BLOCKCHAINK2 : Consolidated Financial Statements For the years ended September 30, 2021 and 2020

BLOCKCHAINK2 CORP.

Consolidated Financial Statements

For the years ended September 30, 2021 and 2020

(Expressed in Canadian dollars)

INDEPENDENT AUDITOR'S REPORT

To the shareholders of BlockchainK2 Corp.:

Opinion

We have audited the consolidated financial statements of BlockchainK2 Corp. (the "Corporation"), which comprise the consolidated statements of financial position as at September 30, 2021 and 2020, and the consolidated statements of comprehensive loss, shareholders' equity and cash flows for the years ended September 30, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as at September 30, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

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 Corporation in accordance with the ethical requirements that are relevant to our audit of the 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

We draw attention to Note 2 of the financial statements, which describes certain conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Corporation's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

Our opinion on the 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 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 financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

In preparing the financial statements, management is responsible for assessing the Corporation'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 Corporation or to cease operations, or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 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 Corporation'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 Corporation'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 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 Corporation to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 Barry Hartley.

DALE MATHESON CARR‐HILTON LABONTE LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

January 28, 2022

BLOCKCHAINK2 CORP. Consolidated Statements of Financial Position As at September 30,

(Expressed in Canadian dollars)

		2021		2020
Assets
Current assets:
Cash	$	573,813	$	1,414,094
Receivables		11,576		4,433
Inventory		7,773		3,249
Prepaid expenses (notes 5 and 11)		13,739		79,008
		606,901		1,500,784
Non-current assets:
Note receivable (note 6)		41,264		46,033
Investment in Envexergy Inc. (note 7)		1,223,136		1,032,637
Goodwill (note 12)		-		215,464
		1,264,400		1,294,134
	$	1,871,301	$	2,794,918
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables (note 11)	$	276,660	$	50,524
Loans payable - short term (notes 8 and 11)		19,785		33,171
		296,445		83,695
Non-current liabilities:
Loans payable (note 8)		65,802		24,252
		362,247		107,947
Shareholders' Equity
Share capital (note 9)		47,263,590		47,039,893
Contributed surplus (note 9)		13,034,684		12,207,252
Accumulated foreign currency translation (note 9)		1,451,235		1,456,192
Deficit		(60,287,001)		(58,081,407)
Non-controlling interest (note 13)		46,546		65,041
		1,509,054		2,686,971
	$	1,871,301	$	2,794,918

Going concern (note 2)

Subsequent events (note 19)

See accompanying notes to the consolidated financial statements.

Approved for issuance by the Board of Directors on January 28, 2022

Signed "D Lindsay Wu"

D Lindsay Wu, Director

Signed "Sergei Stetsenko"

Sergei Stetsenko, Director

BLOCKCHAINK2 CORP.

Consolidated Statements of Comprehensive Loss For the years ended September 30, (Expressed in Canadian dollars)

		2021		2020
Sales	$	114,846	$	35,856
Cost of sales		(77,351)		(53,340)
Gross margin		37,495		(17,484)
Expenses
Advertising and promotion		42,214		3,820
Consulting fees (note 11)		95,943		42,726
Directors' fees (note 11)		305,267		397,809
Filing and listing fees		71,185		38,497
Foreign exchange gain		1,006		6,600
General and administrative		42,653		54,163
Investor relations		186,899		46,101
Professional fees (note 11)		212,854		69,861
Salaries (note 11)		193,678		76,032
Selling expenses		1,553		-
Share-based compensation (notes 9 and 11)		985,485		-
Travel		8,146		18,975
		2,146,883		754,584
Other items
Accretion (note 8)		(16,773)		(5,711)
Other income		-		5,383
Government grant (note 8)		95,804		36,580
Forgiveness of loan (note 8)		25,048		7,657
Impairment of goodwill (note 12)		(215,464)		-
Change in fair value of note receivable (note 6)		75,061		29,072
Change in fair value of Investment in Envexergy (note 7)		(75,341)		378,287
		(111,665)		451,268
Net loss for the year		(2,221,053)		(320,800)
Other comprehensive loss
Item that will be recognized in profit or loss:
Exchange loss on translation		(4,957)		(1,521)
Comprehensive loss for the year	$	(2,226,010)	$	(322,321)
Net loss for the year attributable to:
Common shareholders of the Corporation	$	(2,205,594)	$	(272,261)
Non-controlling interest (note 13)		(15,459)		(48,539)
	$	(2,221,053)	$	(320,800)
Comprehensive loss for the year attributable to:
Common shareholders of the Corporation	$	(2,207,515)	$	(272,010)
Non-controlling interest (note 13)		(18,495)		(50,311)
	$	(2,226,010)	$	(322,321)
Loss per share for the year:
Basic and diluted (note 10)	$	(0.13)	$	(0.02)

See accompanying notes to the consolidated financial statements.