Ynvisible Interactive Inc. — Interim / Quarterly Report 2023

May 31, 2023

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YNVISIBLE INTERACTIVE INC.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2023 and 2022

(Expressed in Canadian Dollars – unaudited)

Ynvisible Interactive Inc.

Table of Contents

(Expressed in Canadian Dollars – unaudited)

	Page
Contents	2
Notice of 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 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
		March 31, December 31, 2023 2022
ASSETS Current assets Cash 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	$	10,893,084 $ 11,844,266 510,411 769,184 122,831 61,271 84,406 117,418
		11,610,732 12,792,139
		7,030 5,830 238,322 307,429 1,615,307 1,659,428 303,639 315,512
		2,164,298 2,288,199
	$	13,775,030 $ 15,080,338
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	$	893,736 $ 946,067 249,317 308,271 42,947 209,716
		1,186,000 1,464,054
		- 9,310
		1,186,000 1,473,364
		37,532,180 37,532,180 2,498,365 3,084,335 46,084 46,084 (27,205,693) (26,979,750) (281,906) (75,875)
		12,589,030 13,606,974
	$	13,775,030 $ 15,080,338

Note 1 – Corporate Information and Going Concern Note 13 – Subsequent Event

Approved and authorized for issue on behalf of the Board of Directors on May 30, 2023:

“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 March 31,
	2023 2022
Revenue Sales Cost of sales Gross profit Expenses 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 Interest income and other Expenses and losses Projects grants Gain on forgiveness of debt Write-off of tangible assets Total other items Net loss for the period Other comprehensive income (loss) Foreigncurrency translationadjustment	$ 264,895 $ 185,246 (59,001) (63,014)
	205,894 122,232
	812,498 727,036 155,150 159,319 202,943 105,473 2,985 3,412 62,109 51,939 140,133 124,849 83,538 88,006 141,837 366,608 15,456 6,673 40,809 30,795
	1,657,458 1,664,110
	(1,451,564) (1,541,878)
	- 63,530 229,146 36,542 (40,964) (2,830) 76,475 158,921 - 9,222 (6,150) -
	258,507 265,385
	(1,193,057) (1,276,493) (206,031) (255,976)
Comprehensive loss for the period	$ (1,399,088) $ (1,532,469)
Basic and diluted loss per common share	$ (0.01) $ (0.01)
Weighted average number of common shares outstanding	124,671,915 124,666,915

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, 2021 Share-based compensation Net loss for the period Othercomprehensiveincome	124,666,915 37,530,455 2,886,382 - 47,809 (22,388,865) 28,271 18,104,052 - - 366,608 - - - - 366,608 - - - - - (1,276,493) - (1,276,493) - - - - - - (255,976) (255,976)
Balance, March 31, 2022 Shares issued in exchange for Ynvisible, S.A.shares Stock options cancelled Share-based compensation Warrants expired Net loss for the period Other comprehensive loss	124,666,915 37,530,455 3,252,990 - 47,809 (23,665,358) (227,705) 16,938,191 5,000 1,725 - - 1,725 - - - - - (448,459) - - 518,239 - 69,780 - - 349,583 - - - - 349,583 - - (69,779) - - - - (69,779) - - - - - (3,832,631) - (3,832,631) - - - - - - 151,830 151,830
Balance, December 31, 2022 Stock options cancelled Share-based compensation Net loss for the period Other comprehensive loss	124,671,915 37,532,180 3,084,335 - 46,084 (26,979,750) (75,875) 13,606,974 - - (727,807) - - 967,114 - 239,307 141,837 - - - - 141,807 - - - - - (1,193,057) - (1,193,057) - - - - - - (206,031) (206,031)
Balance, March 31, 2023	124,671,915 37,532,180 2,498,365 - 46,084 (27,205,693) (281,906) 12,589,030

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)

	Three Months Ended March 31,	Three Months Ended March 31,
	2023 2022
Operating activities Net loss for the period Items not involving the use of cash: Depreciation Depreciation included in Cost of Sales Share-based compensation 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 Repayment of lease liabilities Cash provided by financing activities Effect of foreign exchange Net change in cash Cash, beginning of period Cash, end of period	$ (1,193,057) $ (1,276,493) 155,150 159,319 5,690 5,959 141,837 366,608 258,773 56,091 (61,560) 16,242 33,012 9,860 (52,331) (47,202) (166,769) (69,500)
		(879,255) (779,116)
		(13,975) (39,067) (1,092) (1,853) (1,200) (514)
		(16,267) (41,434)
		(69,789) (73,888)
		(69,789) (73,888)
		14,129 (136,895)
		(951,182) (1,031,333) 11,844,266 16,107,403
	$ 10,893,084 $ 15,076,070
Non-cash transactions Reclassification of stock options cancelled	$ (727,807) $ -

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

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (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 three months ended March 31, 2023, the Company incurred a net loss of $1,193,057 (March 31, 2022 - $1,276,493) and as at March 31, 2023, had an accumulated deficit of $27,487,599 (March 31, 2022 - $23,665,358).

