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CONSOLIDATED FINANCIAL STATEMENTS

For the years ended 31 January 2018 and 2017

(Expressed in Canadian Dollars)

INDEPENDENT AUDITORS' REPORT

To the Shareholders of

CIC Capital Fund Ltd.

We have audited the accompanying consolidated financial statements of CIC Capital Fund Ltd., which comprise

the consolidated statements of financial position as at January 31, 2018 and 2017 and the consolidated

statements of loss and comprehensive loss, changes in shareholders’ deficiency, and cash flows for the years

then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in

accordance with International Financial Reporting Standards, 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We

conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance

about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the consolidated financial statements 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

entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation

of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis

for our audit opinion.

Opinion

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial

position of CIC Capital Fund Ltd. as at January 31, 2018 and 2017 and its financial performance and its cash

flows for the years then ended in accordance with International Financial Reporting Standards.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which

describes conditions and matters that indicate the existence of a material uncertainty that may cast significant

doubt about CIC Capital Fund Ltd.’s ability to continue as a going concern.

“DAVIDSON & COMPANY LLP”

Vancouver, Canada Chartered Professional Accountants

October 5, 2018

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CIC CAPITAL FUND LTD.

Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

Note As at 31 Jan

2018 As at 31 Jan

2017

Assets

Current assets

Cash 6,282 6,282

Deposit 9 - 49,740

Convertible Loan Receivables 6 379,060 379,060

Total current assets 385,342 435,082

TOTAL ASSETS 385,342 435,082

Liabilities & Shareholder’s Equity

Current liabilities

Accounts payable & accrued liabilities 10 1,325,596 1,272,153

Loan payable 12 495,605 462,626

Total current liabilities 1,821,201 1,734,779

Shareholder’s Equity

Share capital 11 34,063,255 34,063,255

Contributed surplus 3,856,089 3,856,089

Warrant reserve 1,582 1,582

Deficit (39,356,785) (39,220,622)

TOTAL SHAREHOLDER’S EQUITY 1,435,859 1,299,697

TOTAL LIABILITIES & SHAREHOLDERS EQUITY

385,342 435,082

Nature of operations and going concern (Note 1)

These consolidated financial statements are approved and authorized for issuance by the Board of Directors on October 5, 2018

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

Stuart J. Bromley Director

Li Hongguang Director

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Consolidated Statements of Loss & Comprehensive Loss (Expressed in Canadian Dollars)

Note

As at 31 Jan 2018

As at 31 Jan 2017

Operating Expenses

CIC Capital advisory fees 15 - 1,527,554

Audit fees 15 53,442 -

Professional fees - 12,613

Regulatory fees - 33,034

Public news service - 394

Bank charges - 10,357

Operating Loss

(53,442) (1,583,952)

Finance Expenses

Interest expense 12 (61,629) (58,659)

Foreign exchange gain 28,650 21,778

(32,979) (36,881)

Write off deposit 9 (49,740) -

Fair value adjustment 6 - (3,062,089)

Loss for the year

(136,162) (4,682,922)

Total comprehensive loss

(136,162) (4,682,922)

Basic and Diluted loss per common share

(0.0002) (0.008)

Weighted average number of common shares 554,218,639 553,341,317

outstanding, basic and diluted


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Consolidated Statements of Changes in Shareholders Deficiency (Expressed in Canadian Dollars)

No. of Common Shares

Share Capital Contributed

Surplus Warrant Reserve

Deficit Total Equity /Deficiency (Restated)

Balance at 31 January 2016 537,318,639 33,139,591 3,856,089 1,582 (34,537,701) 2,459,561

Loss for the year - - - - (4,682,922) (4,682,922)

Shares issued for cash 16,900,000 923,664 - - - 923,664

Balance at 31 January 2017 554,218,639 34,063,255 3,856,089 1,582 (39,220,623 (1,299,697)

Loss for the year - - - (136,162) (136,162)

