ZincX Resources Corp. — Interim / Quarterly Report 2021

Nov 24, 2021

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FAB-FORM INDUSTRIES LTD CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED 30 SEPTEMBER 2021

FAB-FORM INDUSTRIES LTD CONDENSED INTERIM FINANCIAL STATEMENTS

Table of Contents

Management's Report to Shareholders	3
Condensed Statements of Comprehensive Income	4
Condensed Statements of Financial Position	5
Condensed Statements of Changes in Equity	6
Condensed Statements of Cashflows	7
Selected notes to the Condensed Interim Financial Statements	8-10

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FAB-FORM INDUSTRIES LTD

Management's Report to Shareholders

For the quarter ended 30 September 2021

The accompanying Condensed Interim Financial Statements are the responsibility of the management of Fab-Form Industries Ltd. The Condensed Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards including International Accounting Standard (“IAS”) 34 – Interim Financial Reporting and, where appropriate, include management’s best estimates and judgments.

The Company maintains an accounting system and related controls to provide management with reasonable assurance that transactions are executed and recorded in accordance with its authorizations, that assets are properly safeguarded and accounted for, and that financial records are reliable for preparation of financial statements.

The Board of Directors oversees management’s responsibilities for the Condensed Interim Financial Statements primarily through the activities of its Audit Committee. The Audit Committee meets with management of the Company to review the Company’s Condensed Interim Financial Statements and MD&A. The Audit Committee also reviews internal accounting controls, risk management and accounting principles and practices. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the Condensed Interim Financial Statements.

The Condensed Interim Financial Statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies of the Company.

The Company's independent auditors have neither reviewed nor audited these Condensed Interim Financial Statements.

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........................... Director Rick Fearn President and CEO 24 November 2021

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........................... Director Don Russell Chief Financial Officer 24 November 2021

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

For the quarters and periods ended 30 September 2021, 2020, and year ended 31 December 2020

Not 30-Sep-21 30-Sep-20 $ $ Revenue 1,619,631 872,305 Cost of sales (995,662) (555,585) Gross profit 623,969 316,720 Gross profit margin % 39% 36% Other operating income/(expenses) 22,931 (6,489) Expenses General and administration (113,448) (109,814) Selling and marketing (54,943) (37,312) Total expenses (168,392) (147,126) Earnings from operations 478,509 163,105 Finance costs (3,623) (510) Earnings before income taxes 474,886 162,595 Income taxes (123,510) (43,859) Earnings for the quarter/year 351,376 118,736 Other comprehensive income - - Total comprehensive income for the quarter/period/year 351,376 118,736 Weighted average number of shares 9,084,036 9,084,036 Basic and diluted earnings per share 0.039 0.013 Quarter ended	30-Sep-21 $ 3,621,123 (2,292,299) 1,328,824 37% 9,918 (275,808) (143,029) (418,837) 919,905 (4,090) 915,815 (242,388) 673,427 - 673,427 9,084,036 0.074 Period	30-Sep-20 $ 2,060,575 (1,393,670) 666,905 32% 29,987 (219,592) (137,052) (356,644) 340,248 (316) 339,932 (91,782) 248,150 - 248,150 9,084,036 0.027 ended	Year ended
			31-Dec-20 $ 2,634,852 (1,794,776) 840,076 32% 15,678 (381,529) (173,086) (554,615) 301,139 436 301,575 (81,426) 220,149 - 220,149 9,084,036 0.024

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF FINANCIAL POSITION

As at 30 September 2021, 2020 and 31 December 2020

ASSETS Current Cash and cash equivalents Trade and other receivables Inventories Non current assets Property, plant and equipment Right of use assets Deferred development Patents Total Assets LIABILITIES Current Trade and other payables Lease liabilities Corporate tax payable Non current liabilities Lease liabilities Total liabilities EQUITY Share capital Retained earnings Total equity Total equity and liabilities	30-Sep-21 $' 2,006,709 810,021 348,562 3,165,292 65,816 551,115 18,243 3,845 639,019 3,804,311 699,272 114,024 71,350 884,646 437,091 437,091 1,321,737 1,120,875 1,361,699 2,482,574 3,804,311	30-Sep-20 $' 1,178,615 446,861 428,743 2,054,219 70,199 543,089 10,906 4,181 628,375 2,682,594 256,905 96,492 43,859 397,256 448,190 448,190 845,446 1,120,875 716,273 1,837,148 2,682,594	31-Dec-20 $ 1,299,653 212,953 547,043 2,059,649 70,349 518,841 11,471 4,097 604,758 2,664,407 335,203 94,155 - 429,358 425,902 425,902 855,260 1,120,875 688,272 1,809,147 2,664,407

