210)
Disposal of property and equipment		-	2,500
Additions to exploration and evaluation assets	7	(123,596)	(397,664)
Tax credits received		140,428	340,011
Cash flows from (used in) investing activities		10,178	(61,076)
Financing activities
Issuance of shares by private placement	11.1	503,000	-
Loan	10	30,000	-
Share issue costs	11.1	(40,167)	-
Warrants exercised	11.2	-	947
Payments on lease obligations	9	(32,566)	-
Cash flows from financing activities		460,267	947
Net change in cash		124,304	(578,775)
Cash, beginning of the year		329,170	907,945
Cash, end of the year		453,474	329,170

Additional informations - Cash flows (Note 17)

(1) Tax credits recognized in net income as a reduction of exploration costs of other properties.

Additional information

Interest received from operating activities720	5,689
----------------------------------------------------	-------

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

1. NATURE OF OPERATIONS

Vision Lithium Inc. and its subsidiary Pioneer Resources Inc. (the "Company") are exploration companies with activities in Canada.

2. GOING CONCERN ASSUMPTION, COVID-19, GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS

The consolidated financial statements have been prepared on the basis of the going concern assumption, meaning the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.

Given that the Company has not yet determined whether its mineral properties contain mineral deposits that are economically recoverable, the Company has not yet generated income nor cash flows from its operations. As at August 31, 2020 the Company has a cumulated deficit of $38,086,617 ($37,657,922 as at August 31, 2019). These material uncertainties cast significant doubt regarding the Company's ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon its ability to raise additional financing to further explore its mineral properties and continued support of suppliers and creditors. Even if the Company has been successful in the past in doing so, there is no assurance that it will manage to obtain additional financing in the future.

In March 2020, the World Health Organization declared the COVID-19 epidemic a pandemic. The situation is constantly evolving, and the measures put in place have numerous economic repercussions at the global, national, provincial and local levels. These measures, which include travel bans, solitary confinement or quarantine, voluntary or not, and social distancing, have caused significant disruption among businesses, globally and in Canada, due to the slowdown economic. Governments and central banks responded by implementing monetary and fiscal measures to stabilize the world economy; however, the current difficult economic climate may cause adverse changes in cash flow, the level of working capital and / or the search for future financing, which could have a direct impact on its future financial position. The Company has implemented measures to mitigate the impact of the pandemic on its future operations.

The carrying amounts of assets, liabilities, revenues and expenses presented in the consolidated financial statements and the classification used in the consolidated statement of financial position have not been adjusted as would be required if the going concern assumption was not appropriate.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

Vision Lithium Inc. is incorporated under the Canada Business Corporations Act . The address of the Company's registered office and its principal place of business is 1019 boulevard des Pins, Val-d'Or, Quebec, Canada. Vision Lithium Inc.'s shares are listed on the TSX Venture Exchange under the symbol "VLI".

3. CHANGES IN ACCOUNTING POLICIES

3.1 New standard adopted since September 1, 2019

Impact of the application of IFRS 16, Leases

The Company adopted IFRS 16, Leases, which specifies how to recognize, measure, present and disclose leases. The standard introduces a single lessee accounting model and requires a lessee to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.

Effective September 1, 2019, the Company adopted IFRS 16 using the modified retrospective approach. Accordingly, comparative figures as at and for the year ended August 31, 2019 have not been restated and continues to be reported under IAS 17, Leases ("IAS 17") and IFRIC 4, Determining whether an arrangement contains a lease.

On initial application, for leases previously classified as operating leases under IAS 17, the Company has elected to record right-of-use assets based on the corresponding lease liability of $103,285 as at September 1, 2019.

As such, as at September 1st, 2019, the Company recorded lease obligations of $103,285 and right-of-use assets of $103,285, with no net impact on deficit.

When measuring lease liabilities for those leases previously classified as operating leases under IAS 17, the Company discounted future lease payments using its incremental borrowing rate as at September 1, 2019. The weighted-average rate applied is 2.94%.

The Company has elected to apply the practical expedient to grandfather the assessment of which transactions are leases on the date of initial application, as previously assessed under IAS 17 and IFRIC 4. The Company applied the definition of a lease under IFRS 16 to contracts entered into or changed on or after September 1, 2019.

The following table reconciles the Company's operating lease commitments as at August 31, 2019, as previously disclosed in the Company's annual audited financial statements, to the lease obligations recognized on initial application of IFRS 16 on September 1, 2019.

	$
Operating lease commitments as at August 31, 2019	59,705
Discounted using the incremental borrowing rate as at September 1, 2019	58,164
Renewal options reasonably certain to be exercised	45,121
Lease obligations recognized as at September 1, 2019	103,285

(in Canadian dollars)

3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorization of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

Management anticipates that all of the pronouncements will be adopted in the Company's accounting policy for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company's consolidated financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have an impact on the Company's consolidated financial statements.

4. SUMMARY OF ACCOUNTING POLICIES

4.1 Overall considerations

The significant accounting policies and measurement basis that have been applied in the preparation of these consolidated financial statements are summarized below.

4.2 Consolidation principles

The consolidated financial statements of the Company include the accounts of the parent company and its subsidiary Pioneer Resources Inc. The parent company controls a subsidiary if it is exposed, or is entitled, to variable returns due to its relationship with the subsidiary and if it has the ability to affect these returns because of its power over the subsidiary. The subsidiary of the Company is wholly owned by the parent company. The annual financial reporting date of the subsidiary is August 31.

All transactions and balances between group companies are eliminated upon consolidation, including unrealized gains and unrealized losses on transactions between group companies.

4.3 Functional and presentation currency

The consolidated financial statements are presented in Canadian currency, which is also the functional currency.