Balance at 31 January 2018 554,218,639 34,063,255 3,856,089 1,582 (39,356,785) (1,435,859)


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Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)

As at 31 Jan

2018 As at 31 Jan

2017

Cash flow from operating activities

Net Loss for the year (136,162) (4,682,922)

items not involving cash

Foreign exchange (28,650) (21,778)

Accrued interest 61,629 58,659

Accrued advisory fee - 1,527,554

Fair value adjustment of loan receivable - 3,062,088

Write off deposit 49,740 -

Changes in non-cash working capital items:

Trade payables and accruals 53,443 -

Net cash provided by (used in) operating activities

- (56,398)

Cash flow from investing activities

Advances to CIC Gold - (185,782)

Repayments from CIC Capital 83,189.00

Net cash used in financing activities - (102,593)

Cash flow from financing activities:

Proceeds from issuance of shares - 160,725

Net cash provided by financing activities - 160,725

Change in cash during the year - 1,734

Cash, beginning of the year 6,282 4,548

Cash, end of year 6,282 6,282


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Notes to the Consolidated Financial Statements

for the years ended 31 January 2018 and 2017


1 Nature of Operations and Going Concern

CIC Capital Fund Ltd (“CIC Fund” or the “Company”) is a Canadian close-ended fund incorporated on 20 June 2003 under the Canada Business Corporations Act and is a reporting issuer in Canada. The Company intends to achieve its investment objective by investing by way of convertible loans in a range of companies that may become public companies trading on a designated stock exchange. The Company principally seeks equity interests in client companies in return for its capital and issues a dividend in kind in part or whole of shares received in client companies to its shareholders.

The consolidated financial information is presented in Canadian Dollars (CAD$). The Company’s registered office is located at 1100 - 570 Granville Street, Vancouver, British Columbia V6C 3P1, Canada. These financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at January 31, 2018 and 2017, the Company had a working capital deficiency and has incurred ongoing losses. The Company will be required to raise new financing through the sale of shares. Although management intends to secure additional financing as may be required, there can be no assurance that management will be successful in its efforts to secure additional financing or that it will ever develop a self-supporting business. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and thus be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements. These material uncertainties may cast significant doubt on the Company`s ability to continue as a going concern.

2 Summary of Significant Accounting Policies

(a) Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements have been authorized for issuance by the Company’s board of directors on October 5, 2018. The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments classified as financial instruments at fair value through profit or loss, which are stated at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

(b) Basis of consolidation The consolidated financial information incorporates the results of the Company and its wholly subsidiary CIC Beijing Ltd.

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Control is achieved where the Company is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The Company only consolidates subsidiaries in the financial statements if they do not meet the definition of an investment entity. The results of subsidiary acquired or disposed of during the year are included in the consolidated statement of loss and comprehensive loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full on consolidation. Unrealised losses are also eliminated when the transaction provides evidence of an impairment of the asset transferred.

(c) Restatement of prior period As at January 31, 2017, the Company determined that certain adjustments were not made to the loan payable: loan repayments made by director and the resulting debt forgiveness by the director, foreign exchange translation and interest accrual. The effects of the restatement are to decrease the opening deficit and opening loan payable balance as at January 31, 2017 by $55,730.

(d) Foreign exchange The presentation currency of the Company is the Canadian dollar. The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The Company considers the functional currency for its parent entity and subsidiaries to be the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in International Accounting Standard (“IAS”) 21, The Effects of Changes in Foreign Exchange Rates. Monetary assets and liabilities denominated in foreign currencies are translated into CAD$ at the rates of exchange ruling at the reporting date. Transactions in foreign currencies are recorded at the rate ruling at the date of transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. For the purpose of presenting consolidated financial information, the assets and liabilities of the Company’s foreign operations are expressed in CAD$ using exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and recognized in the Company’s foreign currency translation reserve. Such exchange differences are recognized in profit or loss in the year in which the foreign operation is disposed of.