Approved and authorized by the Board 24 November 2021

“Richard Fearn” …..........................., Director

“Don Russell” …..........................., Director

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF CHANGES IN EQUITY

For the period ended 30 September 2021, and year ended 31 December 2020

	No of shares Amount' $' $' $ Issued Capital Retained earnings Total equity
Balance, 1 January 2020 Total comprehensive income Balance, 31 December 2020	8,822,055 1,120,875 468,123 1,588,998 220,149 220,149 8,822,055 1,120,875 688,272 1,809,147
Balance, 1 January 2021 Total comprehensive income Balance, 30 September 2021	8,822,055 1,120,875 688,272 1,809,147 673,427 673,427 8,822,055 1,120,875 1,361,699 2,482,574

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD CONDENSED STATEMENTS OF CASHFLOWS

For the quarters and periods ended 30 September 2021, 2020, and year ended 31 December 2020

Cash flows form operating activities Earnings before income taxes Items not involving use of cash Depreciation Depreciation - Right of Use Assets Profit on disposal of assets Finance cost - lease liabilities Changes in working capital items Trade and other receivables Inventories Trade and other payables Cash generated from operating activities Income taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sales of assets Deferred development Net cash used in investing activities Cash flows from financing activities Lease payments Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the quarter/year Cash and cash equivalents at end of the quarter/period/year	30-Sep-21 30-Sep-20 30-Sep-21 30-Sep-20 $' $' $' $' 474,886 162,595 915,815 339,932 3,573 3,341 9,927 11,108 28,506 19,260 77,004 69,162 - - - (7,705) 3,623 618 4,090 618 510,588 185,815 1,006,836 413,116 (105,078) 95,147 (578,820) (41,248) (55,977) (100,275) 198,480 99,206 157,133 13,751 362,069 (70,507) 506,665 194,437 988,564 400,566 (105,000) (47,923) (197,299) (31,923) 401,665 146,514 791,265 368,642 (4,968) (483) (2,938) (11,178) - - - 18,696 (1,492) (252) (7,778) (2,706) (6,460) (735) (10,716) 4,812 (27,855) (25,091) (73,493) (72,994) (27,855) (25,091) (73,493) (72,994) 367,350 120,688 707,056 300,461 1,639,359 1,057,927 1,299,653 878,154 2,006,709 1,178,615 2,006,709 1,178,615 Quarter ended Period ended	Year ended
		31-Dec-20 $ 301,575 9,903 98,217 (8,101) 1,083 402,677 77,830 (19,094) 132,310 593,723 (75,116) 518,606 (14,500) 19,092 (3,616) 976 (98,084) (98,084) 421,499 878,154 1,299,653

The accompanying notes are an integral part of these financial statements

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS For the quarter ended 30 September 2021

1 Reporting Entity

Fab-Form Industries Ltd. (the "Company" or "Fab-Form") is a company domiciled in Canada and incorporated under the Company Act of British Columbia. The address of the Company’s head office is Unit 19, 1610 Derwent Way, Delta BC V3M 6W1. The Company develops, manufactures and distributes proprietary technology to form concrete footings, columns, foundations and walls for building structures. The Company also exclusively distributes Helix® micro rebar into the BC market and Nudura® insulating concrete form into the Lower Mainland of BC market. The Company has traded on the TSX Venture Exchange (“TSX-V” under the symbol FBF) since 2000.

2 Basis of presentation

a) Basis of preparation

These condensed interim financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standard Board (IASB) and the interpretations issued by International Financial Reporting Interpretations Committee (IFRIC).

b) Basis of measurement

These condensed interim financial statements were prepared on the historical cost basis. The accounting policies of the company, and have been applied consistently to all periods presented in these financial statements.

c) Functional and presentation currency

These condensed interim financial statements are presented in Canadian dollars, the Company’s functional currency.

d) Use of significant estimates and judgements

The preparation of the condensed interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

In the process of applying the Company’s accounting policies, management has made the following estimates and judgments, which have the most significant effect on the amounts recognized in the condensed interim financial statements:

 Impairment of non-financial assets

Impairment exists when the carrying value of a non-financial asset or cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The value in use calculation is based on a discounted cash flow model. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rates used.

 Depreciation and amortization rates

In calculating the depreciation and amortization expense, management is required to make estimates of the expected useful lives of property and equipment and intangible assets.

