Choom : Financials - September 30, 2021

Condensed Consolidated Interim Financial Statements

For the three months ended September 30, 2021 and 2020

(Unaudited, expressed in Canadian dollars, unless otherwise stated)

Suite #208 - 1525 West 8th Avenue

Vancouver, BC, V6J 1T5

Tel: [phone]

CHOOM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited, expressed in Canadian Dollars)

		Notes			September 30,			June 30,
				2021			2021
ASSETS (Note 11)
Current
Cash			$	539,874		$	268,507
Short-term investments				46,000			46,000
Trade and accounts receivable	3		219,048			356,860
Notes receivable	4		-			485,245
Inventory	5		990,719			909,478
Prepaid expenses and deposits	20		191,670			225,272
					1,987,311			2,291,362
Non-Current
Prepaid expenses and lease deposits	20		369,293			575,292
Property and equipment	6		4,545,888			4,477,387
Right-of-use assets	8		7,607,364			7,366,878
Intangible assets	7		10,176,216			10,433,974
Investment				715,282			715,282
Goodwill	7		346,091			346,091
Total assets			$	25,747,445		$	26,206,266
LIABILITIES
Current
Trade and other payables	9,10,11,15	$	2,077,074		$	6,035,477
Current portion of convertible debentures	11		-			3,907,348
Current portion of provision for restructuring fee	11		166,418			-
Lease liabilities	8		1,472,284			2,242,435
Government assistance	21		205,008			201,618
					3,920,784			12,386,878
Non-Current
Lease liabilities	8		7,292,161			6,652,660
Notes payable	10		1,250,000			1,250,000
Government assistance	21		240,000			240,000
Convertible debentures	11		8,204,618			15,871,343
Provision for restructuring fee	11		1,477,877			-
Deferred income tax liability				961,740			961,740
Total liabilities			$	23,347,180			37,362,621
SHAREHOLDERS' EQUITY (DEFICIT)
Share capital	12		139,102,539			131,147,686
Equity portion of convertible debentures	11		1,929,933			5,739,326
Contributed surplus	11,12,13		14,124,160			9,779,911
Accumulated other comprehensive loss				(12,512)			(10,673)
Accumulated deficit				(152,743,855)			(157,812,605)
Total shareholders' equity (deficit)				2,400,265			(11,156,355)
Total liabilities and shareholders' equity (deficit)			$	25,747,445		$	26,206,266
Approved on behalf of the Board of Directors by:
"Stephen Tong"	"Christopher Bogart"
Stephen Tong		Christopher Bogart

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

2

CHOOM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited, expressed in Canadian Dollars)

Three Months Ended September 30,

	Notes		2021		2020
REVENUES
Revenue		$	4,840,757	$	5,985,415
Cost of sales			(3,041,314)		(3,863,339)
GROSS PROFIT			1,799,443		2,122,076
EXPENSES
General and administrative	14	$	861,609	$	1,013,832
Salary, wages, benefits	15,21		1,298,352		1,068,327
Depreciation and amortization	6,7,8		918,492		577,019
Share-based payments	13(c)		315,126		118,762
Operating expenses			(3,393,579)		(2,777,940)
Loss from operations			(1,594,136)		(655,864)
OTHER ITEMS
Other income			11,266		31,676
Financing costs	8,10,11		(631,009)		(1,059,047)
Gain on extinguishment of debt	11		7,044,619		-
Impairment of property and equipment			-		(115,435)
Loss on settlement of debt			-		(54,132)
Other expenses	12(a)		(285,460)		(63,991)
Income/(loss) before income tax			4,545,280		(1,916,793)
Current income tax expense			(2,074)		-
Deferred income tax recovery	11		560,082		-
Income/(loss) from continuing operations			5,103,288		(1,916,793)
Loss from discontinued operations	17		(34,538)		(1,062,347)
Net income/(loss) for the period			5,068,750		(2,979,140)
Other comprehensive income/(loss)			(1,839)		1,678
NET COMPREHENSIVE INCOME/(LOSS)		$	5,066,911	$	(2,977,462)
Net income/(loss) per share
Continuing operations, basic and diluted	16	$	0.01	$	(0.01)
Discontinued operations, basic and diluted	16	$	(0.00)	$	(0.01)

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

3

CHOOM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited, expressed in Canadian Dollars)

