PowerBand : Q2 June 30, 2022 Condensed Interim Consolidated Financial Statements

POWERBAND SOLUTIONS INC.

Condensed Interim Consolidated Financial Statements Three and Six Months Ended June 30, 2022 and 2021 (Expressed in Canadian Dollars)

Notice to Reader

The accompanying unaudited condensed interim consolidated financial statements of PowerBand Solutions Inc. (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.

POWERBAND SOLUTIONS INC.

Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

(Unaudited)

				As at,		As at,
				June 30,		December 31,
		Note		2022		2021
				(Unaudited)		(Audited)
ASSETS
Current assets		$	18,003,178
Cash	7	$	6,367,533
Accounts receivable, net	8		1,402,366		1,547,211
Inventory	9		254,449		7,000
Other current assets	10		951,396		1,141,756
Total current assets			20,611,389		9,063,500
Non-current assets			238,781
Property and equipment, net	12			323,177
Goodwill	13		171,620		2,649,264
Intangible assets, net	13		2,114,515		4,790,511
Right-of-use asset	14		3,011,170		3,320,469
Investment	11		404,668		195,454
Other non-current assets			69,733		68,607
Total non-current assets			6,010,487		11,347,482
Total assets		$	26,621,876	$	20,410,982
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities		$	5,667,892
Accounts payable and accrued liabilities	15, 20	$	5,104,785
Seller reserve provision			26,384		84,404
Due to related parties	20		894,024		2,958,262
Lease obligation - current portion	16		729,978		689,443
Government assistance	17		60,000		60,000
Debt - current portion	5		-		2,167,438
Total current liabilities			7,378,278		11,064,332
Non-current liabilities			2,750,313
Lease obligation - long term portion	16			3,074,743
Long-term debt	5, 20		1,895,623		1,737,536
Total non-current liabilities			4,645,936		4,812,279
Total liabilities			12,024,214		15,876,611
Shareholders' Equity			66,080,858
Share capital	18			43,852,237
Reserves	18		10,595,257		5,896,184
Other comprehensive income			52,128		(73,789)
Deficit			(60,161,363)		(45,791,859)
Total shareholders' equity attributed to owners			16,566,880		3,882,773
Non-controlling interest	19		(1,969,218)		651,598
Total shareholders' equity			14,597,662		4,534,371
Total liabilities and shareholders' equity		$	26,621,876	$	20,410,982
Nature of operations and going concern (note 1); Subsequent events (note 25)
Approved on behalf of the Board of Directors:
"Darrin Swenson" (signed)			"Bill Butler" (signed)
Director				Director

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

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POWERBAND SOLUTIONS INC.

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

(Unaudited)

		Three months ended		Six months ended
		June 30,		June 30,
		2022		2021		2022		2021
Revenue	$	354,236			$	505,298
Vehicle and auction sales	$	7,253	$	138,144
Lease origination revenue		3,576,373		4,249,017		9,383,336		6,473,953
Subscription revenue		204,457		148,921		395,469		311,604
Cost of goods sold		4,135,066		4,405,191		10,284,103		6,923,701
	348,509				482,971
Vehicle acquisition (note 9)			1,000			129,149
Lease acquisition		1,979,080		2,021,711		5,058,413		3,034,969
Subscription costs		20,430		24,593		55,831		41,518
		2,348,019		2,047,304		5,597,215		3,205,636
Gross Profit		1,787,047		2,357,887		4,686,888		3,718,065
Expenses		2,824,177				5,388,702
Salaries and wages (note 17)			1,072,591			3,196,630
Professional fees (note 20)		809,874		928,299		2,006,156		1,648,305
Cost of finance		2,500		10,869		22,500		136,003
Share based compensation (note 18(e))		1,138,555		308,812		3,949,793		439,066
Investor relations		(50,000)		372,815		81,478		404,401
Regulatory fees		117,330		99,227		186,500		173,629
Insurance		64,414		27,638		109,824		50,594
Advertising and promotion		280,629		539,722		1,425,441		630,139
Rent expense		20,195		20,857		43,589		37,392
Office and sundry expenses		279,320		290,844		638,698		512,738
Travel expense		138,380		101,787		340,206		156,792
Telephone		13,643		13,014		27,425		25,685
Interest and bank charges		63,248		37,630		136,426		62,433
Amortization of intangible assets (note 13)		198,530		170,876		395,939		392,147
Depreciation of tangible assets (note 12)		47,206		39,636		93,634		80,200
Depreciation of right of use assets (note 14)		178,763		163,075		356,290		330,585
Accretion (note 5, 16)		400,110		60,076		582,797		123,544
Foreign exchange loss (gain)		57,199		(44,794)		165,863		(78,822)
		6,584,073		4,212,974		15,951,261		8,321,461
Loss from operations		(4,797,026)		(1,855,087)		(11,264,373)		(4,603,396)
Other income (expense)		434,828				434,828
Discount on debt (note 5 (a))						-
Unrealized gain (loss) on fair value adjustment (note 11(a))		19,823		-		209,214		-
Unrealized gain (loss) on settlement of debt (note 18 (c))		164,907		-		164,907		-
Impairment of intangible assets (note 13)		(4,074,434)		-		(4,074,434)		-
Impairment of goodwill (note 13)		(2,487,654)		-		(2,487,654)		-
		(5,942,530)		-		(5,753,139)		-
Loss before taxes		(10,739,556)		(1,855,087)		(17,017,512)		(4,603,396)
Income taxes
Net loss	$	(10,739,556)	$	(1,855,087)	$	(17,017,512)	$	(4,603,396)
Net loss attributable to:		(8,430,603)			$	(14,369,504)
Equity holders of PowerBand Solutions Inc.			(1,658,533)	$	(3,666,223)
Non-controlling interest (note 19)	$	(2,308,953)		(196,554)	$	(2,648,008)	$	(937,173)
Basic and diluted net loss per share-Equity holders of
PowerBand Solutions Inc.	$	(0.052)	$	(0.011)	$	(0.071)	$	(0.023)
Weighted average number of
common shares outstanding - basic and diluted		208,271,232		166,731,035		203,816,494		158,838,158