4.4 Financial instruments

Measurement and derecognition

Financials assets and financial liabilities are recognized when the Company becomes a part to the contractual provisions of the financial instrument. Financial assets and financial liabilities are measured initially at fair value adjusted for transaction costs, where appropriate.

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires.

The classification of financial instruments under IFRS 9 is based on the entity's business model and the characteristics of the contractual cash flows of the financial asset or liability.

(in Canadian dollars)

4.4 Financial instruments (continued)

Classification and initial measurement of financial assets

Financial assets of the Company are classified into the following categories:

• At amortized cost;
• At fair value through profit or loss (FVTPL).

All income and expenses relating to financial assets that are recognized in profit or loss are presented within finance cost or finance income.

Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if they meet the following conditions:

• they are held according to an economic model whose purpose is to hold financial assets in order to collect the contractual cash flows;

• the contractual terms of the financial assets give rise to cash flows that correspond solely to repayments of principal and interest payments on the principal outstanding.

After initial recognition, they are measured at amortized cost using the effective interest rate method. Discounting is omitted if effect is not significant. Cash and guaranteed investment certificate are included in this category of financial instruments.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held in a different economic model than "holding for the purpose of collection" or "holding for the purpose of collection and sale" are classified in the FVTPL category.

This category includes marketable securities in quoted mining exploration companies. The Company accounts for the investment at FVTPL and has not made an irrevocable election to account for its investment in the marketable securities in quoted mining exploration companies at fair value through profit or loss (FVTPL).

Assets in this category are measured at fair value and gains or losses are recognized in net income. The fair value of financial assets in this category is determined based on transactions in an active market or by applying a valuation technique when there is no active market.

(in Canadian dollars)

4.4 Financial instruments (continued)

Depreciation of financial assets

The impairment provisions in IFRS 9 use forward-looking information, the expected credit loss model.

The recognition of credit losses is not dependent on the identification of credit loss event by the Company. Rather, it must take into account an expanded range of information for assessing credit risk and assessing expected credit losses, including: past events, current circumstances, reasonable and justifiable forecasts that affect expected recoverability of future cash flows of the financial instrument.

The estimate of expected credit losses is determined at each reporting date to reflect changes in credit risk since the initial recognition of the related financial asset.

Classification and subsequent measurement of financial liabilities

The Company's financial liabilities include trade and other payables (except deductions at source, salaries and vacation payables).

Financial liabilities are measured subsequently at amortized cost using the effective interest method.

All interest-related charges arc reported in profit or loss within finance costs, if applicable.

4.5 Basic and diluted loss per share

Basic loss per share is calculated by dividing the loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by adjusting loss attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares which include options and warrants. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the average market price at the beginning of the exercise or, if later, at the date of issue of the potential ordinary shares.

4.6 Tax credits receivable

The Company is entitled to a refundable tax credit on qualified exploration expenditures incurred and a refundable credit on duties for losses under the Mining Tax Act. These tax credits are recognized as a reduction of the exploration costs incurred based on estimates made by management. The Company records these tax credits when there is reasonable assurance with regards to collections and assessments as well that the Company will comply with the conditions associated to them.

(in Canadian dollars)

4.7 Exploration and evaluation expenditures, and exploration and evaluation assets

Exploration and evaluation expenditures are costs incurred in the course of initial search of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Costs incurred before the legal right to undertake exploration and evaluation activities are recognized in profit or loss when they are incurred.

Once the legal right to undertake exploration and evaluation activities has been obtained, all costs of acquiring mineral rights or options to acquire such rights (option agreement), expenses related to the exploration and evaluation of mining properties, less refundable tax credits related to these expenses, are recognized as exploration and evaluation assets. Expenses related to exploration and evaluation include topographical, geological, geochemical and geophysical studies, exploration drilling, trenching, sampling and other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource. The various costs are capitalized on a property-by-property basis pending determination of the technical feasibility and commercial viability of extracting a mineral resource. These assets are recognized as intangible assets and are carried at cost less any accumulated impairment losses. No amortization expenses are recognized for these assets during the exploration and evaluation phase.

Whenever a mining property is no longer considered viable, or is abandoned, the capitalized amounts are written down to their recoverable amounts (see Note 4.9); the difference is then immediately recognized in profit or loss.

When technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation assets related to the mining property are transferred to property and equipment in Mining assets under construction. Before the reclassification, exploration and evaluation assets are tested for impairment (see Note 4.9) and any impairment loss is recognized in profit or loss before reclassification.

To date, neither the technical feasibility nor commercial viability of extracting a mineral resources has been demonstrated.

Although the Company has taken steps to verify title to the mining properties in which it holds an interest, in accordance with industry practices for the current stage of exploration and development of such properties, these procedures do not guarantee the validity of the Company's titles. Property titles may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

Disposal of interest in connection with option agreement

On the disposal of interest in connection with the option agreement, the Company does not recognize expenses related to the exploration and evaluation performed on the property by the acquirer. In addition, the cash and share consideration received directly from the acquirer is credited against the carrying amount of costs previously capitalized to the property, and the surplus is recognized as a gain on the disposal of exploration and evaluation assets in profit or loss.

(in Canadian dollars)

4.8 Lease agreements

The Company's accounting policy under IFRS 16 is as follows:

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts entered into, or changed, on or after September 1, 2019.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, and estimate of costs to dismantle and remove or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use assets are subsequently depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term using the straight-line method. The lease term includes consideration of an option to renew or to terminate if the Company is reasonably certain to exercise that option. Lease terms, including options to renew for which the Company is reasonably certain to exercise, range from 1 to 4 years for automotive equipment, premises and other equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising mainly from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, renewal or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-ofuse asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Under IAS 17, the Company's accounting policy was as follows:

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments under an operating lease are recognized as an expense or an exploration and evaluation assets on a straight-line basis over the lease term. Related expenses, such as maintenance and insurance are charged or exploration and evaluation assets as incurred.