		Share Capital
								Equity				Accumulated
						Obligation		Portion of				Other
						to Issue		Convertible		Contributed		Comprehensive		Accumulated
		Shares		Amount		Shares		Debentures		Surplus		Loss		Deficit		Total
June 30, 2020		225,753,870	$	121,460,291	$	771,900	$	5,739,326	$	8,801,591	$	-	$	(136,189,760)	$	583,348
Net loss for the period		-		-		-		-		-		1,678		(2,979,140)		(2,977,462)
Shares issued for acquisition		64,608,187		6,460,819		-		-		134,384		-		-		6,595,203
Shares issued for transaction costs		3,126,025		412,603		-		-		-		-		-		412,603
Share-based payments		1,111,111		-		-		-		118,762		-		-		118,762
Share issue costs		-		(5,382)		-		-		-		-		-		(5,382)
September 30, 2020		294,599,193	$	128,328,331	$	771,900	$	5,739,326	$	9,054,737	$	1,678	$	(139,168,900)	$	4,727,072
	Notes
June 30, 2021		325,504,273	$	131,147,686	$	-	$	5,739,326	$	9,779,911	$	(10,673)	$	(157,812,605)	$	(11,156,355)
Net income for the period		-		-		-		-		-		(1,839)		5,068,750		5,066,911
Shares issued for debt	12	3,174,603		200,000		-		-		-		-		-		200,000
Shares issued for services	12	3,076,923		200,000		-		-		-		-		-		200,000
Extinguishment of debentures	11	79,754,843		5,184,065		-		(3,809,393)		3,249,311		-		-		4,623,983
Shares issued on the Offering	12	43,750,000		2,843,750		-		-		656,250		-		-		3,500,000
Share-based payments	13(c)	-		-		-		-		315,126		-		-		315,126
Share issue costs	12	1,312,500		(472,962)		-		-		123,562		-		-		(349,400)
September 30, 2021		456,573,142	$	139,102,539	$	-	$	1,929,933	$	14,124,160	$	(12,512)	$	(152,743,855)	$	2,400,265

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

4

CHOOM HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited, expressed in Canadian Dollars)

Three Months Ended September 30,

	Notes		2021		2020
OPERATING ACTIVITIES
Net income/(loss) for the period from continuing operations		$	5,103,288	$	(1,916,793)
Items not affecting cash:
Depreciation and amortization	6,7,8		918,492		577,019
Share-based payments	13(c)		315,126		118,762
Shares issued for transaction costs			-		154,132
Shares issued for services	12		200,000		-
Financing costs	11		225,876		834,412
Fair value loss on marketable securities			-		300
Impairment of property and equipment			-		115,435
Gain on extinguishment of debt	11		(7,044,619)		-
Gain on sale of property and equipment			-		(2,342)
Deferred income tax recovery	11		(560,082)		-
Foreign exchange loss			2,041		-
Net cash used in operations prior to changes in working capital			(839,878)		(119,075)
Changes in non-cash working capital:
Trade and accounts receivable	3		101,541		(72,558)
Inventory	5		(81,241)		(178,633)
Trade and other payables	9,10,11,15		(895,912)		(718,062)
Prepaid expenses	20		(21,398)		(49,673)
Net cash used in operating activities from continuing operations			(1,736,888)		(1,138,001)
Net cash provided by/(used in) discontinued operations	17		318		(23,374)
Net cash used in operating activities			(1,736,570)		(1,161,375)
INVESTING ACTIVITIES
Capital expenditures	6,7,8		(466,918)		(33,676)
Acquisition of Phivida			-		1,448,891
Proceeds from sale of assets			-		469,426
Net cash provided by/(used in) investing activities			(466,918)		1,884,641
FINANCING ACTIVITIES
Payments of interest on debt	11,19		(303,292)		-
Lease payments	8		(372,453)		(356,165)
Private placement, net of issuance costs	12		3,150,600		-
Share issue costs			-		(5,382)
Net cash provided by/(used in) financing activities			2,474,855		(361,547)
Increase in cash from continuing operations			271,049		385,093
Increase/(decrease) in cash from discontinued operations	17		318		(23,374)
Cash, beginning of the period			268,507		461,100
Cash, end of the period		$	539,874	$	822,819

Supplemental cash flow information - Note 19.

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

5