Liquid Avatar Technologies : Interim Condensed Consolidated Financial Statements for the Quarter ended June 30, 2022

Liquid Avatar Technologies Inc.

Interim Condensed Consolidated Financial Statements

(unaudited)

For the Three and Six Month Period Ended June 30, 2022 and 2021

Expressed in Canadian Dollars

Unaudited Interim Condensed Consolidated Financial Statements

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited interim condensed consolidated financial statements for the three and six month period ended June 30, 2022

Liquid Avatar Technologies Inc.

Interim Condensed Consolidated Statements of Financial Position

(Unaudited, Expressed in Canadian Dollars)

As at June 30, 2022 and December 31, 2021

		June 30,		December 31,
		2022		2021
Assets
Current
Cash	$	53,883	$	646,096
Accounts receivable		3,095		713,284
Harmonized sales tax receivable		73,416		62,392
Prepaid expenses and other current assets		792,277		686,680
		922,671		2,108,452
Prepaid long-term expense and other assets		48,750		61,250
Investment (Note 4)		122,722		122,722
Computer and related equipment		18,293		24,433
Intangible assets (Note 6)		504,413		638,923
	$	1,616,849	$	2,955,780
Liabilities
Current
Accounts payable and accrued expenses	$	2,988,920	$	843,569
Due to KABN (Gibraltar) Ltd. (Note 11)		532,551		112,480
Deferred revenue		1,982,227		1,058,270
Short term loans payable (Note 5)		538,337		517,069
		6,042,035		2,531,388
Shareholders' (Deficiency)/Equity
Share capital (Note 7)		10,561,492		10,486,492
Shares to be issued (Note 7)		40,000		-
Contributed surplus (Notes 8 and 10)		4,431,054		4,381,239
Broker compensation options (Note 9)		589,253		589,253
Warrants (Note 8)		2,583,964		2,583,964
Accumulated other comprehensive loss		(22,455)		-
Deficit		(22,608,494)		(17,616,556)
		(4,425,186)		424,392
	$	1,616,849	$	2,955,780

Going Concern (Note 1)

Subsequent Events (Note 17)

Approved by the Board	"David Lucatch"	"Andra Enescu"
	Director (Signed)	Director (Signed)
See accompanying notes		2

Liquid Avatar Technologies Inc.

Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited Expressed in Canadian Dollars)

For the Three and Six Month Period Ended June 30, 2022 and 2021

	Three Months				Six Months
		Ended	Three Months		Ended		Six Months
		June 30,		Ended		June 30,		Ended
		2022	June 30, 2021		2022	June 30, 2021
Revenue
Liquid Avatar Operations	$	26	$	25	$	40	$	133
Oasis Digital Studios Operations		-		10,600		90		10,600
		26		10,625		130		10,733
Operating expenses
Amortization		67,255		67,255		134,510		134,510
Depreciation on tangible assets		3,070		3,223		6,141		6,141
Agent fees		-		22,728		-		38,417
Consulting fees		540,026		236,421		1,109,222		318,179
General and administrative costs		136,512		129,229		422,076		202,278
Interest expense		11,967		-		26,203		-
Legal and audit fees		131,460		147,688		199,276		232,900
Management and staff		370,204		434,534		836,369		838,735
Marketing and communications		428,788		447,331		867,514		945,594
Product development		335,735		652,626		774,851		1,089,781
Web and infrastructure		104,799		40,746		203,505		78,583
Annual license fee		322,571		250,000		322,571		250,000
Financing fee		-		-		12,000		-
Stock based compensation		-		330,820		49,815		1,354,844
		2,452,387		2,762,601		4,964,053		5,489,962
Other losses
Foreign exchange loss		(26,167)		(11,723)		(28,015)		(19,322)
		(2,478,554)		(2,774,324)		(4,992,068)		(5,509,284)
Net loss	$	(2,478,528)	$	(2,763,699)	$	(4,991,938)	$	(5,498,551)
Other comprehensive loss
Exchange differences from
translation of foreign subsidiaries		(28,032)		-		(22,455)		-
Comprehensive loss	$	(2,506,560)	$	(2,763,699)	$	(5,014,393)	$	(5,498,551)
Basic and diluted loss per share
Basic and diluted	$	(0.017)	$	(0.026)	$	(0.035)	$	(0.053)
Weighted average number of common shares outstanding
Weighted average number of
common shares	141,678,474	105,137,893	141,601,551		103,242,742