(in Canadian dollars)

4.9 Impairment of exploration and evaluation assets

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at a cashgenerating unit level.

Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, an asset or cashgenerating unit is reviewed for impairment.

Impairment reviews for exploration and evaluation assets are carried out on a project-by-project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise, but typically when one of the following circumstances apply:

• the right to explore the areas has expired or will expire in the near future with no expectation of renewal;

• no further exploration or evaluation expenditures in the area are planned or budgeted;

• no commercially viable deposits have been discovered, and the decision has been made to discontinue exploration in the area;

• sufficient work has been performed to indicate that the carrying amount of the expenditure carried as an asset will not be fully recovered.

Additionally, when technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the exploration and evaluation assets of the related mining property are tested for impairment before these items are transferred to property and equipment.

An impairment loss is recognized in profit or loss for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less cost to sell and its value in use.

An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.

(in Canadian dollars)

4.10 Provisions and contingent liabilities

Provisions are recognized when present legal or constructive obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.

The Company's operations are governed by government environment protection legislation. Environmental consequences are difficult to identify in terms of amounts, timetable and impact. As of the reporting date, management believes that the Company's operations are in compliance with current laws and regulations. Site restoration costs currently incurred are negligible. When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated, a restoration provision will be recognized in the cost of the mining property when there is constructive commitment that has resulted from past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be measured with sufficient reliability.

No liability is recognized if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

4.11 Income taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the consolidated financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

However, since the Company is in exploration phase and has no taxable income, tax expense recognized in profit or loss is currently comprised only of deferred tax.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period.

(in Canadian dollars)

4.11 Income taxes (continued)

Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company's forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as deferred income tax expense in profit or loss, except where they relate to items that are recognized directly in equity, in which case the related deferred tax is also recognized in equity.

4.12 Equity

Share capital

Share capital represents the amount received on the issue of shares. If shares are issued when options and warrants are exercised, the share capital account also comprises the compensation costs previously recorded as contributed surplus. In addition, if shares were issued as consideration for the acquisition of a mineral property or some other form of non-monetary assets, they were measured at their fair value according to the quoted price on the day of the Company takes possession of the assets.

Unit placements

Proceeds from unit placements are allocated between shares and warrants issued using their relative fair value. Black-Scholes model is used to determine the fair value of the warrants and the market price at the time of issuance is use for shares.

Flow-through placements

The issuance of flow-through shares represents in substance an issue of ordinary shares and the sale of the right to tax deductions to the investors. When the flow-through units are issued, the sale of the right to tax deductions is deferred and presented as other liabilities in the consolidated statement of financial position. The proceeds received from flow-through placements are allocated between share capital and other liabilities using the residual method. Proceeds are first allocated to shares based on the market price according to the quoted price of shares at the time of issuance and the residual proceeds are allocated to the other liabilities. When eligible expenses are incurred and the Company has waived its right to tax deductions, the amount recognized in other liabilities is reversed and recognized in profit or loss as a deduction from deferred tax expense and a deferred tax liability is recognized for the temporary taxable difference resulting from the fact that the book value of eligible expenditures recorded as assets in the consolidated statement of financial position differs from their tax base.

(in Canadian dollars)

4.12 Equity (continued)

Other elements of equity

Contributed surplus includes charges related to share options not exercised and expired and warrants not exercised.

Deficit includes all current and prior year retained profits or losses and share issue costs net of tax benefits related to these issue costs from current and prior year and the warrants expired.

4.13 Equity-settled share-based payments

The Company operates an equity-settled share-based payment plan for its eligible directors, employees and consultants who are eligible. The Company's plan does not feature any options for a cash settlement.

All goods and services received in exchange for the grant of any share-based payments are measured at their fair values, unless that fair value cannot be estimated reliably. If the Company cannot estimate reliably the fair value of the goods or services received, the Company shall measure their value indirectly by reference to the fair value of the equity instruments granted. For the transactions with employees and others providing similar services, the Company measured the fair value of the services received by reference to the fair value of the equity instruments granted.

Equity-settled share-based payments (except warrants to brokers) are ultimately recognized as an expense in the profit or loss or capitalized as an exploration and evaluation asset, depending on the nature of the payment with a corresponding credit to Contributed surplus, in equity. Equity-settled share-based payments to brokers, in respect of an equity financing are recognized as issuance cost of the equity instruments with a corresponding credit to Contributed surplus, in equity.

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior period if the number of share options ultimately exercised is different from that estimated on vesting.

4.14 Segment reporting

The Company presents and discloses segmental information based on information that is regularly reviewed by the chief operating decision-maker i.e the Chairman and the Board of Directors.

The Company has determined that there was only one operating segment being the sector of exploration and evaluation of mineral resources.

5. JUDGMENTS, ESTIMATES AND ASSUMPTIONS

When preparing the consolidated financial statements, management makes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

5.1 Significant management judgment

The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect on the consolidated financial statements.

Recognition of deferred income tax assets and measurement of income tax expense

Management continually evaluates the likelihood that its deferred tax assets could be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carryforward period. By its nature, this assessment requires significant judgment. To date, management has not recognized any deferred tax assets in excess of existing taxable temporary differences expected to reverse within the carry-forward period (see Note 4.11).

Going concern

The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meets its liabilities for the ensuing year, and to fund planned and contractual exploration programs, involves significant judgment based on historical experience and other factors including expectation of future events that are believed to be reasonable under the circumstances. See Note 2 for more information.

