Taal Distributed Information Technologies : Interim FS Q2

TAAL Distributed Information Technologies Inc.

Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2022 and 2021

(Stated in Canadian Dollars) (Unaudited - Prepared by Management)

Notice of No Auditor Review of Condensed Interim Consolidated Financial Statements

Under National Instrument 51-102, Part 4, subsection 4.4(3), if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the condensed interim consolidated financial statements have not been reviewed by an auditor.

The accompanying condensed interim consolidated financial statements of the Company have been prepared by management and are the responsibility of the Company's management.

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

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TAAL Distributed Information Technologies Inc. Condensed consolidated statements of financial position (Stated in Canadian dollars)

(Unaudited - Prepared by Management)

	June 30,	December 31,
	2022	2021
ASSETS
Current assets
Cash and cash equivalents	$ 8,169,900	$ 3,979,970
Accounts receivable	18,041,578	79,707
Other receivables	8,145,158	1,013,290
Digital assets (Note 6)	5,279,410	12,653,838
Prepaid expenses and other current assets (Note 5)	403,503	994,141
Total current assets	40,039,549	18,720,946
Investments in associate	276,949	267,555
Note receivable	325,956	320,312
Property, plant and equipment, net (Note 7)	9,347,679	14,322,706
Intangible assets, net	4,555,778	5,205,910
Right of use asset (Note 8)	1,626,782	1,615,832
Deposits on hashing equipment and facility (Note 5)	29,782,300	28,272,106
Total assets	$ 85,954,993	$ 68,725,367
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$ 1,912,031	$ 2,932,605
Lease liabilities (Note 8)	364,000	336,433
Total current liabilities	2,276,031	3,269,038
Lease liabilities, long term (Note 8)	1,237,311	1,245,172
Promissory note - long term (Note 9)	12,877,000	12,809,000
Total liabilities	16,390,342	17,323,210
SHAREHOLDERS' EQUITY
Share capital (Note 10)	100,933,092	91,779,341
Contributed surplus	13,225,774	8,224,365
Accumulated other comprehensive income/ (loss)	461,476	49,320
Accumulated deficit	(45,055,691)	(48,650,869)
Shareholders' equity	69,564,651	51,402,157
Total liabilities and shareholders' equity	$ 85,954,993	$ 68,725,367

See Note 13 for Subsequent events

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

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TAAL Distributed Information Technologies Inc.

Condensed consolidated statements of income/ (loss) and comprehensive income/ (loss) For the three and six months ended June 30, 2022 and 2021

(Stated in Canadian Dollars) (Unaudited - Prepared by Management)

	Three months ended June 30,	Six months ended June 30,
	2022	2021	2022		2021
Revenues
Digital asset hashing (Note 6)	$ 7,253,924	$ 6,640,706	$15,966,425	$	7,548,808
Digital asset hashing pool management -
related party (Note 11)	-	18,411	-		74,297
Total revenues	7,253,924	6,659,117	15,966,425		7,623,105
Cost of revenues
Site operating costs	5,724,122	1,853,271	9,267,363		1,910,968
Pool operating costs	328,190	161,368	627,107		360,307
Depreciation and amortization	1,019,809	679,601	2,125,531		1,046,675
Total cost of revenues	7,072,121	2,694,240	12,020,001		3,317,950
Income before value adjustments	181,803	3,964,877	3,946,424		4,305,155
Revaluation loss on digital assets (Note 6)	(2,306,220)	(8,822,049)	(2,299,460)		(5,895,610)
Gain/(loss) on sale of digital assets (Note
6)	(260,890)	(138,177)	(3,279,767)		1,845,492
Income/(loss) before operating
expenses	(2,385,307)	(4,995,349)	(1,632,803)		255,037
Operating expenses
Office and administration	499,223	518,050	1,006,578		1,008,092
Regulatory	23,436	59,237	36,609		127,665
Investor relations and marketing	297,908	238,088	666,611		490,042
Management fees, salaries and wages	3,687,104	2,751,871	7,646,690		5,100,186
Professional fees	707,813	450,421	1,507,039		1,444,947
Travel and entertainment	193,971	19,874	316,396		62,493
Share-based payments (Note 10)	6,613,857	1,123,397	14,155,260		1,490,297
Loss/ (gain) on foreign exchange	166,979	(14,243)	41,902		527,234
Total operating expenses	12,190,291	5,146,695	25,377,085		10,250,956
Income/ (loss) from operations	(14,575,598)	(10,142,044)	(27,009,888)		(9,995,919)

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TAAL Distributed Information Technologies Inc.

Condensed Consolidated statements of loss and comprehensive loss continued

(Stated in Canadian Dollars)

	Three months ended June 30,	Six months ended June 30,
		2022		2021		2022		2021
Other income (expense):
Gain on sale of equipment, net of tax		3,694,637		(1,016)		3,694,637		20,055
Share of income/ (loss) in associate		-		(15,849)		9,494		(22,944)
Gain on sale of subsidiary, net of tax		27,404,928		-		27,404,928		2,479,063
Accretion of lease liability		(2,149)		(1,094)		(4,612)		(1,094)
Debt forgiveness		-		21,568		-		21,568
Interest expense, net		(250,277)		(2,774)		(499,381)		(930)
Net income (loss)		16,271,541		(10,141,208)		3,595,178		(7,500,201)
Other comprehensive income/ (loss)
Foreign currency translation adjustment		628,707		(261,198)		412,516		(178,611)
Total comprehensive income/ (loss)	$16,900,248	$	(10,402,406)	$	4,007,694	$	(7,678,812)
Basic income/ (loss) per common share	$	0.40	$	(0.29)	$	0.10	$	(0.24)
Diluted income/ (loss) per common
share	$	0.33	$	(0.29)	$	0.08	$	(0.24)
Weighted average number of common
shares outstanding		39,243,547		34,907,403		37,750,738		31,229,368

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

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