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(e) Financing costs and interest income Financing costs comprise interest payable on borrowings and finance lease payments and interest income, which is calculated using the effective interest rate method. All borrowing costs are charged to the offset against related debt and amortized over the term of the loans.

(f) Financial instruments A financial liability is derecognized only when the liability is extinguished.

Financial assets The Company classifies its financial assets into one of the following categories as follows:

Fair value through profit or loss - This category comprises derivatives and financial assets acquired principally for the purpose of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit or loss.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortized cost using the effective interest method less any provision for impairment.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method less any provision for impairment. If there is objective evidence that the asset is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in profit or loss.

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for-sale. They are carried at fair value with changes in fair value recognized in other comprehensive income (loss). Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from accumulated other comprehensive income (loss) and recognized in profit or loss.

All financial assets except those measured at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is objective evidence of impairment as a result of one or more events that have occurred after initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or the group of financial assets. The Company has classified its cash as loan receivable and convertible debenture receivable as fair value through profit or loss as loan and receivable. Financial liabilities The Company classifies its financial liabilities into one of two categories as follows:

Fair value through profit or loss - This category comprises derivatives and financial liabilities incurred principally for the purpose of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit or loss.

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Other financial liabilities: This category consists of liabilities carried at amortized cost using the effective interest method. The Company classified its accounts payable and accrued liabilities and loan payable as other financial liabilities. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investments have been impacted. For all financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or

default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or financial re‐organization.

For certain categories of financial assets, such as receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. The carrying amount of financial assets is reduced by the impairment loss directly for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

(g) Convertible debenture receivable The Company’s investment in a convertible loan receivable can be converted to equity of the loan party at any time prior to maturity. As a result, the instrument is composed of an asset component and an embedded derivative component. The asset component is recognized initially at the fair value of a similar asset that does not have an equity conversion option. The embedded derivative component is separated from the host contract and is recognized initially at the fair value established using the Black-Scholes option pricing model. Subsequent to initial recognition, the asset component is measured at amortized cost using the effective interest method and the embedded derivative component is revalued using Black-Scholes option pricing model with the difference in fair value recorded in profit or loss.

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(h) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of loss and comprehensive loss of any reimbursement.

(i) Share capital Ordinary shares are without par value. When new shares are issued, they are recognized

within share capital at their issue price. Costs incurred directly to the issue of shares are accounted for as a deduction from share capital.

(j) Taxation Tax on profit or loss for the period comprises current and deferred tax. Tax is recognized in

the statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates

enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amount of assets

and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or

liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiary to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the Statement of Financial Position.

A deferred tax asset is recognized only to the extent that it is probable that future taxable

profits will be available against which the asset can be utilized. (k) Share-based payments

The Company accounts for stock options granted to directors, officers and employees at the fair value of the options granted. Accordingly, the fair value of the options at the date of the grant is determined using the Black-Scholes option pricing model and share-based compensation is accrued and charged to operations, with an offsetting credit to share-based payment reserve, over the vesting periods. Stock options granted to non-employees are measured at the fair value of goods or services rendered or at the fair value of the instruments issued, if it is determined that the fair value of the goods or services received cannot be reliably measured.

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The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. If and when the stock options are exercised, the applicable amounts of equity reserves are transferred to share capital. The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

(l) Earnings per share

Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. For the periods presented, the calculations proved to be anti-dilutive.

(m) Significant accounting judgments and estimates

The preparation of these consolidated financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates. The most significant estimates relate to the valuation of deferred income tax amounts, and impairment assessment of convertible loans receivable. Management is required to make estimates when determining the valuation of its convertible debenture receivable. The convertible debenture receivable, and the associated conversion feature, required option pricing models that involved various estimates and assumptions.

The most significant judgments relate to the functional currency of the Company and its subsidiary.

