Volt Carbon Technologies Inc. — Annual Report 2021

Mar 2, 2021

SAINT JEAN CARBON INC.

Audited Financial Statements

for the years ended October 31, 2020 and October 31, 2019

MANAGEMENT’S REPORT TO THE SHAREHOLDERS

The accompanying financial statements have been prepared by management and approved by the Board of Directors of the Company. Management is responsible for the information and representations contained in these financial statements and the accompanying Management’s Discussion and Analysis. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The significant accounting policies followed by the Company are set out in Note 3 to the financial statements.

To assist management in discharging these responsibilities, the Company maintains a system of procedures and internal controls which are designed to provide reasonable assurance that its assets are safeguarded, that transactions are executed in accordance with management’s authorization, and that the financial records form a reliable base for preparation of accurate and timely financial information.

The Company’s external auditors are appointed by the shareholders. They independently perform the necessary tests of accounting records and procedures to enable them to report their opinion as to the fairness of the financial statements and their conformity with IFRS.

The Board of Directors ensures that management fulfills its responsibilities for financial reporting and internal control. The Board of Directors exercises this responsibility through an Audit Committee. The Audit Committee has reviewed and discussed the financial statements, including the notes thereto, with management and the external auditors. The financial statements have been approved by the Board of Directors on the recommendation of the Audit Committee.

“ ” William Pfaffenberger __ William Pfaffenberger Chief Executive Officer

“ David Madill ” David Madill Chief Financial Officer

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Independent Auditors’ Report

To: The Shareholders of Saint Jean Carbon Inc.

Opinion

We have audited the financial statements of Saint Jean Carbon Inc. (the “Company”), which comprise the statements of financial position as at October 31, 2020 and 2019 and the statements of operations and comprehensive loss, changes in shareholders’ equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 2(a) to the financial statements which indicate that at October 31, 2020 the Company has incurred a loss from operations of $4,061,427, has a working capital deficit of $1,785,849, negative cash flow from operations of $200,203 and an accumulated deficit of $23,503,856. This condition, along with other matters as set forth in Note 2(a), indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not qualified in respect of this matter.

Information Other than the Financial Statements and Auditors' Report Thereon

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

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

In connection with our audit of the 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 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 auditors' 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 auditors' report. We have nothing to report in this regard.

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

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

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

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

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Independent Auditors’ Report (continued)

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

We communicate with those charged with governance, regarding, among other matters, the planned scope and timing of the 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 Auditors' report is Roland A. Bishop, CPA, CA.

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March 1, 2021 Calgary, Alberta

Chartered Professional Accountants

SAINT JEAN CARBON INC. STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

ASSETS Current Cash Accounts receivable (Note 6) Prepaid expenses	As at As at October 31, October 31, 2020 2019
	29,441 $ 7,723 $ 17,790 27,070 21,067 50,078
Restricted cash(Note 16) Equipment(Note 7) Mineral exploration and evaluation assets(Note 8) Right‐of‐use assets(Note 9) Other assets	68,298 84,871 41,000 41,000 375,759 484,411 839,582 3,907,664 43,845 ‐ 1,042 534
	1,369,526 $ 4,518,480 $
LIABILITIES Current Accounts payable and accrued liabilities (Note 10) Notes payable (Note 12) Current portion of lease liabilities (Note 9) Interest payable Other liabilities(Note 11)	1,544,327 $ 1,099,676 $ 139,521 38,000 21,065 ‐ 1,734 868 147,500 ‐
Lease liabilities(Note 9)	1,854,147 1,138,544 23,437 ‐
SHAREHOLDERSʹ EQUITY Share capital (Note 13) Contributed surplus Deficit	1,877,584 1,138,544 21,190,744 21,011,573 1,805,054 1,805,054 (23,503,856) (19,436,691)
	(508,058) 3,379,936
	1,369,526 $ 4,518,480 $
Going concern(Note 2(a)) Contingency(Note 22)

See accompanying notes

On behalf of the Board of Directors:

ʺWilliam Pfaffenbergerʺ

CEO, Director

ʺDavid Madillʺ

CFO, Director

SAINT JEAN CARBON INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

Processing revenue	Year ended October 31, 2020 17,166 $	Year ended October 31, 2019
		115,205 $
Direct costs	17,166 10,766	115,205 25,363
Expenses Impairment of mineral exploration and evaluation assets (Note 8) Management fees Amortization Investor relations (Note 10) Professional fees Regulatory and filing fees (Note 11) Flow‐through share indemnification provision (Note 11) Mill operating expense Office and general Bank and loan interest Travel and promotion Automotive Interest on lease liabilities Sales and marketing Bad debt (recovery) expense Expense recovery	6,400 3,068,081 $ 306,990 162,686 141,331 125,766 100,428 85,000 74,071 23,346 8,238 5,013 3,288 3,252 ‐ (8,700) (30,963)	89,842 ‐ $ 390,947 131,223 13,275 114,351 10,781 ‐ 95,406 52,883 3,832 5,923 14,245 ‐ 62,250 26,470 ‐
Loss and comprehensive loss	4,067,827 (4,061,427)	921,586 (831,744)
Loss per share ‐ basic and diluted(Note 13(b))	(0.053) $	(0.011) $
Weighted average number of shares outstanding ‐ basic and diluted	76,389,294	73,738,648

See accompanying notes

SAINT JEAN CARBON INC.