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

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POWERBAND SOLUTIONS INC.

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

(Unaudited)

	Three months ended		Six months ended
	June 30,		June 30,
	2022	2021		2022		2021
Net loss	(10,739,556)	(1,855,087)	$	(17,017,512)	$	(4,603,396)
Other Comprehensive income (loss)	147,125			153,109
Loss on foreign currency translation	(94,055)			(199,975)
Total Comprehensive Income (loss)	$ (10,592,431)	$ (1,949,142)	$	(16,864,403)	$	(4,803,371)
Total comprehensive loss attributable to:	(8,276,788)		$	(14,236,897)
Equity holders of PowerBand Solutions Inc	(1,708,487)	$	(3,797,563)
Non-controlling interest	(2,315,643)	(240,655)	$	(2,627,506)	$	(1,005,808)

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

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POWERBAND SOLUTIONS INC.

Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian dollars)

(Unaudited)

Six Months Ended June 30,		2022		2021
Cash flows provided by (used in) operating activities	$	(17,017,512)
Net loss for the period	$	(4,603,396)
Adjustments to reconcile net income (loss) to net cash used in operating activities:		111,012
Accretion on lease liability (note 16)			123,544
Accretion on loan (note 5)		471,785		-
Amortization of intangible assets (note 13)		395,939		392,147
Depreciation of tangible assets (note 12)		93,634		80,200
Depreciation of right of use assets (note 14)		356,290		330,585
Impairment of goodwill (note 13)		2,487,654		-
Foreign exchange loss (gain)		165,863		(67,532)
Discount on debt (note 20)		(434,828)		-
(Gain) Loss on settlement of debt (note 20)		(164,907)		-
Impairment of intangible assets (note 13)		4,074,434		-
Unrealized loss (gain) on fair value adjustment (note 11)		(209,214)		-
Forgiveness of loans (note 19)		-		(648,332)
Share based compensation (note 18(e))		3,949,793		439,066
(Increase) Decrease in:		(5,720,057)		(3,953,718)
	308,099
Accounts receivable			(1,616,581)
Inventory		(247,449)		-
Deposits		-		(85,359)
Other current assets		63,299		132,580
Increase (Decrease) in:		487,526
Accounts payable and accrued liabilities			506,453
Seller reserve provision		(58,616)		34,168
Net cash used in operating activities		(5,167,198)		(4,982,457)
Cash flows provided by (used in) investing activities		(5,742)
Purchase of property and equipment (note 12)			(10,445)
Addition to intangible asset (note 13)		(1,788,798)		-
Purchase of investment in CB Auto (note 11)		-		(2,939,166)
Net cash used in investing activities		(1,794,540)		(2,949,611)
Cash flows provided by (used in) financing activities		18,000,251
Private placements, net			5,207,705
Exercise of warrants and options		608,466		2,771,753
Payment of debt (note 5(a))		(4,423,607)		-
Payment of lease liability, net of deposits received (note 16)		(449,016)		(411,751)
Proceeds from related parties (note 20)		6,776,633		4,238,479
Payments to related parties (note 20)		(2,000,000)		(2,648,308)
Proceeds from CEBA loan		-		20,000
Net cash provided by financing activities		18,512,727		9,177,878
Net change in cash		11,550,989		1,245,810
Effect of exchange rate changes on cash held in foreign currencies		84,656		(58,350)
Cash, beginning of period		6,367,533		1,403,213
Cash, end of period	$	18,003,178	$	2,590,673

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

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