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, 2022 and 2021.

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 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (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:

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

4. CRITICAL JUDGMENTS AND ACCOUNTING ESTIMATES (continued)

ACCOUNTING ESTIMATES

• 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.

• b. The application of IFRS 16 requires the Company to make judgments that affect the measurement of the rightof-use assets and 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 incremental borrowing 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. The amounts receivable balance is recorded at the estimated recoverable amount, which involves the estimate of uncollectible accounts.

CRITICAL JUDGMENTS

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.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (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, 2021	$	1,183,316
Lease modification		234,595
Foreignexchange adjustment		(171,181)
At December 31, 2022		1,246,730
Foreignexchange adjustment		8,172
At March 31, 2023	$	1,254,902
Depreciation:
At December 31, 2021	$	811,335
Charge for the year		276,636
Foreignexchange adjustment		(148,670)
At December 31, 2022		939,301
Charge for the period		70,460
Foreignexchange adjustment		6,819
At March 31, 2023	$	1,016,580
Net book value:
At December 31, 2022	$	307,429
At March 31, 2023	$	238,322

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

Lease Liabilities

At December 31, 2021 $ Lease payments made Interest expense on lease liabilities Foreign exchange adjustment At December 31, 2022 Lease payments made Interest expense on lease liabilities Foreign exchange adjustment At March 31, 2023 Less: current portion Non-Current Portion $	371,365 (276,850) 5,614 217,452
	317,581 (71,035) 1,246 1,525
	249,317 (249,317) -

The lease liabilities were measured by discounting the lease payments using an incremental borrowing rate of 12%. Interest expense of $1,246 (March 31, 2022 - $1,501) 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	2023	$	239,847
Fiscal	2024		9,470
Total		$	249,317

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YNVISIBLE INTERACTIVE INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

6. FIXED ASSETS

						Leasehold
						Building
				Manufacturin		Improvement
		Equipment		g Equipment		s		Office		Other		Total
Costs
Balance, December 31, 2021	$	586,839	$	1,918,779	$	39,685	$	152,985	$	65,931	$	2,764,219
Additions		31,576		-		-		27,315		2,835		61,726
Disposal		-		-		-		(1,321)		(2,359)		(3,680)
Foreignexchange adjustment		(27,700)		(79,670)		31,694		(8,438)		14,683		(69,430)
Balance, December 31, 2022		590,715		1,839,109		71,379		170,541		81,090		2,752,835
Additions		8,745		-		-		5,230		-		13,975
Foreign exchange adjustment		(2,595)		(21,914)		74		12,953		(14,274)		(25,757)
Balance, March 31, 2023	$	596,865	$	1,817,195	$	71,453	$	188,724	$	66,816	$	2,741,053
Accumulated Depreciation
Balance, December 31, 2021	$	213,653	$	462,244	$	18,807	$	54,032	$	39,914	$	788,650
Charge for the year		62,715		167,061		8,389		23,603		4,971		266,739
Foreignexchange adjustment		7,545		26,629		617		(11,403)		14,630		38,018
Balance, December 31, 2022		283,913		655,934		27,813		66,232		59,515		1,093,407
Charge for the period		17,237		43,260		2,355		6,981		1,255		71,088
Foreignexchange adjustment		(7,774)		(27,008)		(649)		11,328		(14,646)		(38,749)
Balance, March 31, 2023	$	293,376	$	672,186	$	29,519	$	84,541	$	46,124	$	1,125,746
Carrying Value
Balance,December31,2022	$	306,802	$	1,183,175	$	43,566	$	104,309	$	21,575	$	1,659,428
Balance, March 31, 2023	$	303,489	$	1,145,009	$	41,933	$	104,183	$	20,692	$	1,615,307