STATEMENTS OF CHANGES IN SHAREHOLDERSʹ EQUITY

(Expressed in Canadian Dollars)

Balance at November 1, 2018 Private placements Share issuance costs Loss and comprehensive loss	Number of shares Share Capital Contributed Surplus Deficit Total
	71,330,032 20,882,797 1,805,054 (18,604,947) 4,082,904 4,562,500 159,688 ‐ ‐ 159,688 ‐ (30,912) ‐ ‐ (30,912) ‐ ‐ ‐ (831,744) (831,744)
Balance, October 31, 2019	75,892,532 21,011,573 $ 1,805,054 $ (19,436,691) $ 3,379,936 $
Impact of adoption of IFRS 16(Note 4)	‐ ‐ ‐ (5,738) (5,738)
Balance at November 1, 2019 Private placements Share issuance costs Loss and comprehensive loss	75,892,532 21,011,573 $ 1,805,054 $ (19,442,429) $ 3,374,198 $ 7,905,000 197,625 ‐ ‐ 197,625 ‐ (18,454) ‐ ‐ (18,454) ‐ ‐ ‐ (4,061,427) (4,061,427)
Balance, October 31, 2020	83,797,532 21,190,744 $ 1,805,054 $ (23,503,856) $ (508,058) $

See accompanying notes

SAINT JEAN CARBON INC. STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

Cash flows from (used in) operating activities Loss and comprehensive loss Items not involving cash: Amortization Interest on lease liabilities Impairment of mineral exploration and evaluation assets	Year ended October 31, 2020 (4,061,427) $ 162,686 3,252 3,068,081	Year ended October 31, 2019
		(831,744) $ 131,223 ‐ ‐
Changes in non‐cash working capital items: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Interest payable Other liabilities	(827,408) 9,280 24,908 444,651 866 147,500	(700,521) 36,873 (3,741) 481,502 868 ‐
	(200,203)	(185,019)
Cash flow from (used in) financing activities Issuance of share capital Share issuance costs Proceeds of notes payable Repayment of notes payable Decrease of lease liabilities	197,625 (18,454) 141,521 (40,000) (58,263)	159,688 (30,912) 38,000 ‐ ‐
	222,429 ‐	166,776
Cash flows used in investing activities Purchase of capital assets Acquisition of other assets	‐ (508)	(3,500) (534)
	(508)	(4,034)
Increase (decrease) in cash Cash, beginning of year	21,718 7,723	(22,277) 30,000
Cash, end of year	29,441 $	7,723 $

See accompanying notes

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

1. CORPORATE INFORMATION AND NATURE OF OPERATIONS

Saint Jean Carbon Inc. (formerly Torch River Resources Ltd.) incorporated provincially in Alberta, and extra provincially Saskatchewan, Manitoba, Quebec and British Columbia has shares listed on the TSX Venture Exchange.

The Company is in the process of exploring its mineral properties and has not determined whether these properties contain ore reserves which are economically recoverable. The company also generates incidental revenue by processing raw materials through its mill.

To date, the Company has not earned significant revenues and is considered to be in the exploration stage.

2. BASIS OF PRESENTATION AND GOING CONCERN

Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Reporting Interpretations Committee (“IFRIC”). These financial statements were approved by the Board of Directors on March 1, 2021.

a) Going concern

These financial statements have been prepared on a going‐concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. Accordingly, it does not give effect to adjustments, if any, that would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and liquidate its liabilities in other than normal course of business and at amounts which may differ from those shown in the financial statements.

As at October 31, 2020, the Company has incurred a loss from operations of $4,061,427, has a working capital deficit of $1,785,849, negative cash flow from operations of $200,203 and an accumulated deficit of $23,503,856. The Company’s ability to continue as a going concern is contingent on its ability to obtain additional equity financing.

This condition, along with other matters as set forth in the above paragraph, indicates the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

b) Measurement basis

These financial statements are prepared on the historical cost basis except for certain financial instruments, which are measured at fair value as explained in the accounting policy set out in Note 17. The Company’s presentation and functional currency is Canadian dollars.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all years presented in these financial statements.

a) Mineral exploration and evaluation assets

The Company is in the exploration stage with respect to its investment in mineral properties. Expenditures incurred before the entity has obtained the legal rights to explore a specific area are expensed.

All costs directly associated with property acquisition and exploration activities are capitalized as exploration and evaluation assets. Costs that are capitalized are limited to costs related to the acquisition and exploration activities that can be associated with finding specific mineral resources, and do not include costs related to production, administrative expenses and other general indirect costs.

Costs related to the acquisition of mining properties and exploration and evaluation expenditures are capitalized by property until the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation assets are reclassified as mining assets under development. Exploration and evaluation assets are assessed for impairment before reclassification, and any impairment loss is then recognized.

