Ynvisible Interactive Inc. — Interim / Quarterly Report 2022

Nov 30, 2022

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Three and Nine Months Ended September 30, 2022 and 2021

(Expressed in Canadian Dollars – unaudited)

Ynvisible Interactive Inc.

Table of Contents

(Expressed in Canadian Dollars – unaudited)

	Page
Contents	2
Notice to Reader	3
Condensed Interim Consolidated Financial Statements
Condensed Interim Consolidated Statements of Financial Position	4
Condensed Interim Consolidated Statements of Comprehensive Loss	5
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity	6
Condensed Interim Consolidated Statements of Cash Flows	7
Notes to the Condensed Interim Consolidated Financial Statements	8

2

Notice of No Auditor Review of Condensed Interim Consolidated Financial Statements

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

The accompanying condensed interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company’s management. The Company’s external auditors have not performed a review of these condensed interim consolidated financial statements.

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars – unaudited)

		As at
		September 30, December 31, 2022 2021
ASSETS Current assets Cash and cash equivalents Amounts receivable Inventories Prepaid expenses Total current assets Non-current assets Deposits Right-of-use assets (Note 5) Fixed assets (Note 6) Intangible assets (Note 7) Total non-current assets Total assets	$	12,692,343 $ 16,107,403 670,401 1,067,968 43,480 73,522 161,511 189,860
		13,567,735 17,438,753
		7,243 5,566 124,885 371,981 1,609,033 1,975,569 310,587 387,455
		2,051,748 2,740,571
	$	15,619,483 $ 20,179,324
LIABILITIES Current liabilities Accounts payable and accrued liabilities (Note 8) Current portion of lease liabilities (Note 5) Deferred project grants Total current liabilities Non-current liabilities Lease liabilities (Note 5) Total liabilities SHAREHOLDERS’ EQUITY Share capital (Note 9) Reserve (Note 9) Obligation to issue shares (Note 9) Deficit Accumulated other comprehensive income Total shareholders’ equity Total liabilities and shareholders’ equity	$	751,743 $ 1,100,268 114,717 298,757 86,963 603,639
		953,423 2,002,664
		17,214 72,608
		970,637 2,075,272
		37,601,959 37,530,455 3,118,858 2,886,382 46,084 47,809 (26,016,886) (22,388,865) (101,169) 28,271
		14,648,846 18,104,052
	$	15,619,483 $ 20,179,324

Note 1 – Corporate Information and Going Concern

Approved and authorized for issue on behalf of the Board of Directors on November 29, 2022:

“Alexander Helmel” “Jani-Mikael Kuusisto” Director Director

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

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in Canadian Dollars – unaudited)

	Three Months Ended September 30, Nine Months Ended September 30,
	2022 2021 2022 2021
Revenue Sales Cost of sales Gross profit Expenses Bad debt Compensation and consulting (Note 8) Depreciation (Notes 5, 6, and 7) Development and production Interest and bank charges Marketing and promotion Office facilities and services Professional fees Share-based compensation (Notes 8 and 9) Transfer and listing fees Travel and project investigation Total operating expenses Loss from operations Other items Rental income Income and gains Expenses and losses EU co-funded projects grants Gain on forgiveness of debt Prototype project revenue Total other items Loss before income taxes Income tax recovery Net loss for the period Other comprehensive income Foreigncurrency translationadjustment	$ 73,785 $ 295,908 $ 330,320 $ 981,944 (56,762) (265,303) (170,308) (706,255)
	17,023 30,605 160,012 275,689
	- 34,061 - 34,061 728,083 514,938 2,148,736 2,248,430 145,804 169,035 454,956 533,418 178,853 60,214 532,478 235,212 2,181 4,318 8,612 12,182 14,407 587,659 114,693 655,887 108,884 60,388 380,050 152,368 147,335 222,255 298,606 453,994 287,101 408,893 837,440 713,586 20,476 19,567 55,774 137,051 36,926 17,980 125,376 30,613
	1,670,050 2,099,308 4,956,721 5,206,802
	(1,653,027) (2,068,703) (4,796,709) (4,931,113)
	62,769 44,714 192,332 190,938 84,147 30,765 168,517 47,007 (46,441) (53,395) (83,451) (143,964) 68,289 131,290 346,883 444,338 - - 9,222 - - - - 31,183
	168,764 153,374 633,503 569,502
	(1,484,263) (1,915,329) (4,163,206) (4,361,611) - 2,562 - 2,703
	(1,484,263) (1,912,767) (4,163,206) (4,358,908) (36,999) 9,213 (129,440) (108,627)
Comprehensive loss for the period	$ (1,521,262) $ (1,903,554) $ (4,292,646) $ (4,467,535)
Basic and diluted loss per common share	$ (0.01) $ (0.02) $ (0.03) $ (0.04)
Weighted average number of common shares outstanding	124,671,915 124,666,915 124,669,772 113,196,805