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(n) New Standards not yet adopted

In July 2014, the IASB issued the final version of IFRS 9 – Financial instruments (“IFRS 9”) to replace IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on an entity’s business model and the contractual cash flow of the financial asset. Classification is made at the time the financial asset is initially recognized, namely when the entity becomes a party to the contractual provisions of the instrument. IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures, including added disclosures about investments in equity instruments measured at fair value in other comprehensive income, and guidance on financial liabilities and de-recognition of financial instruments. The amended standard is effective for annual periods beginning on or after January 1, 2018, with earlier adoption still permitted.

The Company has determined that adopting IFRS 9 will not have a material impact on its consolidated financial statements, except for the accounting of convertible loan receivables. After the Company adopts IFRS 9, the Company will no longer separate the embedded derivatives from its host contract.

IFRS 15 – Revenue from contracts with customers (“IFRS 15”) was issued by the IASB on May 28, 2014, and will replace IAS 18 – Revenue, IAS 11 – Construction Contracts, and related interpretations on revenue. IFRS 15 sets out the requirements for recognizing revenue that apply to all contracts with customers, except for contracts that are within the scope of the standards on leases, insurance contracts and financial instruments. IFRS 15 uses a control based approach to recognize revenue which is a change from the risk and reward approach under the current standard. Companies can elect to use either a full or modified retrospective approach when adopting this standard and it is effective for annual periods beginning on or after January 1, 2018. The Company does not anticipate the adoption of IFRS 15 will have a material impact on its consolidated financial statements. On January 13, 2016, the IASB issued IFRS 16 – Leases, the new leases standard. The standard is effective for periods beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 has also been applied. The Company has not yet completed the process of assessing the impact of IFRS 16 on its consolidated financial statements.

3 Capital Management

The Company’s capital structure consists of items in shareholders’ equity. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. This is done primarily through equity financing, selling assets, and incurring debt. Future financings are dependent on market conditions and there can be no assurance the Company will be able to raise funds in the future. There were no changes to the Company’s approach to capital management during the period. The Company is not subject to externally imposed capital requirements.

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The Company does not have adequate sources of capital to complete its business plan, current obligations and ultimately the development of its business over the long term, and will need to raise adequate capital by obtaining equity financing, selling assets and/or incurring debt.

4 Financial Instruments and Risk Management

The Company’s activities expose it to a variety of financial risks: currency risk, credit risk, liquidity risk and cash flow interest-rate risk. These risks are limited by the Company’s financial management policies and practices as described below: Credit risks Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from The Company’s receivable and investments in convertible loan receivable.

Liquidity risks analysis All of The Company’s financial liabilities have contractual maturities of 30 days or are due on demand.

YE 31 Jan 2018

YE 31 Jan 2017

Other financial liabilities 1,821,201 1,734,779

Market risk Market risk is the risk to the Company that the fair value or future cash flows of financial instruments will fluctuate due to changes in interest rates and foreign currency exchange rates. Market risk arises as a result of the Company generating revenues and incurring expenses in foreign currencies, holding cash which earn interest, and having operations based in countries using currencies other than CAD$. Fair value Fair value is the amount at which the asset could be bought or sold in a current transaction between willing parties, or transferred to an equivalent party, other than in a liquidation sale. This is used for assets whose carrying value is based on mark-to-market valuations. The Company’s financial instruments consist of cash, convertible loans, accounts payable, and loan payable. The carrying amounts of these financial instruments are a reasonable estimate of their fair values because of their current nature. The Company classifies its fair value measurements in accordance with an established hierarchy that prioritizes the inputs in valuation techniques used to measure fair value as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 Inputs that are not based on observable market date.

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The estimated fair value of convertible loan receivable is measured based on level 2 inputs of the fair value hierarchy. Interest Rate Risk The Company does not currently have financial instruments that expose the Company to significant interest rate risk. The Company’s loan payable bears a fixed interest rate. Foreign Exchange Risk The Company’s financial instruments are substantially all denominated in USD$, GBP (£) and CAD$. Fluctuations in the exchange rates between USD$, GBP (£) and CAD$ could have a material effect on the Company’s business and on the reported amounts of various financial instruments. The Company does not utilize any financial instruments or cash management policies to mitigate the risks arising from changes in foreign currency rates.