The Company may occasionally enter into farm‐out arrangements, whereby the Company will transfer part of a mineral interest, as consideration, for an agreement by transferee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken by the Company. The Company does not record any expenditures made by the farmee on its behalf. Any cash consideration received from the agreement is credited against the costs previously capitalized to the mineral interest given up by the Company, with any excess cash accounted for as a gain on disposal.

b) Impairment of non‐financial assets

Non‐financial assets are regularly assessed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

For the purposes of determining impairment the Company considers each property to be a cash‐generating unit. When assessing for a possible impairment the Company considers whether any of the following facts and circumstances apply to a specific property: the rights to explore the property have expired (or are about to expire), no further substantive expenditure or further exploration of the property is planned, the exploration conducted on the property has not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities, or sufficient data exists to indicate that development of the property is likely to proceed but the carrying amount of the property is unlikely to be recovered in full from successful development or by sale.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The recoverable amount is the greater of fair value less costs to sell and value in use of the asset. When the recoverable amount of an exploration and evaluation asset is less than the carrying amount, the carrying amount of the asset is reduced to its recoverable amount by recording an impairment loss.

c) Property and equipment

Property and equipment is recorded at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated at the following annual rates and basis:

Leasehold improvements	Straight line ‐Lease term
Mill equipment	20% Declining balance
Furniture, fixtures and office equipment	20 – 55% Declining balance

One‐half of the above rates are used in the year of acquisition.

d) Leases

The Company recognizes a right‐of‐use asset (“RUA”) and a lease liability based on the present value of future lease payments when the leased asset is available for use by the Company. The lease payments include fixed payments. The lease payments are discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate. Generally, the Company uses the lessee’s incremental borrowing rate for its present value calculations.

Lease payments are discounted over the lease term, which includes the fixed term and renewal options that the Company is reasonably certain to exercise. Lease payments are allocated between the lease liability and a finance cost, which is recognized in finance costs over the lease term in the statement of earnings. RUA are measured at cost, less any accumulated amortization and accumulated impairment losses, and adjusted for any re‐measurement of lease liabilities. Cost is calculated as the initial measurement of the lease liability plus any initial direct costs and any lease payments made at or before the commencement date. RUA’s are amortized on a straight‐line basis over the shorter of the lease term or the useful life.

e) Revenue recognition

Revenue from graphite processing services rendered is recognized when the services are performed.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f) Income taxes

Income tax expense represents current tax and deferred tax. The Company records current tax based on the taxable profits for the period which is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred income taxes are accounted for using the liability method. The liability method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred income tax assets and liabilities are determined for each temporary difference based on currently enacted or substantively enacted tax rates that are expected to be in effect when the underlying items of income or expense are expected to be realized. The effect of a change in tax rates or tax legislation is recognized in the period of substantive enactment. Deferred tax assets, such as non‐capital loss carry forwards, are recognized to the extent it is probable that taxable profit will be available against which the asset can be utilized.

g) Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre‐ tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. At each financial position reporting date presented the Company has not incurred any decommissioning costs related to the exploration and evaluation of its mineral properties and accordingly no provision has been recorded for such site reclamation or abandonment.

h) Share capital

The Company records proceeds from share issuances net of issue costs. When unit issuances include warrants the excess of proceeds over fair value of shares is credited to contributed surplus.

Shares issued for consideration other than cash are valued at the quoted price on the TSX‐V on the date the shares are issued unless the fair value of goods and services is readily determinable.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i) Share‐based payments

The Company has a stock option plan that is described in Note 13.

Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The fair value is determined by the Black‐Scholes Option Pricing Model with assumptions for: weighted average risk‐free interest rates; dividend yields; weighted‐average volatility factors of the expected market price of the Company’s Common Shares; and a weighted average expected life of the options.

Where equity instruments are granted to non‐employees, they are recorded at the fair value of the goods or services received, unless they are related to the issuance of shares. Amounts related to the issuance of shares are recorded as a reduction of share capital.

Where equity instruments are used to purchase mineral properties the value of these share‐ based payments is calculated using the closing price of the shares on the date of issue as determined by the public exchange upon which they are listed as this is the most readily determinable value.

j) Basic and diluted loss per share

Basic loss per share is computed by dividing the loss for the year by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to Common Shares. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method. Fully diluted amounts are not presented when the effect of the computations are anti‐dilutive due to the losses incurred. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.

– k) Share capital flow through shares

The Company finances a portion of its exploration activities through the issue of flow‐through shares.

The Company provides certain share subscribers with a flow‐through component for tax incentives available on qualifying Canadian exploration expenditures. The Company renounces the qualifying expenditures upon issuance of the respective flow‐through common shares and accordingly is not entitled to the related taxable income deductions for such expenditures.

The shares issued require that the Company make certain qualifying expenditures for tax purposes on or before December 31, the deduction of which flow through to the shareholders.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company may incur liabilities in the event that it has not incurred sufficient qualifying expenditures or has renounced expenses to investors that do not meet the definition of a qualifying expenditure for tax purposes.