5.2 Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Lease obligations

Accounting for leases obligations involves judgment and requires the establishment of a number of estimates and assumptions. Judgment is used to determine whether there is reasonable certainty that an option to extend or terminate the rental agreement will be exercised. In addition, management has made estimates to determine the term of the leases and the appropriate interest rate to value the lease obligation (see Note 9).

(in Canadian dollars)

5.2 Estimation uncertainty (continued)

Impairment of exploration and evaluation assets

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and assumptions in many cases (see Note 4.9).

When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset or cash-generating unit must be estimated.

In assessing impairment, the Company must make some estimates and assumptions regarding future circumstances, in particular, whether an economically viable extraction operation can be established, the probability that the expenses will be recovered from either future exploitation or sale when the activities have not reached a stage that permits a reasonable assessment of the existence of reserves, the Company's capacity to obtain financial resources necessary to complete the evaluation and development and to renew permits. Estimates and assumptions may change if new information becomes available. If, after expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in profit or loss in the period when the new information becomes available.

See Note 7 for the exploration and evaluation assets impairment analysis.

The total impairment loss of the exploration and evaluation assets recognized in profit or loss amounts to $147,119 for the year ended August 31, 2020 ($25,497 for the year ended August 31, 2019). No reversal of impairment losses has been recognized for the reporting periods.

Other properties have not been tested for impairment as the Company has the ability to retain these properties as it has sufficient financial resources to meet its short-term obligations. In general, the rights to prospect for these properties will not expire in the near future or are expected to be renewed, work has been completed on these properties over the past three years and / or results promising results were obtained.

Share-based payments

The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility of its own shares, the probable life of share options and warrants granted and the time of exercise of those share options and warrants, if applicable. The model used by the Company is the Black-Scholes valuation model (see Note 12.2).

Provisions and contingent liabilities

Judgments are made as to whether a past event has led to a liability that should be recognized in the consolidated financial statements or disclosed as a contingent liability. Quantifying any such liability and provisions involves judgments and estimates. These judgments are based on a number of factors including the nature of the claims or dispute, the legal process and potential amount payable, legal advice received, previous experience and the probability of a loss being realized. Several of these factors are source of estimation uncertainty (see Note 8).

5.2 Estimation uncertainty (continued)

Tax credits receivable

The calculation of the Company's refundable tax credit on qualified exploration expenditure incurred and refundable tax credit involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until notice of assessments and payments have been issued from the relevant taxation authority and a payment has been received. Difference arising between the actual results following final resolution of some of these items and the assumptions made could necessitate adjustments to the refundable tax credit and refundable tax credit, exploration and evaluation assets, and income tax expense in future periods (see Note 4.6 for more information).

6. RIGHT-OF-USE ASSETS

	Automotive
	Premisesequipment		Total
	$	$	$
Impact of the application of IFRS 16	87,804	15,481	103,285
Depreciation	(22,906)	(8,444)	(31,350)
Balance as at August 31, 2020	64,898	7,037	71,935

The Company rents its offices under a lease expiring in June 2021. This lease includes an option to renew for an additional 24 months which the Company may exercise of by giving three-month notice. The Company also leases mobile equipment under a lease expiring in June 2021. Depreciation of right-of-use assets totals $31,350 of which $29,989 is recognized as an expense and $1,361 is recognized as exploration and evaluation assets.

7. EXPLORATION AND EVALUATION ASSETS

The carrying amount can be detailed as follows:

MINING RIGHTS

	Balance as at				Balance as at
	September 1,		Tax credits and		August 31,
	2019	Additions	credit on duties	Write-off	2020
	$	$	$	$	$
Sirmac Lithium (Qc)	9,595,633	1,470	-	(20,000)	9,577,103
Case Twp (On)	68,441	-	-	(68,441)	-
Dôme Lemieux (Qc)	2,325,948	1,720	-	-	2,327,668
La Corne (Qc)	10,141	-	-	(10,141)	-
Broadback and Broadback
North (Qc)	3,397	-	-	(1,666)	1,731
Wabouchi (Qc)	641	-	-		641
Epsilon (Qc)	-	296	-	(296)	-
Red Brook (NB)	-	300,340	-	-	300,340
Epithermal (NB)	-	103,060	-	-	103,060
Benjamin (NB)	-	113,695	-	-	113,695
TOTAL	12,004,201	520,581	-	(100,544)	12,424,238

7. EXPLORATION AND EVALUATION ASSETS (continued)

EXPLORATION AND EVALUATION EXPENSES

	Balance as atSeptember 1,2019	Additions	Tax credits andcredit on duties	Write-off	Balance as atAugust 31,2020
	$	$	$	$	$
Sirmac Lithium (Qc)	607,915	51,601	(11,380)	(2,000)	646,136
Case Twp (On)	29,113	-	-	(29,113)	-
Dôme Lemieux (Qc)	57,010	27,162	(6,671)	-	77,501
La Corne (Qc)	4,715	-	-	(4,715)	-
Broadback and Broadback
North (Qc)	4,501	16,467	-	(3,728)	17,240
Wabouchi (Qc)	195	-	-	-	195
Epsilon (Qc)	-	7,019	-	(7,019)	-
Red Brook (NB)	-	2,429	-	-	2,429
	703,449	104,678	(18,051)	(46,575)	743,501
TOTAL	12,707,650	625,259	(18,051)	(147,119)	13,167,739

The carrying amount can be detailed as follows:

MINING RIGHTS

	Balance as at				Balance as at
	September 1,		Tax credits and		August 31,
	2018	Additions	credit on duties	Write-off	2019
	$	$	$	$	$
Sirmac Lithium (Qc)	9,590,764	4,869	-	-	9,595,633
Case Twp (On)	68,441	-	-	-	68,441
Dôme Lemieux (Qc)	2,310,043	15,905	-	-	2,325,948
La Corne (Qc)	10,141	-	-	-	10,141
Broadback and Broadback
North (Qc)	1,666	1,731	-	-	3,397
Wabouchi (Qc)	-	641	-		641
St-Stephen (NB)	-	8,490	-	(8,490)	-
Epsilon (Qc)	-	6,554	-	(6,554)	-
TOTAL	11,981,055	38,190	-	(15,044)	12,004,201