 Taxes

Deferred tax assets, if any, are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS For the quarter ended 30 September 2021

2 Basis of presentation (Continued)

d) Use of significant estimates and judgements (continued)

• Credit losses

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Significant management judgement is required in developing segments and determining level of stratification. The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period.

• Provision for inventory obsolescence

The Company determines its allowance for inventory obsolescence based upon expected inventory turnover, inventory aging and current and future expectations with respect to product offerings. The Company reviews future revenue trends and forecasts, expected inventory requirements and inventory composition necessary to support future revenues.

The estimate for the Company’s allowance for inventory obsolescence could change from period to period due to changes in product offerings and customer acceptance of those products. If the inventory allowance was inadequate it would result in a charge to operations expense in the future.

• Right of use assets and lease liability

The Company applies judgement in determining the lease term by considering all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option and whether it is reasonably likely that options will be exercised by considering factors such as how far in the future an option occurs, the entity’s business planning cycle and past history of terminating/not renewing leases. Extension options (or periods after termination options) are only included in the lease term applied if the lease is reasonably certain to be extended (or not terminated). The Company also applied judgement in determining the incremental borrowing of 2.50% based on prime rate plus 0.05% as of the assessment date.

3) Credit risk - Accounts receivable

The following table presents an analysis of the age of customer accounts receivable not allowed for as at the dates of the statements of financial position.

30-Sep-21

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Over 91
0-30 Days 31-60 Days 61-90 Days Total
Days
$ $ $ $ $
Trade receivables (CAD customers) 313,806 90,162 43,121 30,576 477,665
Trade receivables (US Dollar customers) 58,018 12,693 277 16,904 87,891
Total 371,824 102,855 43,398 47,480 565,556
Loss allowance % 1.6% 2.6% 6.2% 46.8% 6.0%
Expected credit losses (6,127) (2,668) (2,673) (22,228) (33,696)
Net receivables 365,697 100,187 40,725 25,252 531,860
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31-Dec-20

Trade receivables (CAD customers) Trade receivables (US Dollar customers) Total Loss allowance % Expected credit losses Net receivables	0-30 Days 31-60 Days 61-90 Days Over 91 Days Total $ $ $ $ $ 88,603 25 4,286 13,742 106,656 12,998 6,516 2,084 11,500 33,098 101,601 6,541 6,370 25,241 139,754 4.1% 0.7% 24.3% 89.0% 20.2% (4,206) (48) (1,545) (22,453) (28,252) 97,395 6,493 4,825 2,788 111,501

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FAB-FORM INDUSTRIES LTD NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the quarter ended 30 September 2021

3) Credit risk - Accounts receivable (Continued)

Opening loss allowance at 1 July Decrease in loss allowance recognised in profit or loss during the quarter Closing balance at 30 September The loss allowances for trade receivables as at 30 September reconciled to the opening loss allowances as follows:	Quarter ended 30-Sep-21 $' 34,558 (862) 33,696

The Company has a credit risk as a result of its trade accounts receivable. Trade accounts receivable consists of a large number of customers, spread across diverse industries. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. As such, the Company does not anticipate any significant credit losses. Of the trade receivable balance at September 30, 2021, only four customers represented greater than 5% of the balance amounting to $158,817.

4) Subsequent events

a) Shares for Debts settlement

On 28th October 2021, Fab-Form has completed shares for debt settlement of $144,089.55 by issuing 261,981 common shares at a deemed price of $0.55 per share. The securities issued are subject to a four-months hold period expiring on 28 February 2022.

Insiders purchased 127,111 shares and, accordingly, the shares for debt settlement is a "related party transaction" within the meaning of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101"). The Insiders' participation is exempt from the formal valuation and minority shareholder approval requirements provided under Regulation 61-101 in accordance with sections 5.5(a), 5.6 and 5.7(1)(a) of Regulation 61101.

Earnings per share presented on the face of the income statement was calculated in consideration of increase in weighted average of number shares resulting from the above event. This is an non adjusting event, and has no impact to the balances and transactions reported at the quarter end.

b) Entering into an agreement with Hagihara Industries in Japan

On 17 November 2021, Fab-Form achieved a key milestone by entering into a Fabric Development Agreement with Hagihara Industries Inc, a company situated in Japan. This Agreement will enable both companies to research, test, and develop a unique fabric optimized for the Fast-Tube fabric column form. Concrete pressures in the fabric form induce tensile force in the weft direction only, not in the warp direction. Refer to SEDAR for the news release published on 24 November 2021

There is no impact to the balances and transactions reported at the end of reporting period as a result of this event.

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