The proceeds from issuing flow‐through shares are allocated between the offering of shares and the sale of tax benefits. The allocation is based on the difference (“premium”) between the quoted price of the Company’s existing shares and the amount the investor pays for the actual flow‐through shares. A liability is recognized for the premium and is reversed into the statement of loss as a deferred tax recovery when the eligible expenditures are incurred. If the flow‐through shares are not issued at a premium, a liability is not recorded.

l) Financial instruments

Recognition

Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Classification

Financial assets are classified as subsequently measured at amortized cost or fair value through profit or loss on the basis of both the Company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The classification of subsequently measured at amortized cost is used when the objective of the business model is to hold assets and collect contractual cash flows, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company’s cash, accounts receivable and restricted cash are classified as financial assets subsequently measured at amortized cost.

Financial liabilities are classified as subsequently measured at amortized cost, unless they meet the criteria for measurement at fair value or other prescribed measurement. The Company’s accounts payable and accrued liabilities, notes payable, interest payable and other liabilities are classified as financial liabilities subsequently measured at amortized cost.

Measurement

Financial assets and financial liabilities classified as subsequently measured at amortized cost are initially measured at fair value plus or minus transaction costs that are directly attributable to the acquisition of the financial asset or issue of the financial liability. Subsequently, the financial assets and liabilities are measured at amortized cost using the effective interest rate method.

Impairment

Financial assets classified as subsequently measured at amortized cost or fair value through other comprehensive income reflect the Company’s assessment of expected credit losses.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Expectations reflect historical credit losses, adjusted for forward looking factors. The expected credit loss provision is based on expectations for the next twelve months unless there has been a significant increase in the customer’s credit risk, resulting in the provision being based on expectations for the remaining lifetime of the asset.

4. ADOPTION OF NEW ACCOUNTING POLICY

The standard issued and adopted by the Company in the current year’s financial statements is listed below.

IFRS 16 Leases

In January 2016, the IASB issued IFRS “Leases”, which replaces IAS 17 “Leases,” and provides that a single recognition and measurement model for leases would apply, with required recognition of assets and liabilities for most leases. For lessees, IFRS 16 removes the classification of leases as either operating or finance leases, effectively treating all leases as finance leases. Certain short‐term leases (less than 12 months) and leases of low‐value assets are exempt from the requirements and may continue to be treated as operating leases.

The Company adopted the standard for the fiscal year commencing November 1, 2019. The standard was adopted using the modified retrospective approach by recognizing the cumulative impact of initial adoption in opening retained earnings. Under the standard, the Company recognized a RUA and a corresponding liability for the lease associated with the Company’s warehouse space. Previously, the Company recognized the lease charge associated with this facility as an operating lease expense on a straight‐line basis over the term of the lease. The nature of the expenses related to this lease will change since the Company recognizes an amortization charge for the RUA and an interest expense on the related lease liability. Consistent with the guidance, the Company did not apply this standard to short‐term leases and leases for which the underlying asset is of low value.

On adoption of IFRS 16, the Company utilized the practical expedient to exclude initial direct costs from the measurement of the RUA at the date of initial application. The lease for the Company’s warehouse space qualifies for recognition under IFRS 16.

As at November 1, 2019, the Company recorded a RUA of $51,047, an offsetting amount against prepaid expenses of $4,103 and offsetting lease liabilities of $52,680 with the difference of $5,738 recognized as an adjustment to beginning retained earnings. Under the principles of the new standard these leases have been measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rates at the time of entering into the lease which was estimated to be 6%.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

4. ADOPTION OF NEW ACCOUNTING POLICY (continued)

The Company’s undiscounted lease liabilities at October 31, 2019 were $127,077, as previously disclosed in the Company’s audited annual consolidated financial statements related to lease commitments. The related lease liability recognized on initial application of IFRS 16 at November 1, 2019 is $52,680.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

Information about critical judgments in applying accounting policies that have the most significant risk to cause material adjustment to the carrying amounts of assets and liabilities recognized in these financial statements within the next financial year are discussed below:

Impairment of non‐financial assets

Exploration and evaluation assets and equipment assets are assessed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable amounts. The assessment requires estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance.

Title to mineral property interests

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

6. ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE
		2020	2019
Trade receivables	$	‐	$ 5,000
GST receivable		17,790	22,070
	**$ **	17,790	$ 27,070

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

7. EQUIPMENT

Cost Mill equipment Leasehold improvements	Furniture, fixtures and office equipment Total
At November 1, 2018 $ 627,941 $ 48,416 Additions 2,050 1,450	$ 15,184 $ 691,541 ‐ 3,500
At October 31, 2019 $ 629,991 $ 49,866 Additions ‐ ‐	$ 15,184 $ 695,041 ‐ ‐
At October 31, 2020 $ 629,991 $ 49,866	$ 15,184 $ 695,041
Accumulated amortization Mill equipment Leasehold improvements	Furniture, fixtures and office equipment Total
At November 1, 2018 $ 62,794 $ 12,930 Amortization 113,234 15,458	$ 3,684 $ 79,408 2,531 131,223
At October 31, 2019 $ 176,028 $ 28,388 Amortization 90,793 15,960	$ 6,215 $ 210,631 1,898 108,651
At October 31, 2020 $ 266,821 $ 44,348	$ 8,113 $ 319,282
Net book value Mill equipment Leasehold improvements	Furniture, fixtures and office equipment Total
At October 31, 2019 $ 453,963 $ 21,478	$ 8,970 $ 484,411
At October 31, 2020 $ 363,170 $ 5,518	$ 7,071 $ 375,759

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

8. MINERAL EXPLORATION AND EVALUATION ASSETS

The Company has acquired certain mineral properties and rights. Mineral exploration and evaluation assets include property acquisition costs and deferred exploration costs.