7. EXPLORATION AND EVALUATION ASSETS (continued)

EXPLORATION AND EVALUATION EXPENSES

	Balance as at				Balance as at
	September 1,		Tax credits and		August 31,
	2018	Additions	credit on duties	Write-off	2019
	$	$	$	$	$
Sirmac Lithium (Qc)	438,161	256,299	(86,545)	-	607,915
Case Twp (On)	10,219	18,894	-	-	29,113
Dôme Lemieux (Qc)	42,068	19,747	(4,805)	-	57,010
La Corne (Qc)	4,425	438	(148)	-	4,715
Broadback and Broadback
North (Qc)	2,811	3,000	(1,310)	-	4,501
Wabouchi (Qc)	-	347	(152)	-	195
St-Stephen (NB)	-	6,413	-	(6,413)	-
Epsilon (Qc)	4,001	39	-	(4,040)	-
	501,685	305,177	(92,960)	(10,453)	703,449
TOTAL	12,482,740	343,367	(92,960)	(25,497)	12,707,650

All write-off charges are presented in profit or loss in Write-off of exploration and evaluation assets.

During the year ended August 31, 2020, the Company wrote-off all of its Case Twp, La Corne, Broadback's properties and a portion on Sirmac's property since the mining rights were not renewed. In addition, the Company wrote-off its Epsilon's property because no exploration and evaluation expenses were planned (St-Stephen and Epsilon's properties were written-off as at August 31, 2019).

Sirmac Lithium

The Company owned 100% the Sirmac Lithium property which comprises 25 mineral claims covering a total area of approximately 1,108 hectares located approximately 180 kilometers northwest of Chibougamau, in the province of Quebec. The Company will pay a net smelter return royalty of 1% on some of the claims and can be redeemed at any time for $1,000,000.

Dôme Lemieux

This 100% owned property is located near the town of Ste-Anne-des-Monts in the province of Quebec and comprises 238 claims covering 11,599.84 hectares.

Broadback North

The Broadback North property is owned 100%, were comprised of 27 claims covering 1,414 hectares and are located approximately 10 km west of the Sirmac property and 180 km NW of Chibougamau, Québec. The properties were staked to cover a prominent pegmatite body which may be prospective for lithium exploration.

7. EXPLORATION AND EVALUATION ASSETS (continued)

Wabouchi (formely Nemiscau)

The Wabouchi property is owned 100%, consists of 10 contiguous claims covering 534 hectares located Southeast of the village of Nemaska in northern Québec. The recently staked claims are located in the general area of the Nemaska dyke swarm, approximately 5 km south of the Wabouchi lithium deposit of Nemaska Lithium which is in the development construction phase.

St-Stephen

This property is owned 50% by the Company and 50% by Indiana Inc. ("Indiana") and is located near the border town of St-Stephen in the southwest corner of the province of New Brunswick (NB), near the Canada-US border. he property was written off during the year 2019.

Epsilon

This 100% owned property is located in the Otish Mountains region of Quebec. The Epsilon property consists of 21 claims covering 1,107 hectares. This property is subject to two NSR royalties of 2% on all mineral production. The Company can buy back up to 50% of each of the NSR interests for $1,000,000 each. The property was written off during the year 2019.

Red Brook

On June 12, 2020, the Company acquired the Red Brook property, owned 100%, which is located approximately 60 km West of the mining center of Bathurst, in Northern New Brunswick. The Red Brook property consists of 139 claims covering 3,018 hectares. This property is subject to 2% NSR royalties on all mineral production. The Company can buy back up to 50% of each of the NSR interests for $1,000,000.

Epithermal

On June 12, 2020, the Company acquired the Epithermal property, owned 100%, which is located approximately 60 km West of the mining center of Bathurst, in Northern New Brunswick. The Epitermal property consists of 96 claims covering 2,083 hectares. This property is subject to 2% NSR royalties on all mineral production. The Company can buy back up to 50% of each of the NSR interests for $1,000,000.

In June 2020, the Company staked 30 mining claims for $300 in cash. In addition, 20 claims were redistributed from the Benjamin property to the Epithermal property.

Benjamin

On June 12, 2020, the Company acquired the Benjamin property, owned 100%, which is located approximately 60 km West of the mining center of Bathurst, in Northern New Brunswick. The Benjamin property consists of 33 claims covering 715 hectares. This property is subject to 2% NSR royalties on all mineral production. The Company can buy back up to 50% of each of the NSR interests for $1,000,000.

In June 2020, 20 claims were redistributed from the Benjamin property to the Epithermal property.

8. PROVISION FOR COMPENSATION

Provisions related to various taxation claims. The Company was not eligible for any reimbursement by third parties in this regard. During the year ended August 31, 2020, the Company paid no amount to investors and the provision decreased by an amount of $345,768 ($259,090 as at August 31, 2019).

Management, on the advice of counsel, does not expect that the outcome of any of the remaining cases will give rise to any significant loss beyond the amounts actually recognized. None of the provisions will be discussed here in further detail so as to not seriously prejudice the Company's position.