See accompanying notes

3

Liquid Avatar Technologies Inc. Interim Condensed Consolidated Statements of Changes in Shareholders' (Deficiency)/Equity (Unaudited Expressed in Canadian Dollars)

For the Six Month Period Ended June 30, 2022 and the Year ended December 31, 2021

	Number of				Reserve		Broker
	Common				for		Compensation		Contributed
	Shares		Amount		Warrants		Options		Surplus		Deficit		Total
Balance January 1, 2021	96,216,472		5,858,759		2,416,120		652,786		754,400		(6,252,624)	$	3,429,441
Issued for warrant exercises (Note 7)	16,325,563		2,980,606		(1,242,931)		-		1,242,931		-		2,980,606
Issued in connection with consultant obligations
(Note 9)	332,894		101,470		-		-		-		-		101,470
Issued in connection with option exercise (Note 7)	805,100		130,765		-		-		-		-		130,765
Stock based compensation (Note 10)	-		-		-		-		2,351,313		-		2,351,313
Issuance for broker unit exercise (Note 9)	184,155		27,623		30,938		(63,533)		32,595		-		27,623
Issued for early warrant exercise incentive and consultant
warrant compensation (Note 7)	1,514,288		-		285,870		-		-		-		285,870
Issued in connection with private placement (Note 7)	25,800,001		1,387,269		1,093,967		-		-		-		2,481,236
Net loss	-		-		-		-		-		(11,363,932)		(11,363,932)
Balance December 31, 2021	141,178,473	$	10,486,492	$	2,583,964	$	589,253	$	4,381,239	$	(17,616,556)	$	424,392
Issued in connection with option exercise (Note 7)	500,000		75,000		-		-		-		-		75,000
Stock based compensation (Note 10)	-		-		-		-		49,815		-		49,815
Shares to be issued (Note 7)	-		-		-		-		-				40,000
Net loss	-		-		-		-		-		(4,991,938)		(4,991,938)
Balance June 30, 2022	141,678,473	$	10,561,492	$	2,583,964	$	589,253	$	4,431,054	$	(22,608,494)	$	(4,402,731)
Accumulated other comprehensive income
Other comprehensive income Q1, 2022													5,577
Other comprehensive loss, Q2, 2022													(28,032)
Accumulated other comprehensive loss June 30, 2022													(22,455)
													(4,425,186)

See accompanying notes

4

Liquid Avatar Technologies Inc.

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited Expressed in Canadian Dollars)

For the Six Month Period Ended June 30, 2022 and 2021

		Six Month		Six Month
		Period Ended		Period Ended
		June 30,		June 30,
		2022		2021
Cash provided by (used in)
Operations
Net loss	$	(4,991,938)	$	(5,498,551)
Items not affecting cash
Amortization		134,510		134,510
Depreciation		6,141		6,141
Foreign exchange loss		28,015		19,322
Expenses paid in shares		-		97,470
Stock based compensation		49,815		1,354,844
Net cash flows used in operating activities before changes in
non-cash working capital items		(4,773,457)		(3,886,264)
Net change in non-cash working capital
Increase in prepaid expenses and other current assets		(105,597)		(53,643)
Decrease/(Increase) in prepaid long-term expenses and other
assets		12,500		(17,500)
Increase in accounts payable and accrued expenses		2,111,860		366,577
(Increase)/Decrease in harmonized sales tax recoverable		(11,024)		32,399
Decrease/(Increase) in accounts receivable		710,189		(10,600)
Increase in deferred revenue		923,957		-
Increase/(Decrease) in due to KABN (Gibraltar) Ltd.		420,071		(70,000)
Net cash flows used in operating activities		(711,501)		(3,639,031)
Investing
Acquisition of investment		-		(122,722)
Purchase of computer and related equipment		-		(18,216)
Net cash flows used in investing activities		-		(140,938)
Financing
Repayment of short term loan payable		(117,069)		-
Issuance of short term loans in Aftermath Islands		121,357		-
Net proceeds from common shares and unit issuances/advance		115,000		1,717,274
Net cash flows provided by financing activities		119,288		1,717,274
Net change in cash		(592,213)		(2,062,695)
Cash, beginning of period		646,096		2,588,590
Cash, end of period	$	53,883	$	525,895

See accompanying notes

5