Property acquisition costs:

		Mount	Walker			Buckingham
	Red Bird	Copeland	mine	Clot	Bell	/Kendall	Lochaber	Total
	a)	b)	c)	c)	c)	c)	c)
At October 31,
2019 and 2018	$140,000	$221,186	$607,699	$187,570	$76,133	$44,123	$455,000	$1,731,711
Impairment	‐	‐	(607,699)	(187,570)	(76,133)	(44,123)	(455,000)	(1,370,525)
At October 31,
2020	$140,000	$221,186	$ ‐	$ ‐	$ ‐	$ ‐	$ ‐	$ 361,186

Deferred exploration costs:

		Mount	Walker			Buckingham
	Red Bird	Copeland	mine	Clot	Bell	/Kendall	Lochaber	Total
	a)	b)	c)	c)	c)	c)	c)
At October 31,
2019 and 2018	$16,681	$461,715	$645,369	$315,164	$635,751	$51,622	$49,651	$2,175,953
Impairment	‐	‐	(645,369)	(315,164)	(635,751)	(51,622)	(49,651)	(1,697,557)
At October 31,
2020	$16,681	$461,715	$ ‐	$ ‐	$ ‐	$ ‐	$ ‐	$ 478,396

Total costs:

		Mount	Walker					Buckingham
	Red Bird	Copeland	mine		Clot		Bell	/Kendall	Lochaber		Total
	a)	b)	c)		c)		c)	c)	c)
At October 31,
2019	$156,681	$682,901	$1,253,068	$502,734		$711,884		$95,745	$504,651	$3,907,664
At October 31,
2020	$156,681	$682,901	$ ‐	$	‐	$	‐	$ ‐	$ ‐	$	839,582

a) Red Bird

The Red Bird molybdenum property consists of three mineral claims situated in the Skeena Mining Division of west central British Columbia. The Company has acquired a 25% undivided interest in the property.

b) Mount Copeland

The Mount Copeland molybdenum property is situated in British Columbia. The Company has acquired a 100% interest in the Mount Copeland property.

c) Other properties

The property acquisition and deferred exploration costs for Walker mine, Clot, Bell, Buckingham/ Kendall, and Lochaber have been impaired in the current year. The impairment was recorded due to claims being expired and management’s intention to abandon the claims.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

9. RIGHT‐OF‐USE ASSETS AND LEASE LIABILITIES

For the year ended October 31, 2020, the Company recognized non‐cash amortization expense in the amount of $54,035 (increase in costs) and recognized non‐cash interest expense in the amount of $3,252 (increase in costs).

a) Right‐of‐use assets

b)	Cost November 1, 2019 $ 134,909 Additions duringtheyear 46,833
	October 31, 2020 $ 181,742
	Accumulated amortization November 1, 2019 $ 83,862 Amortization 54,035
	October 31, 2020 $ 137,897
	Net book value November 1, 2019 $ 51,047 October 31,2020 $43,845
	Lease liabilities
	Balance, beginning of the year $ 52,680 Additions during the year 46,833 Lease finance expense 3,252 Repayments duringtheyear (58,263)
	Balance, October 31, 2020 $ 44,502
	Current $ 21,065 Long‐term 23,437
	Total discounted lease liabilities $ 44,502
	The Company is committed to lease payments as follows: 2021 $ 22,400 2022 14,579 2023 9,719 $ 46,698

The Company has applied the practical expedient to all rent concessions that meet the conditions under IFRS 16. Included in expense recovery is $10,607 of rent concessions that meet the conditions of the practical expedient.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		2020		2019
Trade payables	$	992,507	$	638,992
Tradepayables – relatedparties		551,820		460,684
	**$ **	1,544,327	**$ **	1,099,676

Included in accounts payable are amounts due to related parties relating to management fees incurred as follows:

incurred as follows:
Amounts due to	Nature of relationship	2020	2019
Private corporation	Company controlled by the	$ 241,820	$ 241,820
	former CEO
Unincorporated business	Key Management personnel	84,000	‐
Private corporation	Key Management personnel	‐	126,086
Private corporation	Key Management personnel	226,000	90,400
Limited liability partnership	Partnership of which the former	‐	2,378
	CFO is apartner
		$ 551,820	$ 460,684

Included in trades payable is a $122,500 accrual related to a settlement with an investor relations consulting company.

11. OTHER LIABILITIES

In a prior year, Canada Revenue Agency (ʺCRAʺ) commenced an audit of the Companyʹs tax filings related to flow‐through shares. In the current year, CRA has accepted, in part, the Companyʹs original filing. The Company has recorded a provision of $85,000 related to the indemnification of flow through shares to investors.