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

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Expressed in Canadian Dollars – unaudited)

	Class A Common Shares Reserve Share subscriptions received Obligation to issue shares Deficit Accumulated Other Comprehensive Income Total Shareholders’ Equity Number Amount
	# $ $ $ $ $ $ $
Balance, December 31, 2020 Shares issued by private placement Finders’ shares issued for private placement Finders’ warrants issued for private placement Share issue costs Share issue costs by shares issuance Stock options exercised Stock options cancelled Share-based compensation Warrants exercised Warrants expired Net loss for the period Other comprehensive loss	82,891,680 17,565,296 1,597,619 459,130 114,409 (16,614,794) 448,799 3,570,459 32,849,145 16,695,122 - (459,130) - - - 16,235,992 452,280 158,298 - - - - - 158,298 - (571,092) 571,092 - - - - - - (1,424,261) - - - - - (1,424,261) - (158,298) - - - - - (158,298) 470,000 280,917 (127,917) - - - - 153,000 - - (129,432) - - 129,432 - - - - 713,586 - - - - 713,586 8,003,810 4,964,913 (189,626) - (66,600) - - 4,708,687 - 19,560 (19,560) - - - - - - - - - - (4,358,908) - (4,358,908) - - - - - - (108,627) (108,627)
Balance, September 30, 2021 Stock options cancelled Share-based compensation Net loss for the period Other comprehensive loss	124,666,915 37,530,455 2,415,762 - 47,809 (20,844,270) 340,172 19,489,928 - - 17,392 - - (17,392) - - - - 453,228 - - - - 453,228 - - - - - (1,527,203) - (1,527,203) - - - - - - (311,901) (311,901)
Balance, December 31, 2021 Shares issued in exchange for Ynvisible, S.A. shares Share-based compensation Stock options cancelled Warrants expired Net loss for the period Othercomprehensiveloss	124,666,915 37,530,455 2,886,382 - 47,809 (22,388,865) 28,271 18,104,052 5,000 1,725 - - (1,725) - - - - - 837,440 - - - - 837,440 - - (535,185) - - 535,185 - - - 69,779 (69,779) - - - - - - - - - - (4,163,206) - (4,163,206) - - - - - - (129,440) (129,440)
Balance, September 30, 2022	124,671,915 37,601,959 3,118,858 - 46,084 (26,016,886) (101,169) 14,648,846

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

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars – unaudited)

	Nine Months Ended September 30,	Nine Months Ended September 30,
	2022 2021
Operating activities Net loss for the period Items not involving the use of cash and cash equivalents: Depreciation Depreciation included in Cost of Sales Share-based compensation Income tax recovery Changes in working capital items: Amounts receivable Inventories Prepaid expenses Accounts payable and accrued liabilities Deferred project grants Cash used in operating activities Investing activities Purchase of fixed assets Purchase of intangible assets Deposits Cash used in investing activities Financing activities Proceeds on issuance of shares Share issue costs Stock options exercised Warrants exercised Repayment of lease liabilities Cash provided by financing activities Effect of foreign exchange Net change in cash Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	$ (4,163,206) $ (4,358,908) 454,956 533,418 17,098 - 837,440 713,586 - (2,703) 397,567 (579,408) 30,042 (8,842) 28,349 (63,245) (348,525) (255,972) (516,676) 333,336
		(3,262,955) (3,688,738)
		(52,247) (79,628) (1,773) (1,365) (1,677) (1,266)
		(55,697) (82,259)
		- 16,235,992 - (1,424,261) - 153,000 - 4,708,687 (204,272) (247,702)
		(204,272) 19,425,716
		107,864 53,883
		(3,415,060) 15,708,602 16,107,403 1,809,637
	$ 12,692,343 $ 17,518,239
Non-cash transactions Reclassification of stock options exercised Reclassification of stock options cancelled Reclassification of warrants exercised Reclassification of warrants expired Finders’ shares issued forprivateplacement	$ - $ 127,917 $ 535,185 $ 129,432 $ - $ 189,626 $ 69,779 $ 19,560 $ - $ 571,092

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

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

1. CORPORATE INFORMATION

Ynvisible Interactive Inc. (the “Company”) was incorporated on September 2, 1983, under the laws of British Columbia, Canada. The address of the Company’s head office and principal place of business is 830 – 1100 Melville Street, Vancouver, British Columbia, Canada, V6E 4A6, and the registered and records office is located at 1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7.

The Company’s principal business activity is the development and sale of electrochromic displays (“ECDs”). The Company’s shares trade on the TSX Venture Exchange (“TSXV”) under the symbol “YNV”, on the OTCQB under the symbol “YNVYF”, and on the FSE under the symbol “1XNA”.

These condensed interim consolidated financial statements have been prepared by management on a going concern basis, which presume the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. During the nine months ended September 30, 2022, the Company incurred a net loss of $4,163,206 (September 30, 2021 - $4,358,908) and as at September 30, 2022, had an accumulated deficit of $26,016,886 (March 31, 2021 - $22,388,865).