5 Segmented Information

For the purpose of IFRS 8, the Chief Operating Decision Maker “CODM” takes the form of the board of directors. The Company’s directors are of the opinion that the business of the Company comprises a single activity being investments and advice within emerging markets.

6 Convertible Loans Recievable

The following convertible loans are outstanding:

YE 31 Jan 2018

YE 31 Jan 2017

CIC Capital Limited - -

CIC Gold Group Limited 379,060 379,060

CIC Capital Limited (“CIC Capital”) Convertible Loans The Company agreed, under a number of Convertible Loan Agreements, to provide CIC Capital convertible loans of GBP3,100,000.

The Convertible Loan are repayable, either in cash or in Common Shares at the option of CIC Capital, no later than 31 December 2018. On conversion, the Convertible Loans are convertible into Common Shares at a price of £0.06 per Common Share, each such Common Share having a Convertible Loan Warrant attached. The fair value of the equity conversion option was estimated, at initial recognition, to be $nil. As at January 31, 2017, the Company provided a full valuation allowance totalling $3,062,089 for the recovery of the loan receivable due to the uncertainty in valuation and recoverability.

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CIC Gold Group Limited (“CIC Gold”) Convertible Loans

The Company agreed, under a number of Convertible Loan Agreements, to provide CIC Gold convertible loans up to GBP1,200,000. The purpose of the convertible loan is to provide the required working capital for re-admission following a trading suspension of an acquisition and change of home state to Germany.

The Convertible Loan plus interest is repayable, either in cash or in Common Shares at the option of the CIC Gold Group, no later than 31 January 2019. On conversion, the Convertible Loans are convertible into Common Shares at a price of £0.02 per Common Share, each such Common Share having a Convertible Loan Warrant attached. The fair value of the equity conversion option was estimated, at initial recognition, to be $nil.

As at January 31, 2018 and 2017, the fair value of the convertible loan receivable was estimated using comparable market transactions. Subsequent to January 31, 2018, the Company and CIC Gold entered into an amended agreement whereby the parties agreed that the outstanding loan balance plus interest will be converted into common shares before December 31, 2018.

7 Income Taxes A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

As at 31 Jan 2018

As at 31 Jan 2017

Loss of the year (136,162) (4,682,922)

Expected income tax (recovery) $ (37,000) $ (1,218,000)

Change in statutory, foreign tax, foreign exchange rates and

-

(158,000)

Change in unrecognized deductible temporary differences

37,000 1,376,000

Total income tax expense (recovery) $ - $ -

In September 2017, the British Columbia (BC) Government proposed changes to the general corporate income tax rate to increase the rate from 11% to 12% effective January 1, 2018 and onwards. This change in tax rate was substantively enacted on October 26, 2017. The relevant deferred tax balances have been re-measured to reflect the increase in the Company's combined Federal and Provincial (BC) general corporate income tax rate from 26% to 27%.

As at 31 Jan 2018

As at 31 Jan 2017

Deferred tax assets Convertible loan receivables $ 827,000 $ -

Non-capital losses available for future period 3,471,000 -

4,298,000

-

Unrecognized deferred tax assets (4,298,000) -

Net deferred tax assets $ - $ -

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The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:

As at 31 Jan 2018 Expiry Date Range

As at 31 Jan 2017 Expiry Date Range

Temporary Differences

Convertible loan receivables 3,062,000 No expiry

date

3,062,000 No expiry

date Non-capital losses available for future period Canada 12,855,000 2032 to 2038

12,719,000 2032 to 2037

12,855,000 2032 to 2038

12,719,000 2032 to 2037

Tax attributes are subject to review, and potential adjustment, by tax authorities.