The Company has also accrued for $62,500 related to a settlement with the Alberta Securities Commission.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

12. NOTES PAYABLE

NOTES PAYABLE
	2020	2019
Unsecured promissory notes payable to a senior officer and	$ 13,000	$ 13,000
director of the Company, due upon demand, bearing
interest at 10% per annum.
Unsecured loan payable of $95,000 USD, non‐interest	126,521	‐
bearing with no fixed terms of repayment.
Unsecured promissory notes payable, due upon demand,	‐	25,000
bearinginterest at 12%per annum.
	$ 139,521	$ 38,000

Subsequent to year‐end, on November 11, 2020, the Company entered in a promissory note agreement with a third party for a loan of $100,000. The note is unsecured, due on November 14, 2021 and bears interest at 12% per annum.

Subsequent to year‐end between December 1, 2020 and February 22, 2021, the Company entered into promissory note agreements with the President for a total amount of $250,000. The notes are unsecured, due between December 1, 2021 and February 22, 2022, and bear interest at 12% per annum.

13. SHARE CAPITAL

a) Authorized:

The authorized share capital of the Company is:

An unlimited number of voting common shares without par value. An unlimited number of non‐voting first preferred shares. An unlimited number of non‐voting second preferred shares.

b) Issued and outstanding:

See the Statement of Changes in Shareholders’ Equity. The number of the shares outstanding presented in the statements of changes in shareholders’ equity refers only to voting common shares. Diluted loss per share did not include the effect of 260,000 options (1,055,172 – 2019) and 24,755,750 warrants and broker warrants (16,850,750 – 2019) as they are anti‐dilutive.

c) Private placements:

In 2019 the Company closed on private placements for a total of 4,562,500 units at a price of $0.035 per unit for gross proceeds of $159,688. Each unit consisted of one common share and warrant. In connection with the private placements, $30,912 of share issue costs of were incurred.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

13. SHARE CAPITAL (continued)

On October 9, 2020 the Company closed on a private placement for 7,905,000 units at a price of $0.025 per unit for gross proceeds of $197,625. Each unit consisted of one common share and warrant. In connection with the private placement, $18,454 of share issue costs of were incurred.

Subsequent to year‐end, on December 23, 2020 the Company received a subscription for a private placement of 3,500,000 shares at a price of $0.035 per unit for gross proceeds of $122,500.

Subsequent to year‐end, on January 4, 2021 the Company issued a loan bonus to lenders of 115,000 common shares in the capital of the Company at a deemed price of $0.05 per share for an aggregate amount of $5,750.

Subsequent to year‐end, on January 18, 2021 the Company issued 1,398,750 common shares in the capital of the Company due to exercise of warrants at an exercise price of $0.05 per share for gross proceeds of $69,937.

Subsequent to year‐end, on February 17, 2021 the Company issued 980,000 common shares in the capital of the Company due to exercise of warrants at an exercise price of $0.05 per share for gross proceeds of $49,000.

d) Stock options

The Company has established a stock based compensation plan pursuant to which options to purchase common shares may be granted to certain officers, directors, and contractors of the Company as well as persons providing ongoing services to the Company. Exercise price of options equals at least the market price of the Company’s stock on the date of grant. Stock options are exercisable on the day of grant and are for a two or five‐year term in accordance with TSX Venture Exchange policy.

A summary of the status of the Company’s incentive stock option plan as at October 31, 2020 and 2019 is as follows:

d 2019 is as follows:
		Weighted Average
	Number of options	Exercise Price
Balance October 31, 2018	3,703,922	$0.20
Granted	‐	‐
Expired	(2,648,750)	$0.20
Exercised	‐	‐
Balance October 31, 2019	1,055,172	$0.20
Granted	‐	‐
Expired	(795,172)	$0.20
Exercised	‐	‐
Balance October 31, 2020	260,000	$0.20

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

13. SHARE CAPITAL (continued)

Subsequent to year‐end, on December 14, 2020, the Company issued 7,300,000 options to directors, officers and consultants of the Company with an exercise price of $0.05. The options expire on December 14, 2025.

Options Granted

A summary of options granted as at October 31, 2020 is as follows:

Number of Shares	Exercise	Expiry
Under Option	Price	Date
150,000	$0.20	April 5, 2021
35,000	$0.20	November 8, 2021
75,000	$0.20	January 13, 2022
260,000

e) Share purchase warrants

A summary of outstanding warrants as at October 31, 2020 and 2019 is as follows:

	Number of	Weighted Average
	Warrants	Exercise Price
Balance, October 31, 2018	16,845,750	$0.19
Granted	4,562,500	$0.05
Expired	(4,557,500)	$0.23
Exercised	‐	‐
Balance October 31, 2019	16,850,750	$0.14
Granted	7,905,000	$0.05
Expired	‐	‐
Exercised	‐	‐
Balance October 31, 2020	24,755,750	$0.11

A summary of warrants granted as at October 31, 2020 is as follows:

	Exercise	Expiry
Number of Warrants	Price	Date
3,222,500	$0.22	December 12, 2020
695,500	$0.20	January 25, 2021
2,002,750	$0.20	February 8, 2021
1,705,000	$0.22	May 17, 2021
1,162,500	$0.22	May 29, 2021
2,400,000	$0.075	June 28, 2021
1,100,000	$0.075	July 18, 2021
4,277,500	$0.05	April 18, 2022
285,000	$0.05	June 10, 2022
7,905,000	$0.05	October 9, 2023
24,755,750

