GATEKEEPER SYSTEMS INC.

Consolidated Financial Statements

For the Nine Months Ended May 31, 2023

MANAGEMENT'S COMMENTS ON

UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the unaudited condensed interim financial statements; they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of Gatekeeper Systems Inc. (the "Company") have been prepared by and are the responsibility of the Company's management. The unaudited condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards and reflect management's best estimates and judgment based on information currently available.

The Company's independent auditor has not performed a review of these unaudited condensed interim consolidated financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of unaudited condensed interim consolidated financial statements by an entity's auditor.

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GATEKEEPER SYSTEMS INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT

(expressed in Canadian dollars)

May 31,

August 31,

2023

2022

ASSETS

Current Assets

Cash (note 6)

$

894,349

$

2,604,229

Trade and other receivables (note 7)

7,733,659

8,629,697

Inventories (note 8)

6,878,917

8,490,594

Prepaid expenses and other current assets

365,315

364,402

Income tax receivable

94,895

-

Non-Current Assets

15,967,135

20,088,922

Property, plant and equipment (note 10)

1,106,700

1,179,904

Intangible asset (note 11)

10,005

10,618

Goodwill (note 9)

155,380

149,760

Deferred tax asset (note 19)

1,497,000

1,587,000

Total Assets

$

18,736,220

$

23,016,204

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Line of credit (note 12)

$

1,628,703

$

3,536,593

Trade and other payables and accrued liabilities (note 13)

1,269,591

4,807,812

Bonus payable (note 5 and 23)

-

280,000

Lease obligations - current (note 14)

188,912

189,618

Unearned revenue

94,188

78,061

Non-Current Liabilities

3,277,604

8,892,084

Bonus payable - long term (note 5 and 23)

-

840,000

Lease obligations - long term (note 14)

612,259

738,025

Total Liabilities

3,793,653

10,470,109

Shareholders' Equity

Share capital (note 15)

17,041,553

17,003,700

Other capital reserves (notes 16 and 17)

2,458,517

2,289,321

Accumulated other comprehensive loss

61,830

6,208

Deficit

(4,619,333)

(6,753,134)

14,942,567

12,546,095

Total Liabilities and Shareholders' Equity

$

18,736,220

$

23,016,204

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS (note 1)

COMMITMENTS AND CONTINGENCIES (note 24)

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 condensed interim consolidated financial statements.

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GATEKEEPER SYSTEMS INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED

(expressed in Canadian dollars)

Three months ended

Nine months ended

May 31,

May 31,

May 31,

May 31,

2023

2022

2023

2022

Revenues

$

5,933,125

$

4,388,520

$

20,503,956

$

10,192,417

Cost of Sales

2,986,140

2,577,924

11,465,274

5,681,271

Gross Profit

2,946,985

1,810,596

9,038,682

4,511,146

Operating Expenses

General and administrative (note 18a)

1,084,531

964,510

2,997,762

2,652,918

Selling and marketing (note 18b)

825,560

598,111

2,421,301

1,619,517

Research and development (note 18c)

608,844

566,897

1,670,001

1,513,727

(2,518,935)

(2,129,518)

(7,089,064)

(5,786,162)

Operating Profit (Loss)

428,050

(318,922)

1,949,618

(1,275,016)

Other Income (Expenses)

Interest

6,063

1,161

16,140

3,978

Foreign exchange

158,375

(49,722)

389,520

43,851

Income tax

(126,299)

-

(126,299)

Finance costs

(33)

(33)

(108)

(355)

Write-down of inventory

(5,069)

(400)

(5,070)

(1,485)

Net income (loss) before income taxes

461,087

(367,011)

2,223,801

(1,229,027)

Deferred income tax (expense) recovery (note 19)

(57,000)

(27,000)

(90,000)

404,000

Net income (loss)

404,087

(340,011)

2,133,801

(825,027)

Other Comprehensive Income (Loss)

Foreign currency translation differences

36,876

22,251

86,052

24,152

Total Comprehensive Income (Loss)

$

440,963

$

(317,760)

$

2,219,853

$

(800,875)

Basic income (loss) per share

$

0.01

$

(0.00)

$

0.02

$

(0.01)

Weighted Average Number of Shares Outstanding

91,539,602

90,981,629

91,539,602

90,709,796

Diluted loss per share

$

0.01

$

(0.00)

$

0.02

$

(0.01)

Weighted Average Number of Shares Outstanding

91,539,602

90,981,629

91,539,602

90,709,796

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

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GATEKEEPER SYSTEMS INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED

(expressed in Canadian dollars)

May 31,

May 31,

2023

2022

Cash Flows from Operating Activities

Net income (loss)

$ 2,133,801

$ (825,027)

Items not affecting cash from operations:

Depreciation

277,867

259,870

Amortization - intangible assets

-

613

Share-based payments

181,250

183,476

Deferred tax expense (recovery)

90,000

(404,000)

Unrealized foreign exchange loss (gain)

(75,566)

(140,835)

Changes in non-cash working capital balances related to operations:

167,416

Trade and other receivables

2,470,406

Inventories

1,893,378

(3,824,755)

Prepaid expenses and other current assets

4,979

(153,093)

Income tax receivable

(94,318)

-

Trade and other payables and accrued liabilities

(5,224,392)

1,105,317

Bonus payable

(840,000)

-

Long term bonus payable

(280,000)

-

Unearned revenue

-

21,321

Net cash provided by (used in) operating activities

563,339

(3,609,697)

Cash Flows used in Investing Activities

Purchase of property, plant and equipment

(173,731)

(202,494)

Net cash provided by (used in) investing activities

(173,731)

(202,494)

Cash Flows used in Financing Activities

Draws (repayment) on line of credit

(1,907,890)

2,663,361

Exercise of stock options

25,800

371,951

Lease payments

(210,730)

(148,949)

Net cash provided by (used in) financing activities

(2,092,820)

2,886,363

Foreign Exchange Gain (Loss) on Cash and Cash Equivalents held in USD

(6,669)

246

Increase (Decrease) in Cash and Cash Equivalents

(1,703,211)

(925,828)

Cash and Cash Equivalents - Beginning of period

2,604,229

3,601,034

Cash and Cash Equivalents - End of period

$ 894,349

$ 2,675,452

Supplemental Cash Flow Information (note 25)

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

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Gatekeeper Systems Inc. published this content on 19 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 July 2023 13:34:10 UTC.