8 Loss per common share

Basic (loss) per share is calculated by dividing loss attributable to equity holders of the Company by the weighted average number of common shares outstanding during the year:

YE 31 Jan

2018 YE 31 Jan

2017

Loss attributable to the equity holders of the Company (136,162) (4,682,922)

Weighted average number of ordinary shares outstanding:

554,218,639 553,341,317

Basic and diluted EPS (CAD$) (0.0002) (0.008)

9 Deposit

YE 31 Jan 2018

YE 31 Jan 2017

Deposit (I) - 49,740

(i) Deposit represents are prepaid rental deposits. This amount was impaired as at 31 January 2018

due to the uncertainty in its recovery.

10 Accounts payable and accrued liabilities

YE 31 Jan 2018

YE 31 Jan 2017

Trade and other payables 53,442 -

Due to related party 9note 15) 1,272,154 1,272,153

1,325,596 1,272,153

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11 Share capital and reserves

Authorized Unlimited common shares without par value.

Common shares 16,900,000 common shares were issued during the year ended 31 Jan 2017 at CAD$0.055 per share to one subscriber for net proceeds totaling CAD$923,664. Of the total proceeds, $762,940 was subscribed by CIC Capital and formed part of the convertible loan receivable in lieu of cash receipt (note 6). Warrants As at 31 January 2018, there were no warrants outstanding (2017 nil).

Share Purchase Options (CAD$) The Company has a stock option plan which authorizes the board of directors to grant incentive stock options to directors, officers and employees. The exercise price and vesting provisions of the options are determined by the board based on the market values of the shares using the closing price on the date prior to date of the grant.

Stock options As at 31 January 2018, there were no employee, director and consultant options outstanding (2017 and 2016 - nil).

12 Loan Payable

Audited YE 31 Jan

2018

Audited YE 31 Jan

2017

Financial liabilities loans 495,605 462,626

CIC Fund entered into a loan facility agreement with YA Global on 2 January 2014 for a maximum aggregate amount of US$2,000,000 subject to and upon a number of terms and conditions. US$500,000 of this loan had been drawn by the year ended 31 January 2015 with interest charged at 12% per annum. The total loan facility was collateralized against the Company’s CEO and director Mr. Bromley’s shareholding of 50,418,560 common shares in the Company. In proportion, the first advance of US$500,000 loan was collateralized against Stuart Bromley’s shareholding of 12,604,640 common shares of the Company. Prior to January 31, 2017, Mr. Bromley made total payments of US$214,239 towards the loan and it was agreed between Mr. Bromley and the Company that Mr. Bromley will not seek repayment of these amounts from the Company. During the year ended January 31, 2018, the Company incurred interest expense of $61,629 on this loan facility (2017 - $58,659).

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13 Operating Lease Commitments

As at 31 January 2018, the Company had no material operating lease commitments.

14 Commitments and Contingent Liabilities

As at 31 January 2018, the Company had no material commitments and contingent liabilities other than Company’s accounts payable; accrued liabilities and loan payable.

15 Related Party Transactions

The Company is related to CIC Capital and CIC Gold by virtue of a common director.

(i) The Company’s engaged CIC Capital to provide advisory services for public listing of its Common shares, B Class share and bond issue. During the year ended 31 January 2017, the Company accrued an advisory fee of $1,527,554 (GBP850,00) payable to CIC Capital. The payable was offset against the convertible loan receivable with CIC Capital.

(ii) The Company provided convertible loans to CIC Gold and CIC Capital as outlined in note

6. The Company has impaired fully CIC Capital loan until a fair value of the Company can be established. The convertible loan will remain outstanding.

As at January 31, 2018 and 2017, $1,282,153 was due to the Company’s CEO and director. Amounts are non-interest bearing and have no fixed terms of repayment.

16 Cash Transactions

The Company did not have any significant non-cash transactions for the year ended January 31, 2018.

The significant non-cash transactions for the year ended January 31, 2017 were as follows: (i) $762,940 in share subscriptions funds due from CIC Capital was recorded as an advance

to the convertible loan receivable. (ii) $1,527,554 in advisory fee payable was offset against the convertible loan receivable

with CIC Capital.

consolidated financial statementsciccapitalfund.com/financial statements/cic capital fund... ·...

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