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YNVISIBLE INTERACTIVE INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months ended March 31, 2023 and 2022 (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, 2021	$	114,599	$	164,349	$	51,136	$	140,100	$	71,253	$	541,437
Additions		-		5,049		-		-		-		5,049
Foreignexchange adjustment		2,613		(7,096)		(1,779)		(24,001)		-		(30,263)
Balance, December 31, 2022		117,212		162,302		49,357		116,099		71,253		516,223
Additions		-		1,092		-		-		-		1,092
Foreignexchange adjustment		(1,723)		(1,577)		(881)		11,584		-		7,403
Balance, March 31, 2023	$	115,489	$	161,817	$	48,476	$	127,683	$	71,253	$	524,718
Accumulated Depreciation
Balance, December 31, 2021	$	44,057	$	41,058	$	13,633	$	55,234	$	-	$	153,982
Charge for the year		9,025		28,228		8,612		12,900		-		58,765
Foreignexchange adjustment		2,784		2,663		883		(18,366)		-		(12,036)
Balance, December 31, 2022		55,866		71,949		23,128		49,768		-		200,711
Charge for the period		2,058		7,271		2,161		(3,238)		-		8,252
Foreignexchange adjustment		(2,756)		(2,636)		(874)		18,382		-		12,116
Balance, March 31, 2023	$	55,168	$	76,584	$	24,415	$	64,912	$	-	$	221,079
Carrying Value
Balance, December 31, 2022	$	61,346	$	90,353	$	26,229	$	66,331	$	71,253	$	315,512
Balance, March 31, 2023	$	60,321	$	85,233	$	24,061	$	62,770	$	71,253	$	303,639

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (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

	Three Months Ended March 31,
	2023 2022
Compensation and consulting Share-based compensation	$ 139,875 $ 187,860 48,231 51,204 $ 188,106 $ 239,064

As at March 31, 2023, accounts payable and accrued liabilities include $29,015 (December 31, 2022 - $11,611) due to officers and directors. Accounts payable and accrued liabilities due to related parties are unsecured and have no specified terms of repayment.

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 three months ended March 31, 2023: The Company had no share capital activity.

For the year ended December 31, 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.

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 March 31, 2023, the Company recorded $46,084 (December 31, 2022 - $46,084) for obligation to issue shares.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE - continued

Stock Options

The Company has a rolling 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 April 2022, the Company granted 20,000 stock options to an employee 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 twentyfour 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 option pricing model.

In July 2022, the Company granted 2,680,000 stock options to various directors, officers, consultants, and employees 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 Black-Scholes option 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 Black-Scholes option pricing model.

In September 2022, the Company granted 55,000 stock options to various consultants 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 option pricing model.

In February 2023, the Company granted 2,427,500 stock options to various directors, officers, consultants, and employees 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 $162,856 using the Black-Scholes option 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.

In March 2023, the Company granted 20,000 stock options to employees 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 $1,174 using the Black-Scholes option pricing model.

Share-based compensation recognized during the three months ended March 31, 2023 was $141,837 (March 31, 2022 - $366,608) from vesting of options.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (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 life in years Exercise price Spot price	For the three months ended March 31, 2023 2022
	3.29% - 0% - 118% - 5 Years - 0.20 - 0.09 -

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

	Three Months Ended March 31, 2023	Three Months Ended March 31, 2023	**Year Ended **	December 31, 2022
		Weighted Average		Weighted Average
	Number of Options	Exercise Price	Number of Options	Exercise Price
	#	$	#	$
Outstanding, beginning	9,472,500	0.47	8,952,500	0.47
Granted	2,472,500	0.20	2,780,000	0.20
Cancelled/Forfeited	(2,045,000)	0.37	(2,260,000)	0.58
Outstanding, ending	9,900,000	0.47	9,472,500	0.39

As at March 31, 2023, 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)
May 25, 2023*	0.30	100,000	100,000	0.15
May 1, 2024	0.37	1,010,000	1,010,000	1.09
October 2, 2024	0.30	177,500	177,500	1.51
May 20, 2025	0.33	195,000	195,000	2.14
September 16, 2025	0.25	215,000	215,000	2.47
November 11, 2025	0.29	125,000	125,000	2.62
March 17, 2026	1.29	40,000	40,000	2.96
June 3, 2026	0.63	100,000	100,000	3.18
July 1, 2026	0.75	1,515,000	504,999	3.25
July 22, 2026	0.62	80,000	26,667	3.31
August 26, 2026	0.55	250,000	250,000	3.41
October 20, 2026	0.44	370,000	123,333	3.56
December 7, 2026	0.32	500,000	166,666	3.69
April 13, 2027	0.23	20,000	-	4.04
July 20, 2027	0.20	2,705,000	2,022,500	4.31
September 22, 2027	0.20	25,000	12,500	4.48
February 24, 2028	0.20	2,452,500	606,875	4.91
March 28,2028	0.20	20,000	5,000	5.00
	0.35	9,900,000	5,681,040	3.66