9. LEASE OBLIGATIONS

	2020	2019
	$	$
Lease obligations included in the consolidated statement of financial position
Initial recognition upon adoption of IFRS 16	103,285	-
Interests on lease obligations	2,663	-
Payments on lease obligations	(32,566)	-
	73,382	-
Current portion of lease obligations	(26,340)	-
Lease obligations	47,042	-
Maturity analysis – contractual undiscounted cash flows
Less than one year	24,500	-
One to five years	45,320	-
Total undiscounted lease obligations	69,820	-

10. LOAN

The Company received a $40,000 loan under the Canada Emergency Business Account program. If the Company repays $30,000 of the loan by December 31, 2022, no other amount will be payable. Otherwise, the loan balance will bear interest at 5% and may either be repaid in 36 monthly instalments of capital and interest or repaid on maturity on December 31, 2025. Since $10,000 of the government assistance is forgivable if the Company repays $30,000 by December 31, 2022, the amount was recognized in earnings at the time the government assistance was granted.

11. EQUITY

11.1 Share capital

The issued share capital of the Company consists only of fully paid common shares.

Share capital authorized

Unlimited number of common shares without par value. Unlimited number of preferred shares class "A" and "B", without par value.

11.1 Share capital (continued)

Share issuance

On June 12, 2020, the Company acquired the Red Brook, Epithermal and Benjamin properties in consideration of 10,000,000 common shares at a price of $0.05 per share for a total of $500,000.

On December 31, 2019, the Company closed a private placement of 10,060,000 common shares of the Company that will qualify as flow-through shares, at a price of $0.05 per share, for aggregate gross proceeds of $503,000. In connection with the offering, finders' fees totaling $30,380 were paid to third parties dealing at arm's length with the Company. Share issue expenses totaling $9,787 were also applied against the deficit.

The Company renounced to the tax deduction related to flow-through shares, which reduced share capital by $201,200, and the counterparty is presented as liability related to flow-through shares.

11.2 Warrants

Outstanding warrants entitle their holders to subscribe to an equivalent number of common shares, as follows:

2020			2019
	Weightedaverage		Weightedaverageexercise price
	$		$
-	-	39,497,400	0.15
-	-	(6,316)	0.15
-	-	(39,491,084)	0.15
-	-	-	-
	Number	exercise price	Number

12. EMPLOYEE REMUNERATION

12.1 Employee benefits expense

Employee benefits expense recognized is analyzed below:

	2020	2019
	$	$
Salaries and benefits	399,745	441,532
Share-based payments	86,249	83,875
	485,994	525,407
Less: salaries capitalized and share-based payments in exploration and evaluation
assets	(67,028)	(75,696)
Less: salaries reclassified to Exploration costs of other properties in profit or loss	(20,206)	(45,233)
Employee benefits expense	398,760	404,478

(in Canadian dollars)

12.2 Share-based payments

The Company has adopted a share-based payment plan under which members of the Board of Directors August award to directors, employees and consultants, options entitling its holder to purchase common shares of the Company. The maximum number of shares issuable under the plan is 10% of the outstanding shares (10,125,499 shares as at August 31, 2020 and 8,119,499 as at August 31, 2019).

The material terms of the plan are as follows:

• • The maximum number of common shares that can be granted for a beneficiary, other than a consultant or investor relations services, is limited to 5% of issued and outstanding shares;
• • The maximum number of common shares that can be granted for a consultant during any 12-month period is limited to 2% of issued and outstanding shares;
• • The maximum number of common shares that can be granted for a supplier of investors' relation services during any 12 month period is limited to 2% of issued and outstanding shares.
• • The Board shall determine the manner in which an option shall vest and become exercisable to staff members. Options granted to consultants performing investor relations activities shall vest over a minimum of 12 months with no more than 1/4 of such options vesting in any 3-month period.

The exercise price per common share for an option shall not be less than the "Discounted Market Price", as calculated pursuant to the policies of the Exchange, or such other minimum price as may be required by the Exchange. Every option shall have a term not exceeding and shall therefore expire no later than eight years after the date of grant.

All share-based payments will be settled in equity. The Company has no legal or constructive obligation to repurchase or settle the options in cash.

The Company share options are as follows for the reporting periods presented:

		2020		2019
		Weighted		Weighted
		average		average
	Number	exercise price	Number	exercise price
		$		$
Outstanding, beginning of the reporting period	4,587,500	0.34	4,662,500	0.33
Exercised	2,500,000	0.10	-	-
Expired	(37,500)	0.10	(75,000)	0.20
Outstanding, end of the reporting period	7,050,000	0.26	4,587,500	0.34
Exercisable, end of the reporting period	5,800,000	0.29	4,587,500	0.34

12.2 Share-based payments (continued)

On June 5, 2020, the Company granted 2,500,000 options to directors, officers and employees at an exercise price of $0.10 per share. The options have a contractual life of 5 years from the date of grant. 50% of the options are exercisable immediately and 50% are exercisable 6 months after the date of the grant.

The table below summarizes the information related to outstanding share options as at :

		2020		2019
		Weighted		Weighted
		average		average
		remaining		remaining
		contractual		contractual
Range of exercise price	Number	life (years)	Number	life (years)
$0.10 to $0.25	2,500,000	4.76	37,500	0.55
$0.26 to $0.41	2,650,000	1.74	2,650,000	2.74
$0.42 to $0.55	1,900,000	2.37	1,900,000	3.37
	7,050,000	2.98	4,587,500	2.98

The average fair value of options granted of $0.05 per option in 2020 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2020
Share price at the date of grant	$0.05
Expected dividends yield	0%
Expected weighted volatility	182%
Risk-free interest rate	0.38%
Expected life	5 years
Exercise price at the date of grant	$0.10

The underlying expected volatility was determined by reference to historical data of Company's shares over the expected average life of the options. No special features inherent to the options granted were incorporated into measurement of fair value.