The Company’s ability to continue as a going concern, to fund work commitments and to ensure adequate working capital is dependent upon achieving profitable operations or upon obtaining sufficient additional financing. Management believes that the Company has sufficient working capital to meet the Company’s obligations over the next twelve months.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, have adversely affected workforces, customers, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal operations of many businesses, including the Company’s. This outbreak could decrease spending, adversely affect demand for the Company’s product and harm business and results of operations. It is not possible to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations at this time.

2. BASIS OF PRESENTATION

Statement of Compliance

These condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standards (“IAS”), Interim Financial Reporting (“IAS 34”).

This financial report does not include all of the information required of a full annual financial report and is intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Company for the years ended December 31, 2021 and 2020.

Basis of Consolidation

These condensed interim consolidated financial statements include the accounts of the Company, its 100% owned subsidiary YD Ynvisible, S.A., Portugal (“Ynvisible SA”), Ynvisible GmbH, Germany, which is 100% owned by Ynvisible SA, and Ynvisible Production AB (“Ynvisible Production”), Sweden, which is 100% owned by the Company. All intercompany transactions and balances were eliminated on consolidation.

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

2. BASIS OF PRESENTATION (continued)

Basis of Measurement and Presentation

The Company’s condensed interim consolidated financial statements have been prepared on a historical cost basis except for the revaluation of certain financial assets and financial liabilities to fair value. The comparative figures presented in these condensed interim consolidated financial statements are in accordance with IFRS and may have been reclassified to conform to the current period's presentation.

The preparation of condensed interim consolidated financial statements requires the use of certain critical accounting estimates and the exercise of management’s judgment in applying the Company’s accounting policies. Areas involving a high degree of judgment or complexity and areas where assumptions and estimates are significant to the Company’s condensed interim consolidated financial statements are discussed in Note 4.

3. SIGNIFICANT ACCOUNTING POLICIES

The condensed interim consolidated financial statements have been prepared on a historical cost basis using the accrual basis of accounting, except for cash flow information and as otherwise specified, as set out in the accounting policies below.

Foreign Currency Translation

The functional currency of the Company is the Canadian dollar. The Company’s functional currency is also the presentation currency. The functional currency of Ynvisible SA and Ynvisible GmbH is the European Euro. The functional currency of Ynvisible Production is the Swedish krona.

Transactions in currencies other than the Company’s functional currency are recorded at the rates of exchange prevailing at the dates of the transactions. The Company translates monetary assets and liabilities denominated in foreign currencies at period-end rates. Non-monetary assets and liabilities are translated at historical rates. The resulting gains or losses are reflected in profit or loss in the period of translation.

Where applicable, the functional currency is translated into the presentation currency using the period end rates for assets and liabilities while the operations and cash flows are translated using average rates of exchange. Exchange adjustments arising when net assets and profit or loss are translated into the presentation currency are taken into a separate component of equity and reported in other comprehensive income or loss.

4. CRITICAL JUDGMENTS AND ACCOUNTING ESTIMATES

When preparing the condensed interim consolidated financial statements in conformity with IFRS, management undertakes a number of judgments, estimates and assumptions about the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management.

Significant areas of judgments and estimation uncertainty considered by management in preparing the condensed interim consolidated financial statements are as follows:

• a. The amounts disclosed related to fair values of stock options and warrants issued are based on estimates of future volatility of the Company’s share price, expected lives of the options and expected dividends.

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

4. CRITICAL JUDGMENTS AND ACCOUNTING ESTIMATES (continued)

• b. The application of IFRS 16 requires the Company to make judgments that affect the valuation of the right-ofuse assets and the valuation of lease liabilities. These include determining agreements in scope of IFRS 16, determining the contract term and determining the interest rate used for discounting of future cash flows. The lease term determined by the Company is comprised of the non-cancellable period of lease agreements, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. The present value of the lease payment is determined using a discount rate representing the rate of a commercial mortgage rate, observed in the period when the lease agreement commences or is modified.

• c. Depreciation of tangible and intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets.

• d. At the end of each reporting period, the Company reviews the carrying amounts of its long-lived assets consisting of Fixed Assets, Intangible Assets, and Goodwill to determine whether there is any indication that the carrying amount is not recoverable. The determination of whether any such indication exists requires significant management judgment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When an individual asset does not generate independent cash flows, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

• e. The amounts receivable balance is recorded at the estimated recoverable amount, which involves the estimate of uncollectible accounts.

• f. Inventories are carried at the lower of cost and net realizable value which requires the Company to utilize estimates related to selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to sell the inventory.

• g. Judgment is required to determine if the Company’s acquisitions represent a business combination or an asset purchase. The assessment requires management to determine if the acquisitions acquired represented an integrated set of activities with inputs, processes and outputs. The acquisition of rdot AB was considered to be an asset acquisition.