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

14. INCOME TAXES

The effective rate on the Company’s earnings before income tax differs from the expected amount that would arise using the combined Canadian Federal and Provincial statutory income tax rates. A reconciliation of the difference is as follows:

	Year ended October 31, 2020 2019
Net loss before income taxes Statutoryincome tax rate	4,061,427 831,744 26.50% 26.50%
Tax recovery Share issuance costs Adjustments to tax pools Adjustments due to IFRS 16 adoption Other Change in rates Unrecognized deferred tax asset	1,076,278 220,412 4,890 8,192 (276,951) ‐ 434 ‐ (759) (9,190) ‐ (78,351) (803,892) (141,063)
Deferred income tax recovery (expense)	‐ ‐

Deferred Tax Assets and Liabilities

Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following represents the components of the net unrecognized deferred income tax asset:

	Year ended	October 31,
	2020	2019
Non‐capital losses	3,323,800	3,369,155
Mineral exploration and evaluation assets	1,633,125	820,083
Property and equipment	57,850	29,057
Right‐of‐use assets	(11,619)	‐
Lease liabilities	11,793	‐
Share issuance costs	39,398	71,248
Other liabilities	39,088	‐
Unrecognized deferred tax asset	(5,093,435)	(4,289,543)
Deferred tax asset (liability)	‐	‐

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

14. INCOME TAXES (continued)

As at October 31, 2020 the Company has non‐capital losses for Canadian income tax purposes totaling $12,542,640 carried forward for tax purposes and are available to reduce taxable income of future years. These losses expire as follows:

Non‐Capital Year Losses	Non‐Capital Year Losses
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040	$ 548,829 563,645 600,405 320,201 211,839 287,654 226,298 2,212,787 2,003,660 563,909 639,744 1,348,008 1,305,854 835,859 873,948 $ 12,542,640

15. RELATED PARTY TRANSACTIONS

		Year ended October 31,	Year ended October 31,
Management and consulting fees		2020	2019
Company controlled by the former CEO	$	‐	$ 179,000
Partnership of which the former CFO is a partner		39,990	40,747
Company controlled by the former President	110,000		96,200
Company controlled by a senior officer	120,000		80,000
Business controlled by an officer		10,000	‐
Business controlled bythe President		37,000	‐

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

15. RELATED PARTY TRANSACTIONS (continued)

Key management personnel include the board of directors, chief executive officer, chief financial officer and chief technology officer. Key management personnel compensation comprised:

Key management compensation

Key management compensation
	Year ended October 31,
	2020	2019
Retainers, wages and benefits	$ 306,990	$ 390,947
Cost ofgoods sold	10,000	5,000
	$316,990	$395,947

16. RESTRICTED CASH

Term deposits of $36,000 have been pledged as security to the Scotia Bank for their irrevocable letter of credit in favor of the Province of British Columbia, Ministry of Energy and Mines. A term deposit of $5,000 has been pledged as security to the Scotia Bank to secure the Company credit card.

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial assets and financial liabilities are measured on an ongoing basis at fair value or amortized cost. The disclosures in the notes to these financial statements describe how the categories of financial instruments are measured and how income and expenses, including fair value gains and losses, are recognized.

Financial instruments recognized at fair value on the statements of financial position must classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy levels are as follows:

• Level 1: Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2: Valuation techniques based on inputs that are other than Level 1 quoted prices that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices).

• Level 3: Valuation techniques with unobservable market inputs (involves assumptions and estimates by management).

As at October 31, 2020, the classification of the financial instruments, as well as their carrying values and fair values, with comparative figures for October 31, 2019 are shown in the table below:

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

	October	31, 2020	October 31, 2019	October 31, 2019
	Fair value	Carrying value	Fair value	Carrying
				value
Financial assets
Cash	29,441	29,441	7,723	7,723
Accounts receivable_(1)_	‐	‐	5,000	5,000
Financial liabilities
Accounts payable and
accrued liabilities	1,544,327	1,544,327	1,099,676	1,099,676
Notes payable	139,521	139,521	38,000	38,000
Interest payable	1,734	1,734	868	868
Other liabilities	147,500	147,500	‐	‐

(1) Excluding taxes receivable

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its obligations. The Company’s maximum exposure to credit risk as at October 31, 2020 under its financial instruments is summarized as follows:

	October 31, 2020	October 31, 2019
Accounts and other receivables ‐
Currently due	‐	5,000
Past due by 90 days or less, not impaired	‐	‐
Past due by greater than 90 days,not impaired	‐	‐
	‐	5,000
Cash	29,441	7,723
	29,441	12,723

All of the Company’s cash is held with major financial institutions in Canada, and management believes the exposure to credit risk with such institutions is not significant. The Company considers the risk of material loss to be significantly mitigated due to the financial strength of the major financial institutions where cash is held. As at October 31, 2020, no material provision has been recorded in respect of impaired receivables. The Company’s maximum exposure to credit risk as at October 31, 2020, is the carrying value of its financial assets.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. The Company has a planning and budgeting process in place by which it anticipates and determines the funds required to support normal operation requirements as well as the growth and development of its mineral property interests. The Company coordinates this planning and budgeting process with its financing activities through the capital management process described in Note 18 , in normal circumstances. Due to the lack of liquidity, management has increased its focus on liquidity risk given the impact of the current economic climate on the availability of finance. Further information regarding liquidity risk is set out in Note 2 (a) .