The share-based payments amounted to $86,249 ($136,506 as at August 31, 2019), all of which related to equity-settled sharebased payment transactions, which $6,900 ($nil as at August 31, 2019) was capitalized in exploration and evaluation assets, $79,349 were included in employee benefits expenses and reported in profit or loss for the year ended August 31, 2020 ($83,875 were included in employee benefits expenses and $52,631 were included in consultants' expenses as at August 31, 2019) and credited to contributed surplus.

13. FAIR VALUE MEASUREMENT

13.1 Financial instruments measured at fair value

Financial assets and liabilities measured at fair value in the consolidated statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly ; and
• Level 3: unobservable inputs for the assets or liabilities.

The fair value of the marketable securities in quoted mining exploration companies have been estimated by reference to their quoted prices at the reporting date.

Marketable securities in quoted mining exploration companies are measured at fair value in the consolidated statement of financial position as at August 31, 2020 and August 31, 2019 and are classified in Level 1.

14. FINANCE INCOME AND FINANCE COST

Finance income may be analyzed as follows for the reporting periods presented:

	2020	2019
	$	$
Interest income from cash and guaranteed investment certificate	720	5,689

Finance cost may be analyzed as follows for the reporting periods presented:

	2020	2019
	$	$
Interests on lease obligations	2,663	-

(in Canadian dollars)

15. LOSS PER SHARE

In calculating the diluted loss per share, dilutive potential common shares such as options and warrants have not been included as they would have the effect of decreasing the loss per share. Decreasing the loss per share would be antidilutive. Details of share options and warrants issued that could potentially dilute earnings per share in the future are given in Note 12.2.

Both the basic and diluted loss per share have been calculated using the net loss as the numerator, i.e. no adjustment to the net loss was necessary in 2020 and 2019.

	2020	2019
Net loss	$(388,528)	$(513,155)
Weighted average number of shares	90,087,445	81,190,677
Basic and diluted loss per share	$(0.00)	$(0.01)

There have been no other transactions involving ordinary shares between the reporting date and the date of authorization of these consolidated financial statements.

16. INCOME TAX

Relationship between expected tax expense and accounting profit or loss

The relationship between the expected tax expense based on the combined federal and provincial income tax rate in Canada and the reported tax expense in the consolidated statement of comprehensive loss can be reconciled as follows:

	2020	2019
	$	$
Expected tax recovery calculated using the combined federal and provincial income tax
rate in Canada of 26.53% (26.63% in 2019)	(108,659)	(136,653)
Adjustments for the following items:
Difference between deferred and statutory tax rates	182	776
Tax effect of temporary differences not recognized	164,790	159,450
Adjustment of prior deferred taxes	7,348	8,088
Tax effect of issuing flow-through shares	16,336	-
Share-based payments	21,051	36,352
Reversal of flow-through share liability	(21,040)	-
Variation of non-taxable fair value	70	64
Other non-deductible expenses	(101,118)	(68,077)
Deferred income tax income	(21,040)	-

Vision Lithium Inc.

August 31, 2020 and 2019 Notes to Consolidated Financial Statements

(in Canadian dollars)

16. INCOME TAX (continued)

Major components of tax income

The major components of tax income are outlined below:

	2020	2019
	$	$
Deferred tax income
Origination and reversal of temporary differences	(188,726)	(168,378)
Tax effect of issuing flow-through shares	16,336	-
Reversal of flow-through share liability	(21,040)	-
Difference between deferred and statutory tax rates	182	776
Adjustment of prior deferred taxes	7,348	8,088
Variation of temporary differences unrecognized	164,790	159,450
Variation of non-taxable fair value	70	64
Total deferred tax income	(21,040)	-

As at August 31, 2020 and 2019, the following unrecognized timing differences for which the Company did not recognize deferred income tax are outlined below :

	August 31, 2020		August 31, 2019
	Federal	Provincial	Federal	Provincial
	$	$	$	$
Unrecognized deductible temporary differences and
unused tax losses
Property and equipment	1,165,430	1,167,635	1,158,272	1,160,477
Intangible asset	250,000	250,000	250,000	250,000
Investments	71,573	71,573	71,309	71,309
Issuance costs of units	68,086	68,086	58,714	58,714
Unused loss carry-forward	8,315,434	11,356,716	7,640,630	10,750,084
Capital losses	31,099	31,099	31,099	31,099
	9,901,622	12,945,109	9,210,024	12,321,683

Deferred tax assets and liabilities and variation of recognized amounts during the period

The following differences between the carrying amounts and tax bases from timing differences, unused tax losses and unused tax credits give rise to the following recognized deferred income tax assets and liabilities, and the following unrecognized timing differences, unused tax losses and unused tax credits:

	Balance as atAugust 31, 2019	Recognizedin profit or loss	Balance as atAugust 31, 2020
	$	$	$
Recognized deferred income tax assets and liabilities
Exploration and evaluation assets	(458,568)	16,000	(442,568)
Unused tax credit	(13,124)	11,095	(2,029)
Unused tax losses	471,692	(27,095)	444,597
Recognized deferred income tax assets and liabilities	-	-	-
Reversal of flow-through share liability		21,040
Deferred tax recovery		21,040

Vision Lithium Inc.

Notes to Consolidated Financial Statements

August 31, 2020 and 2019

(in Canadian dollars)

16. INCOME TAX (continued)

	Balance as atAugust 31, 2018	Recognizedin profit or loss	Balance as atAugust 31, 2019
	$	$	$
Recognized deferred income tax assets and liabilities
Exploration and evaluation assets	(376,622)	(81,946)	(458,568)
Unused tax credit	(37,159)	24,035	(13,124)
Unused tax losses	413,781	57,911	471,692
Recognized deferred income tax assets and liabilities	-	-	-

The Company has non-capital losses which are available to reduce income taxes in future years, for which no deferred tax asset has been recorded in the consolidated statement of financial position, that can be carried over the following years:

	Federal	Provincial
	$	$
2026	-	17,793
2027	-	680,241
2028	-	1,094,602
2029	717,426	1,593,702
2030	1,472,378	1,468,309
2031	1,265,744	1,263,103
2032	992,873	989,343
2033	596,377	595,914
2034	480,403	479,827
2035	299,003	298,591
2036	234,764	423,002
2037	368,935	565,821
2038	744,977	744,375
2039	601,379	600,917
2040	541,175	541,176
	8,315,434	11,356,716

As at August 31, 2020, capital losses for which no deferred tax asset were accounted represent $62,197 ($62,197 as at August 31, 2019). These losses may be carried forward indefinitely.