Estimates are made in determining the fair value of assets and liabilities, including the valuation of separately identifiable intangibles acquired as part of an acquisition. Management exercises judgment in estimating the probability and timing of when cash flows are expected to be achieved, which is used as the basis for estimating fair value. Future performance results that differ from management’s estimates could result in changes to liabilities recorded, which are recorded as they arise through profit or loss. The fair value of identified intangible assets is determined using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows of the acquiree. Valuations are highly dependent on the inputs used and assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied. Acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions. Consideration paid for an asset acquisition is allocated to the individual identifiable assets acquired and liabilities assumed based on their relative fair values. Asset acquisitions do not give rise to goodwill.

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

5. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Right-of-Use Assets

		Leases
Cost:
At December 31, 2020	$	1,279,853
Foreignexchange adjustment		(96,537)
At December 31, 2021		1,183,316
Foreign exchange adjustment		(234,646)
At September 30, 2022	$	948,670
Depreciation:
At December 31, 2020	$	525,864
Charge for the year		331,327
Foreignexchange adjustment		(45,856)
At December 31, 2021		811,335
Charge for the period		215,751
Foreign exchange adjustment		(203,301)
At September 30, 2022	$	823,785
Net book value:
AtDecember31,2021	$	371,981
At September 30, 2022	$	124,885

Depreciation of right-of-use assets is calculated using the straight-line method over the remaining lease term.

Lease Liabilities

At December 31, 2020 $ Lease payments made Interest expense on lease liabilities Foreign exchange adjustment At December 31, 2021 Lease payments made Interest expense on lease liabilities Foreign exchange adjustment At September 30, 2022 Less: current portion Non-Current Portion $	751,802 (337,237) 7,563 (50,763)
	371,365 (208,518) 4,246 (35,162)
	131,931 (114,717) 17,214

The lease liabilities were measured by discounting the lease payments using an incremental borrowing rate of 12%. Interest expense of $4,246 (September 30, 2021 - $5,970) is included in interest and bank charges.

The remaining minimum future lease payments, excluding estimated operating costs, for the term of the lease including assumed renewal periods are as follows:

Fiscal	2022	$	65,826
Fiscal	2023		72,657
Fiscal	2024		8,632
Total		$	147,115

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YNVISIBLE INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021

(Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

6. FIXED ASSETS

						Leasehold
				Manufacturing		Building
		Equipment		Equipment		Improvements		Office		Other		Total
Costs
Balance, December 31, 2020	$	540,196	$	2,120,390	$	42,668	$	106,825	$	73,971	$	2,884,050
Additions		106,923		-		-		54,509		9,733		171,165
Disposal		(22,749)		-		-		(9,692)		-		(32,441)
Transfer		(30,845)		-		-		27,540		3,305		-
Foreign exchange adjustment		(6,686)		(201,611)		(2,983)		(26,197)		(21,078)		(258,555)
Balance, December 31, 2021		586,839		1,918,779		39,685		152,985		65,931		2,764,219
Additions		16,770		-		10,587		22,066		2,824		52,247
Disposal		-		-		-		(1,024)		(2,350)		(3,374)
Foreignexchange adjustment		(46,383)		(143,448)		28,830		(14,683)		13,357		(162,327)
Balance, September 30, 2022	$	557,226	$	1,775,331	$	79,102	$	159,344	$	79,762	$	2,650,765
Accumulated Depreciation
Balance, December 31, 2020	$	185,981	$	277,262	$	13,531	$	33,004	$	43,023	$	552,801
Charge for the year		61,378		212,944		6,377		20,339		11,761		312,799
Disposal		(22,749)		-		-		(9,692)		-		(32,441)
Foreignexchange adjustment		(10,957)		(27,962)		(1,101)		10,381		(14,870)		(44,509)
Balance, December 31, 2021		213,653		462,244		18,807		54,032		39,914		788,650
Charge for the period		46,557		125,257		6,761		17,349		3,772		199,696
Foreign exchange adjustment		11,818		35,410		1,259		(10,035)		14,934		53,386
Balance, September 30, 2022	$	272,028	$	622,911	$	26,827	$	61,346	$	58,620	$	1,041,732
Carrying Value
Balance,December31,2021	$	373,186	$	1,456,535	$	20,878	$	98,953	$	26,017	$	1,975,569
Balance, September 30, 2022	$	285,198	$	1,152,420	$	52,275	$	97,998	$	21,142	$	1,609,033

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YNVISIBLE INTERACTIVE INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months ended September 30, 2022 and 2021

(Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

7. INTANGIBLE ASSETS

		Patents and
Costs		Software		Customer List		IP Rights		License		Goodwill		Total
Balance, December 31, 2020	$	111,239	$	195,222	$	65,074	$	128,971	$	71,253	$	571,759
Additions		11,585		11,417		-		-		-		23,002
Write off		-		(22,903)		(7,634)		-		-		(30,537)
Foreignexchange adjustment		(8,225)		(19,387)		(6,304)		11,129		-		(22,787)
Balance, December 31, 2021		114,599		164,349		51,136		140,100		71,253		541,437
Additions		-		1,773		-		-		-		1,773
Foreignexchange adjustment		(2,657)		(13,046)		(3,883)		(29,766)		-		(49,352)
Balance, September 30, 2022	$	111,942	$	153,076	$	47,253	$	110,334	$	71,253	$	493,858
Accumulated Depreciation
Balance, December 31, 2020	$	35,233	$	14,114	$	4,704	$	22,083	$	-	$	76,134
Charge for the year		11,108		29,441		9,758		14,620		-		64,927
Foreignexchange adjustment		(2,284)		(2,497)		(829)		18,531		-		12,921
Balance, December 31, 2021		44,057		41,058		13,633		55,234		-		153,982
Charge for the period		7,055		21,235		6,494		9,728		-		44,512
Foreignexchange adjustment		2,148		1,582		533		(19,486)		-		(15,223)
Balance, September 30, 2022	$	53,260	$	63,875	$	20,660	$	45,476	$	-	$	183,271
Carrying Value
Balance, December 31, 2021	$	70,542	$	123,291	$	37,503	$	84,866	$	71,253	$	387,455
Balance, September 30, 2022	$	58,682	$	89,201	$	26,593	$	64,858	$	71,253	$	310,587

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

8. RELATED PARTY TRANSACTIONS

Related party transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Key Management Compensation

	Nine Months Ended September 30,
	2022 2021
Compensation and consulting Share-based compensation	$ 546,350 $ 606,266 164,764 121,486 $ 711,114 $ 727,752

As at September 30, 2022, accounts payable and accrued liabilities include $20,500 (December 31, 2021 - $37,225) due to officers and directors. Accounts payable and accrued liabilities due to related parties are unsecured and have no specified terms of repayment. During the nine months ended September 30, 2022, the Company received $nil (September 30, 2021 - $39,714) in rent payments from a company controlled by a director of the Company.

9. SHARE CAPITAL AND RESERVE

Authorized

Unlimited number of Class A common shares without par value.

Unlimited number of Class B non-voting convertible common shares without par value, convertible to Class A common shares on a one-for-one basis.

Issued

For the nine months ended September 30, 2022:

In April 2022, the Company issued 5,000 Class A common shares to the SEA Minority Shareholders (defined below) in exchange for 5,000 common shares of Ynvisible SA.

For the year ended December 31, 2021:

In January 2021, the Company closed a private placement and issued 12,857,142 units of the Company at $0.35 per unit for gross proceeds of $4,500,000 (the “January 2021 Offering”), whereby each unit consists of one Class A common share and one-third of a share purchase warrant of the Company. Each whole warrant, subject to acceleration provision, will be exercisable into an additional Class A common share at an exercise price of $0.50 for a period of 18 months from the date of issuance. In connection with the offering, the Company paid share issuance costs totaling $196,622 in cash and issued 452,280 finders’ units, of which 452,280 finders’ Class A common shares were valued at $158,298 and 150,760 finders’ warrants were valued at $69,779, to eligible finders. The fair value of the finder warrants was calculated using the Black-Scholes pricing model with the following assumptions: expected life of warrants – 18 months, expected volatility – 122.24%, expected dividend yield – 0%, and risk-free rate – 0.16%. The finders’ units will bear the same terms and conditions of the units issued with the offering.

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14

YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Issued (continued)

In May 2021, the Company closed a private placement and issued 19,992,003 units of the Company at $0.61 per unit for gross proceeds of $12,195,122 (the “May 2021 Offering”), whereby each unit consists of one Class A common share and one share purchase warrant of the Company. Each warrant will be exercisable into an additional Class A common share at an exercise price of $0.76 for a period of three years from the date of issuance. In connection with the offering, the Company paid share issuance costs totaling $1,151,040 in cash and issued 999,600 finders’ warrants valued at $501,313 using the Black-Scholes pricing model to the finder agents with the following assumptions: expected life of warrants – 3 years, expected volatility – 117.72%, expected dividend yield – 0%, and risk-free rate – 0.49%. The finders’ warrants will be exercisable into a Class A common share at an exercise price of $0.61 for a period of three years from the date of issuance.

During the year ended December 31, 2021, the Company issued 470,000 Class A common shares in connection with the exercise of 470,000 stock options with a weighted average exercise price of $0.33 for total proceeds of $153,000. In addition, the Company issued 8,003,810 Class A common shares in connection with the exercise of 8,003,810 warrants with a weighted average exercise price of $0.60 for total proceeds of $4,775,286. The Company incurred additional general share issuance costs totaling $76,599 in cash.