The following table summarizes the contractual maturities of the Company’s financial liabilities at October 31, 2020:

liabilities at October 31, 2020:
	Contractual	Less than
	cash flows	oneyear
Accounts payable and
accrued liabilities	$ 1,544,327	$ 1,544,327
Notes payable	139,521	139,521
Interest payable	1,734	1,734
Other liabilities	147,500	147,500
	$ 1,833,082	$ 1,833,082

Market risk

The significant market risks to which the Company is exposed include commodity price risk, interest rate risk and currency risk.

• Commodity price risk

• The Company’s ability to raise capital to fund exploration or development activities is subject to risk associated with fluctuations in the market prices of graphite, molybdenum, copper and gold and the outlook for these metals, as the Company’s ability to raise capital is affected by the commodity that the Company is exploring for on its mineral property interests. The Company does not have any hedging or other derivative contracts respecting its operations.

• Interest rate risk

• The Company has no significant exposure at October 31, 2020, to interest rate risk through its financial instruments.

• Currency risk

• The Company has no significant exposure at October 31, 2020 to currency risk as all cash and cash equivalents are held in Canadian funds.

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

18. MANAGEMENT OF CAPITAL

The Company’s objective in managing capital is to maintain adequate levels of funding to safeguard its ability to continue as a going concern in order to pursue the development of its mineral property interests.

The Company considers the items included in shareholders’ equity to be capital. The Company relies on equity financing in order to fund future exploration and development and makes adjustments to the Company’s capital structure based on financing needs, as well as in response to economic conditions and the risk characteristics of the underlying assets.

Management makes adjustments to its capital structure through share issuances and the acquisition or disposition of assets.

As the Company is in the exploration stage it endeavors to manage its capital structure in a manner that provides sufficient funding for operational activities through funds primarily secured through equity capital obtained in private placements. There can be no assurances that the Company will be able to continue raising capital in this manner.

The Company facilitates the management of capital though the preparation of annual expenditure budgets and cash forecasts that are updated as necessary. The Company does not have any externally imposed capital requirements.

The Company’s managed capital is as follows: table needs updating

	October 31, 2020	October 31, 2019
Share capital	21,190,744	21,011,573
Contributed surplus	1,805,054	1,805,054
Deficit	(23,503,856)	(19,436,691)
	(508,058)	3,379,936

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

19. NOVEL CORONAVIRUS (“COVID‐19”)

The outbreak of the novel strain of coronavirus, specifically identified as “COVID‐19” was declared a global pandemic by the World Health Organization on March 11, 2020. Governments worldwide enacted emergency measures to combat the spread of the virus. These measures, which include public health measures requiring periodic closures of non‐essential businesses, requesting the public to stay home as much as possible, the implementation of travel bans, self‐ imposed quarantine periods and physical distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions.

The duration and impact of the COVID‐19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments.

20. COMPARATIVE AMOUNTS

Certain comparative amounts have been reclassified. Included in this, consulting fees were reclassified as professional fees. All other changes to the prior year are immaterial. There was no effect on net income.

21. SEGMENTED INFORMATION

The Company has two operating segments. These two operating segments have been differentiated based on the type of services provided and equipment requirements. The mineral exploration and development segment focuses on the acquisition and exploration of property interests that are considered potential sites of economic mineralization. The research and development segment focuses on the scientific study and technology applications for graphite and graphene. All of the Company’s operations are in Canada. The following tables provide financial results by segment:

Year ended	Mineral exploration	Research and
October 31, 2020	and development	development	Total
	$	$	$
Revenue	‐	17,166	17,166
Amortization and impairment	3,069,979	160,788	3,230,767
of equipment
Total expenses	3,810,418	268,175	4,078,593
Capital expenditures	‐	‐	‐
Total assets at October 31,2020	939,203	430,323	1,369,526

SAINT JEAN CARBON INC. Notes to the financial statements (Expressed in Canadian Dollars) October 31, 2020 and 2019

21. SEGMENTED INFORMATION (continued)

Year ended	Mineral exploration	Research and
October 31, 2019	and development	development	Total
	$	$	$
Revenue	713	115,205	115,918
Amortization and impairment	2,531	128,692	131,223
of equipment
Total expenses	671,018	275,931	946,949
Capital expenditures	‐	3,500	3,500
Total assets at October 31,2019	4,015,969	502,511	4,518,480

22. CONTINGENCY

The Company has been named as a defendant in a statement of claim filed on January 5, 2021 in the Province of Ontario. The plaintiff is seeking $814,820 for unpaid compensation, and $1,000,000 for wrongful termination and damages. The financial statements include a provision for unpaid compensation of $241,820. Management is in the process of filing a statement of defense and counterclaim. The counterclaim against the plaintiff and other non‐arm’s length parties seeks damages up to $3 million, plus further amounts which will be particularized prior to trial. As the outcome of this lawsuit and any liability to the Company cannot be reasonably determined at this time, no additional provisions have been made in the financial statements.