*Subsequently expired See Note 13.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

9. SHARE CAPITAL AND RESERVE (continued)

Warrants

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

	Three Months Ended March 31, 2023	Three Months Ended March 31, 2023	Year Ended	December 31, 2022
		Weighted Average		Weighted Average
	Number of Warrants	Exercise Price Number of Warrants		Exercise Price
	#	$	#	$
Outstanding, beginning	20,891,603	0.75	24,898,057	0.71
Expired	-	-	(4,006,454)	0.50
Outstanding, end	20,891,603	0.75	20,891,603	0.75

As at March 31, 2023, 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	1.13
May18,2024	0.61	999,600	1.13
	0.75	20,891,603	1.13

10. FAIR VALUES AND RISK MANAGEMENT

The Company’s financial instruments consist of cash, amounts receivable, deposits, and accounts payable and accrued liabilities. The fair value of amounts receivable, deposits, and accounts payable and accrued liabilities, approximate their carrying values because of their short-term nature.

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 is exposed to minimal credit risk. The credit risk on cash is low because the counterparties are highly rated banks.

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

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.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

10. FAIR VALUES AND RISK MANAGEMENT (continued)

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises: currency risk, interest rate risk and other price risk. The Company’s management of market risk has not changed materially from that of the prior year and the Company’s financial instruments aren’t subject to other price risk.

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.

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 March 31, 2023, a 10% change in exchange rates between the Canadian dollar and the Euro and Swedish krona, respectively, would result in an approximately $101,453 and $69,806, respectively, change in foreign exchange gain or loss.

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 three months ended March 31, 2023. The Company is not subject to externally imposed capital requirements.

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

12. SEGMENTED DISCLOSURE

The Company has one operating segment, being the development and sale of ECDs in Europe. At March 31, 2023, the Company’s assets, liabilities and comprehensive loss are geographically located as follows:

	Europe Canada Total
ASSETS Current assets Cash 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	$ 1,824,493 $ 9,068,591 $ 10,893,084 448,134 62,277 510,411 122,831 - 122,831 39,723 44,683 84,406
	2,435,181 9,175,551 11,610,732
	7,030 - 7,030 238,322 - 238,322 1,615,307 - 1,615,307 232,386 71,253 303,639
	2,093,045 71,253 2,164,298
	$ 4,528,226 $ 9,246,804 $ 13,775,030
LIABILITIES Current liabilities Accounts payable and accrued liabilities Current portion of lease liabilities Deferred project grants Total current liabilities Total liabilities	$ 629,920 $ 263,816 $ 893,736 249,317 - 249,317 42,947 - 42,947
	922,184 263,816 1,186,000
	$ 922,184 $ 263,816 $ 1,186,000
Comprehensive loss for the three months ended March 31, 2023	$ 1,184,436 $ 214,652 $ 1,399,088

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YNVISIBLE INTERACTIVE INC. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the Three Months ended March 31, 2023 and 2022 (Expressed in Canadian Dollars Unless Otherwise Noted – unaudited)

12. SEGMENTED DISCLOSURE (continued)

At December 31, 2022, the Company’s assets, liabilities and comprehensive loss were geographically located as follows:

	Europe Canada Total
ASSETS Current assets Cash 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	$ 917,957 $ 10,926,309 $ 11,844,266 732,019 37,165 769,184 61,271 - 61,271 73,622 43,796 117,418
	1,784,869 11,007,270 12,792,139
	5,830 - 5,830 307,429 - 307,429 1,659,428 - 1,659,428 244,259 71,253 315,512
	2,216,946 71,253 2,288,199
	$ 4,001,815 $ 11,078,523 $ 15,080,338
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	$ 723,230 $ 222,837 $ 946,067 308,271 - 308,271 209,716 - 209,716
	1,241,217 222,837 1,464,054
	9,310 - 9,310
	9,310 - 9,310
	$ 1,250,527 $ 222,837 $ 1,473,364
Comprehensive loss for the year ended December 31, 2022	$ 3,891,652 $ 1,321,618 $ 5,213,270

13. SUBSEQUENT EVENT

In May 2023, 100,000 options with an exercise price of $0.30 expired unexercised. (Note 9)

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