Obligation to Issue Shares

On November 9, 2018, the Board of Directors of the Company approved the issuance of up to 1,032,496 Class A common shares of the Company (the “SEA Shares”) to certain Ynvisible SA minority shareholders (the “SEA Minority Shareholders”) pursuant to the terms of share exchange agreements (the “Post-RTO Share Exchange Agreements”) between the Company and the SEA Minority Shareholders. The Board of Directors corrected the number of SEA Shares being issued to the SEA Minority Shareholders to 1,022,496 on September 4, 2019.

On September 4, 2019, the Company implemented a squeeze-out transaction, as per the applicable Portuguese law, pursuant to the RTO transaction, whereby the Company acquired the remaining 499,369 shares of Ynvisible SA, on a one-for-one basis for the Class A common shares of the Company, held by certain minority shareholders of Ynvisible SA (the “Squeeze-Out Minority Shareholders”). Accordingly, the Company recorded an obligation to issue 499,369 Class A common shares with a fair value of $172,282, which has been reported as RTO transaction costs. As a result of the squeeze-out transaction, the Company now owns 100% of Ynvisible SA. As at September 30, 2022, the Company recorded $46,084 (December 31, 2021 - $47,809) for obligation to issue shares.

Stock Options

The Company has a fixed stock option plan, which follows the policies of the TSXV regarding stock option awards granted to employees, directors and consultants. According to the plan, the Company may grant incentive stock options up to a total of 10% of the Company’s issued and outstanding common shares issued.

In March 2021, the Company granted 265,000 stock options to various employees and consultants of the Company at an exercise price of $1.29 per share for a period of five years, vesting as follows: 1/3rd on four months from the date of grant, 1/3rd on eight months from the date of grant and 1/3rd on twelve months from the date of grant. The options were valued at $278,814 using the Black-Scholes pricing model.

In June 2021, the Company granted 100,000 stock options to a director of the Company at an exercise price of $0.63 per share for a period of five years, vesting as follows: 1/3rd on four months from the date of grant, 1/3rd on eight months from the date of grant and 1/3rd on twelve months from the date of grant. The options were valued at $48,929 using the Black-Scholes pricing model. In addition, the Company granted 250,000 stock options to a consultant of the Company at an exercise price of $0.63 per share for a period of five years, vesting as follows: 1/3rd on nine months from the date of grant, 1/3rd on twenty-one months from the date of grant and 1/3rd on thirty-three months from the date of grant. The options were valued at $122,323 using the Black-Scholes pricing model.

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15

YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Stock Options (continued)

In July 2021, the Company granted 2,465,000 stock options to an officer, a director, various consultants and employees of the Company at an exercise price of $0.75 per share for a period of five years, vesting as follows: 1/3rd at nine months from the date of grant, 1/3rd at twenty-one months from the date of grant and 1/3 at thirtythree months from the date of grant. The options were valued at $1,441,052 using the Black-Scholes pricing model. In addition, the Company granted 80,000 stock options to a consultant of the Company at an exercise price of $0.62 per share for a period of five years, vesting as follows: 1/3rd at nine months from the date of grant, 1/3rd at twenty-one months from the date of grant, and 1/3 at thirty-three months from the date of grant. The options were valued at $36,587 using the Black-Scholes pricing model.

In August 2021, the Company granted 250,000 stock options to a director of the Company at an exercise price of $0.55 per share for a period of five years, vesting as follows: 1/3rd at four months from the date of grant, 1/3rd at eight months from the date of grant, and 1/3rd at twelve months from the date of grant. The options were valued at $107,829 using the Black-Scholes pricing model.

In October 2021, the Company granted 640,000 stock options to an officer and director, a director, a consultant and various employees of the Company at an exercise price of $0.44 per share for a period of five years, vesting as follows: 1/3rd at nine months from the date of grant, 1/3rd at twenty-one months from the date of grant, and 1/3 at thirty-three months from the date of grant. The options were valued at $222,650 using the Black-Scholes pricing model.

In December 2021, the Company granted 500,000 stock options to various consultants of the Company at an exercise price of $0.32 per share for a period of five years, vesting as follows: 1/3rd at nine months from the date of grant, 1/3rd at twenty-one months from the date of grant, and 1/3 at thirty-three months from the date of grant. The options were valued at $131,909 using the Black-Scholes pricing model.

In April 2022, the Company granted 20,000 stock options to an employee of the Company at an exercise price of $0.225 per share for a period of five years, vesting as follows: 1/3rd at twelve months from the date of grant, 1/3rd at twenty-four months from the date of grant, and 1/3 at thirty-six months from the date of grant. The options were valued at $3,797 using the Black-Scholes pricing model.

In July 2022, the Company granted 2,680,000 stock options to various directors, officers, consultants, and employees of the Company at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $254,910 using the BlackScholes pricing model. In addition, the Company granted 25,000 stock options to a provider of investor relations services at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at three months from the date of grant, 1/4th at six months from the date of grant, 1/4th at nine months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $2,378 using the BlackScholes pricing model.

In September 2022, the Company granted 55,000 stock options to various consultants of the Company at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $6,308 using the Black-Scholes pricing model.