The Company has available investment tax credits of $196,055 ($196,055 as at August 31, 2019) that can be used to reduce future taxable income. Those investment tax credits have maturity dates between 2027 and 2034.

17. ADDITIONAL INFORMATIONS - CASH FLOWS

The changes in the working capital items are detailed as follows:

	2020	2019
	$	$
Sales taxes receivable	1,487	97,941
Tax credits receivable(1)	(8,217)	(15,957)
Prepaid expenses	14,793	8,972
Trade and other payables	139,774	2,072
	147,837	93,028

(1) tax credit accounted in profit or loss in reduction of exploration costs of other properties.

Non-cash consolidated financial position transactions are detailed as follows:

	2020	2019
	$	$
Amortization of property and equipment asset included in exploration and evaluationassets	3,898	3,214
Depreciation of right-of-use assets included in exploration and evaluation assets	1,361	-
Share-based payments included in exploration and evaluation assets	6,900	-
Issuance of shares for properties' acquisition	500,000	-
Trade and other payables included in exploration and evaluation assets	5,317	15,813
Tax credits receivable credited to exploration and evaluation assets	18,051	92,960
Write-off of accounts receivable included in exploration and evaluation assets	-	5,350

18. RELATED PARTY TRANSACTIONS

The Company's related parties include key management and a company with common director as describe below. Unless otherwise stated, none of the transactions incorporated special terms and conditions and no guarantees were given or received. Outstanding balance are usually settled in cash.

18.1 Transactions with key management personnel

Key management personnel of the Company are members of the Board of Directors and also the President and the CFO. Key management personnel remuneration includes the following expenses:

	2020	2019
	$	$
Short-term employee benefits	257,381	297,187
Share-based payments	68,999	83,875
Total remuneration	326,380	381,062

As at August 31, 2020 and 2019, no key management personnel exercised options.

As of August 31, 2020, salaries payable for two of the key management personnel are included in trade and other payables for an amount of $136,094 (nil as of August 31, 2019).

(in Canadian dollars)

19. CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company's capital management objectives are to ensure the Company's ability to continue as a going concern, to increase the value of the assets of the business, and to provide an adequate return to shareholders of the Company.

These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them through to production or sale and cash flow, either with partners or by the Company's own means.

The Company monitors capital on the basis of the carrying amount of equity.

The Company is not exposed to any externally imposed capital requirements except when the Company issues flow-through shares for which an amount should be used for exploration work, details provided in Notes 11 and 21.

The Company finances its exploration and evaluation activities principally by raising additional capital either through private placements or public offerings.

When financing conditions are not optimal, the Company may enter into option agreements or other solutions to continue its exploration and evaluation activities or may slow its activities until conditions improve.

20. FINANCIAL INSTRUMENT RISKS

The Company is exposed to various risks in relation to financial instruments. The main types of risks are credit risk and liquidity risk.

The Company focuses on actively securing short to medium-term cash flows by minimizing the exposure to financial markets. The Company does not actively engage in the trading of financial assets for speculative purposes.

The most significant financial risks to which the Company is exposed are described below.

20.1 Credit risk

Credit risk is the risk that another party to a financial instrument will cause a financial loss for the Company by failing to discharge an obligation.

The Company's maximum exposure to credit risk is limited to the carrying amount of financial assets at the reporting date, as summarized below:

	2020	2019$
	$
Cash	453,474	329,170
Guaranteed investment certificate	51,844	51,165
	505,318	380,335

The Company's management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality.

(in Canadian dollars)

20.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk management serves to maintain a sufficient amount of cash and to ensure that the Company has financing sources such as private and public investments for a sufficient amount.

During the year, the Company has financed its exploration and evaluation programs, its working capital requirements and acquisitions of mining properties by used of cash and through previous private placement and the receipt of tax credits.

The following table presents contractual maturities (including interest payments where applicable) of the Company's liabilities:

	2020	2019
	$	$
Less than 6 months:
Trade and other payables	15,402	21,960

21. CONTENGENCIES AND COMMITMENTS

The Company is partially financed through the issuance of flow-through shares and, under the tax rules relating to this type of financing, the Company is committed to carrying out exploration and evaluation expenses.

These tax rules also set deadlines for carrying out exploration work no later than the first of the following dates:

• Two years following flow-through placements;
• One year after the Company waived tax deductions relating to exploration work.

However, there is no guarantee that these exploration expenses will qualify as exploration expenses in Canada, even if the Company is committed to taking all the necessary measures in this regard. Refusal of certain expenses by the tax authorities could have a negative tax impact for investors.

During the year ended August 31, 2020, the Company received an amount of $503,000 ($nil as at August 31, 2019) from a flow-through placement for which the Company renounced to the tax deductions, for the benefit of investors, on December 31, 2019. Management is required to fulfill its commitments within the stipulated period of one year from the renounciation date.

As at August 31, 2020, the balance of the unspent funding related to flow-through financing amount totals $441,446 ($nil as of August 31, 2019).

21. SUBSEQUENT EVENTS

On November 26, 2020, an officer made an advance of $105,000 to the Company, without interest.