Gatekeeper : Earnings Document

GATEKEEPER SYSTEMS INC.

Consolidated Financial Statements

For the Years Ended August 31, 2021 and 2020

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Gatekeeper Systems Inc.:

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Gatekeeper Systems Inc. (the "Company"), which comprise the consolidated statements of financial position as at August 31, 2021 and 2020 and the consolidated statements of income and comprehensive income, consolidated statements of cash flows and consolidated statements of changes in equity for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2021 and 2020, and its financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

Without qualifying our opinion, we draw attention to Note 1 to the consolidated financial statements which indicates the existence of a material uncertainty that may cast doubt about Gatekeeper Systems Inc.'s ability to continue as a going concern.

Information other than the Consolidated Financial Statements and the Auditor's Report thereon

Management is responsible for the other information. The other information comprises the information, other than the consolidated financial statements and our auditor's report thereon, included in Management's discussion and analysis report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's discussion and analysis report prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial statement information of the entities or business activities within the Company to express an opinion on the consolidated financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Geoff Dodds.

Vancouver, British Columbia	Harbourside CPA LLP
December 29, 2021	Chartered Professional Accountants

GATEKEEPER SYSTEMS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT
(expressed in Canadian dollars)		August 31,				August 31,
		2021				2020
ASSETS
Current Assets
Cash	$	3,601,034		$	1,029,324
Trade and other receivables (note 6)		3,107,350				7,720,780
Inventories (note 7)		4,683,515				3,362,516
Prepaid expenses and other current assets		261,884				161,098
Non-Current Assets		11,653,783				12,273,718
Loan receivable (note 22)		200,000				200,000
Property, plant and equipment (note 9)		1,237,298				1,504,586
Intangible asset (note 10)		11,434				-
Goodwill (note 8)		144,119				152,633
Deferred tax asset (note 18)		1,155,000				1,471,000
Total Assets	$	14,401,634		$	15,601,937
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit (note 11)	$	-		$	1,411,969
Trade and other payables and accrued liabilities (note 12)		2,198,536				2,401,228
Bonus payable (note 22)		280,000				-
Lease obligations - current (note 13)		143,500				134,837
Unearned revenue		9,480				635
Non-Current Liabilities		2,631,516				3,948,669
Long-term lease obligations (note 13)		670,287				815,395
Total Liabilities		3,301,803				4,764,064
Shareholders' Equity
Share capital (note 14)		16,520,226				16,286,919
Other capital reserves (notes 15 and 16)		2,135,711				2,215,128
Accumulated other comprehensive income (loss)		(47,787)				(35,082)
Deficit		(7,508,319)				(7,629,092)
		11,099,831				10,837,873
Total Liabilities and Shareholders' Equity	$	14,401,634		$	15,601,937
DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS (note 1)
COMMITMENTS AND CONTINGENCIES (note 23)

APPROVED ON BEHALF OF

THE BOARD OF DIRECTORS

"Colin Sutherland"		"Douglas Dyment"
(signed)		(signed)
Director		Director

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

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GATEKEEPER SYSTEMS INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED AUGUST 31, 2021 AND AUGUST 31, 2020

(expressed in Canadian dollars)
		August 31,			August 31,
		2021			2020
Revenues	$	17,231,080		$	20,316,576
Cost of Sales		9,715,096			11,967,766
Gross Profit		7,515,984			8,348,810
Operating Expenses		3,106,450
General and administrative (note 17a)				2,637,909
Selling and marketing (note 17b)		1,877,666			2,063,307
Research and development (note 17c)		1,818,235			1,594,836
		6,802,351			6,296,052
Operating Profit		713,633			2,052,758
Other Income (Expenses)		-
Canada emergency wage subsidy				247,086
Interest		4,073			22,575
Foreign exchange		(256,042)			(180,954)
Finance costs		(140)			(23,957)
Gain or loss on disposal of assets		-			(1,599)
Write-down of inventory		(24,751)			(7,685)
Net income before income taxes		436,773			2,108,224
Deferred income tax (expense) recovery (note 18)		(316,000)			1,471,000
Net income		120,773			3,579,224
Other Comprehensive Income		(12,705)
Foreign currency translation differences				(44,217)
Total Comprehensive Income	$	108,068		$	3,535,007
Basic earnings per share	$	0.00		$	0.04
Weighted Average Number of Shares Outstanding		89,804,860			88,383,406
Diluted earnings per share	$	0.00		$	0.04
Weighted Average Number of Shares Outstanding		94,881,077			90,941,248

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

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