Share-based compensation recognized during the nine months ended September 30, 2022 was $837,440 (September 30, 2021 - $713,586) from vesting of options.

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16

YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Stock Options (continued)

The Company’s valuation of share purchase options granted during the period was estimated using the BlackScholes option pricing model with the following assumptions:

Risk-free interest rate Expected dividend yield and forfeiture Expected stock price volatility Expected option lifeinyears	For the nine months ended September 30, 2022 2021
	2.64%-3.24% 0.97% - 0.99% nil% 0% 118%-124% 108% - 110% 5 5

During the year ended December 31, 2021, the Company issued 470,000 Class A common shares in relation to the exercise of 470,000 stock options for total proceeds of $153,000 and the fair value of $127,917 attributable to these stock options was transferred from reserves to share capital. The average share price on the date of options exercised was $1.48 per share. Additionally, 790,000 stock options were cancelled, and the fair value of $112,040 attributable to these stock options was transferred from reserves to deficit.

During the nine months ended September 30, 2022, 1,398,334 stock options were cancelled, and the fair value of $535,185 attributable to these stock options was transferred from reserves to deficit.

Stock option transactions and the number of stock options outstanding are summarized as follows:

	Nine Months Ended	September 30, 2022	Year Ended	December 31, 2021
		Weighted Average		Weighted Average
	Number of Options	Exercise Price	Number of Options	Exercise Price
	#	$	#	$
Outstanding, beginning	8,952,500	0.47	5,662,500	0.33
Granted	2,780,000	0.20	4,550,000	0.67
Exercised	-	-	(470,000)	0.33
Cancelled/Modified	(1,398,334)	0.49	(790,000)	0.58
Outstanding, ending	10,334,166	0.39	8,952,500	0.47

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Stock Options (continued)

As at September 30, 2022, the following options were granted and vested:

Expiry Date	Weighted Average Exercise Price ($)	Number of Options Outstanding	Number of Options Vested and Exercisable	Weighted Remaining Contractual Life (years)
January 19, 2023	0.30	1,425,000	1,425,000	0.30
February 21, 2023	0.40	175,000	175,000	0.39
May 25, 2023	0.30	200,000	200,000	0.65
May 1, 2024	0.37	1,130,000	1,130,000	1.59
October 2, 2024	0.30	252,500	252,500	2.01
May 20, 2025	0.33	195,000	195,000	2.64
September 16, 2025	0.25	215,000	215,000	2.96
November 11, 2025	0.29	625,000	625,000	3.12
November 18, 2025	0.30	75,000	75,000	3.14
March 17, 2026	1.29	160,000	160,000	3.46
June 3, 2026	0.63	100,000	100,000	3.68
July 1, 2026	0.75	1,801,666	644,998	3.75
July 22, 2026	0.62	80,000	26,667	3.81
August 26, 2026	0.55	250,000	250,000	3.91
October 20, 2026	0.44	370,000	130,000	4.06
December 7, 2026	0.32	500,000	166,666	4.19
April 13, 2027	0.23	20,000	-	4.54
July 20, 2027	0.20	2,705,000	670,000	4.81
September 22,2027	0.20	55,000	13,750	4.98
	0.39	10,334,166	6,454,581	3.12

Warrants

During the nine months ended September 30, 2022, 4,006,454 warrants were expired, and the fair value of $69,779 attributable to these warrants was transferred from reserves to share capital.

Warrant transactions and the number of warrants outstanding are summarized as follows:

	Nine Months Ended	September 30, 2022	Year Ended	December 31, 2021
		Weighted Average		Weighted Average
	Number of Warrants	Exercise Price Number of Warrants		Exercise Price
	#	$	#	$
Outstanding, beginning	24,898,057	0.71	7,980,973	0.60
Issued	-	-	25,428,054	0.71
Exercised	-	-	(8,003,810)	0.60
Expired	(4,006,454)	0.50	(507,160)	0.60
Outstanding, end	20,891,603	0.75	24,898,057	0.71

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Warrants (continued)

As at September 30, 2022, the following warrants were outstanding:

Expiry Date	Weighted Average Exercise Price ($)	Number of Warrants Outstanding	Weighted Remaining Contractual Life (years)
May 18, 2024	0.76	19,892,003	1.63
May18,2024	0.61	999,600	1.63
	0.75	20,891,603	1.63

10. FAIR VALUES AND RISK MANAGEMENT

The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, deposits, accounts payable and accrued liabilities, and lease liabilities. Cash and cash equivalents are measured at fair value based on Level 1 input of the fair value hierarchy. The fair value of amounts receivable, deposits, accounts payable and accrued liabilities, and lease liabilities approximate their carrying values.

The Company is exposed to financial risks arising from its financial assets and liabilities. The Company manages its exposure to financial risks by operating in a manner that minimizes its exposure to the extent practical. The main financial risks affecting the Company are:

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s cash and cash equivalents are exposed to minimal credit risk. The credit risk on cash and cash equivalents is low because the counterparties are highly rated banks.

Cash and cash equivalents and amounts receivable are subject to the impairment requirements of IFRS 9; however, impairment was not identified. The carrying amount of cash and cash equivalents, amounts receivable and deposits represents the maximum credit exposure.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s cash is exposed to minimal interest rate risk as the Company invests cash at floating rates of interest in highly liquid instruments, when applicable.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company ensures that it has sufficient capital to meet short term financial obligations after taking into account its cash on hand.

Foreign Currency Risk

The Company’s functional currency is the Canadian dollar. The Company funds the operations of Ynvisible SA in Portugal, Ynvisible GmbH in Germany, and Ynvisible Production in Sweden by using Euros and Swedish krona, respectively, converted from its Canadian dollar bank accounts. Based on the Company’s Euro and Swedish krona denominated financial instruments at September 30, 2022, a 10% change in exchange rates between the Canadian dollar and the Euro and Swedish krona, respectively, would result in an approximately $135,900 and $43,800, respectively, change in foreign exchange gain or loss.

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

11. CAPITAL MANAGEMENT

Management determines the Company’s capital structure and makes adjustments to it based on funds available to the Company, in order to support its business operations. The Board of Directors has not established quantitative return on capital criteria for capital management but rather relies upon the expertise of the management team to sustain the future development of the business. As the Company does not generate significant revenue, the Company is dependent upon external financing to fund technology and business development as well as its administrative costs. The Company will spend existing working capital and raise additional amounts as needed. The Company will continue to assess new business verticals for its technology and know-how and may seek to acquire an interest in supporting business opportunities, if management feels there is sufficient economic potential, provided it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that its approach, given the relative size of the Company, is reasonable. There have been no changes in the Company’s approach to capital management during the nine months ended September 30, 2022. The Company is not subject to externally imposed capital requirements.

12. SEGMENTED DISCLOSURE

The Company has one operating segment, being the development and sale of ECDs in Europe. At September 30, 2022, the Company’s assets, liabilities and comprehensive loss are geographically located as follows:

	Europe Canada Total
ASSETS Current assets Cash and cash equivalents Amounts receivable Inventories Prepaid expenses Total current assets Non-current assets Deposits Right-of-use assets Fixed assets Intangible assets Total non-current assets Total assets	$ 1,718,404 $ 10,973,939 $ 12,692,343 637,735 32,666 670,401 43,480 - 43,480 102,183 59,328 161,511
	2,501,802 11,065,933 13,567,735
	7,243 - 7,243 124,885 - 124,885 1,609,033 - 1,609,033 239,334 71,253 310,587
	1,980,495 71,253 2,051,748
	$ 4,482,297 $ 11,137,186 $ 15,619,483
LIABILITIES Current liabilities Accounts payable and accrued liabilities Current portion of lease liabilities Deferred project grants Total current liabilities Non-current liabilities Lease liabilities Total non-current liabilities Total liabilities	$ 594,166 $ 157,577 $ 751,743 114,717 - 114,717 86,963 - 86,963
	795,846 157,577 953,423
	17,214 - 17,214
	17,214 - 17,214
	$ 813,060 $ 157,577 $ 970,637 $ 2,971,028 $ 1,321,618 $ 4,292,646
Comprehensive loss for the nine months ended September 30, 2022

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YNVISIBLE INTERACTIVE INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months ended September 30, 2022 and 2021 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

12. SEGMENTED DISCLOSURE (continued)

At December 31, 2021, the Company’s assets, liabilities and comprehensive loss were geographically located as follows:

	Europe Canada Total
ASSETS Current assets Cash and cash equivalents Amounts receivable Inventories Prepaid expenses Total current assets Non-current assets Deposits Right-of-use assets Fixed assets Intangible assets Total non-current assets Total assets	$ 1,323,175 $ 14,784,228 $ 16,107,403 856,497 19,998 1,067,968 73,522 - 73,522 330,092 51,240 189,860
	2,583,286 14,855,466 17,438,753
	5,566 - 5,566 371,981 - 371,981 1,975,569 - 1,975,569 316,202 71,253 387,455
	2,669,318 71,253 2,740,571
	$ 5,252,604 $ 14,926,719 $ 20,179,324
LIABILITIES Current liabilities Accounts payable and accrued liabilities Current portion of lease liabilities Deferred project grants Total current liabilities Non-current liabilities Lease liabilities Total non-current liabilities Total liabilities	$ 746,408 $ 353,861 $ 1,100,268 298,757 - 298,757 603,639 - 603,639
	1,648,804 353,861 2,002,664
	72,608 - 72,608
	72,608 - 72,608
	$ 1,721,412 $ 353,861 $ 2,075,272
Comprehensive loss for the year ended December 31, 2021	$ 3,743,277 $ 2,563,362 $ 6,306,639

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21