Information has been incorporated by reference in the accompanying information circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Jet Metal Corp. at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia, V6E 4G1, telephone (604) 681-8030 and are also available electronically on SEDAR at www.sedar.com.

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING
OF SHAREHOLDERS OF JET METAL CORP.

TO BE HELD ON JULY 27, 2016

AND

MANAGEMENT INFORMATION CIRCULAR

WITH RESPECT TO A PROPOSED CHANGE OF BUSINESS

June 17, 2016

Neither the TSX Venture Exchange Inc. nor any securities regulatory authority has in any way passed on the merits of the Change of Business described in this Information Circular.

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF JET SHAREHOLDERS

JET METAL CORP.

NOTICE IS HEREBY GIVEN that an annual general and special meeting of the shareholders of Jet Metal Corp. ("Jet") will be held at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia V6E 4G1 on July 27, 2016 at 10:00 a.m. (Vancouver Time) (the "Meeting") for the following purposes:

Annual Matters

1.	To receive and consider the audited consolidated financial statements of Jet for the year ending April 30, 2015 and the report of the auditors thereon.

To elect Mark Morabito, Mark Lotz, Stewart Wallis and Ken Brophy as directors of Jet on the basis set forth in the accompanying information circular of the Company dated June 17, 2016 (the "Information Circular") to hold office until the earlier of the closing date of the transaction contemplated by the Amalgamation Agreement (defined below) or until the next annual meeting of the shareholders of Jet, or until their successors are elected or appointed.

3.	To appoint Davidson & Company LLP, Chartered Accountants, as auditors of Jet for the ensuing year and to authorize the directors to fix the auditor's remuneration.

4.	To consider and, if thought fit, pass with or without variation, an ordinary resolution approving and ratifying Jet's 10% rolling stock option plan as more particularly described in the Information Circular.

Transaction Matters

5.	To consider and if thought appropriate, pass a special resolution approving the Change of Business, Consolidation and Continuance (the "Transaction Resolution"). as more particularly described in the Information Circular.

If the Transaction Resolution. is approved, to consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution authorizing Jet to settle liabilities owing to King & Bay West Management Corp. totaling $100,000 in consideration for the issuance of 500,000 common shares of Jet as more particularly described in the Information Circular.

7.	If the Transaction Resolution is approved, to consider, and if thought appropriate, pass with or without variation an ordinary resolution increasing the size of the Board of Directors of Jet from four (4) directors to seven (7) directors.

If the Transaction Resolution is approved, to consider, and if thought appropriate, pass with or without variation an ordinary resolution authorizing and approving the election of Mark J. Morabito, Daniel James Scott, Rejean Bourque, Donald Sorochan, Deborah Robinson, John Sutherland and Mark Lotz as the new directors of the Resulting Issuer on the basis set forth in the accompanying Information Circular to hold office from the closing date of the transaction contemplated by the Amalgamation Agreement until the next annual meeting of the shareholders of the Resulting Issuer, or until their successors are elected or appointed.

9.	To transact such other business as may properly come before the Meeting or any adjournment thereof.

For full details of each of the proposed resolutions set out above, please review the accompanying Information Circular.

If you are a registered holder of common shares of Jet and are unable to attend the Meeting in person, please complete, date and execute the accompanying form of proxy and deposit it with Computershare Investor Services Inc., 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to the Meeting.

If you are a non-registered holder of common shares of Jet and received this Notice of Annual General and Special Meeting and accompanying materials through a broker, a financial institution, a participant, a trustee or administrator of a self-administered retirement savings plan, retirement income fund, education savings plan or other similar self-administered savings or investment plan registered under the Income Tax Act (Canada), or a nominee of any of the foregoing that holds your shares on your behalf (an "Intermediary"), please complete and return the materials in accordance with the instructions provided to you by your Intermediary.

DATED at Vancouver, British Columbia on June 17, 2016.

BY ORDER OF THE BOARD OF DIRECTORS

"Mark J. Morabito"

Mark J. Morabito
Chief Executive Officer

MANAGEMENT INFORMATION CIRCULAR OF JET METAL CORP.

This information circular (the "Information Circular") is furnished in connection with the solicitation of proxies by the management of Jet Metal Corp. ("Jet") for use at the annual general and special meeting (the "Meeting") of the shareholders of Jet at the time and place and for the respective purposes set forth in the accompanying Jet Notice of Meeting (as defined herein).

All summaries of, and references to, the Transaction (as defined herein) and the Amalgamation Agreement (as defined herein) in this Information Circular are qualified in their entirety by reference to the complete text of the Amalgamation Agreement which is incorporated by reference into this Information Circular and a copy of which is available on SEDAR at www.sedar.com. In addition, upon request Jet Shareholders may obtain a copy of the Amalgamation Agreement prior to the date of the Meeting. You are urged to carefully read the full text of the Amalgamation Agreement.

No person has been authorized by Jet or Canada Jetlines Ltd. ("CJL") to give any information or make any representations in connection with the Transaction other than those contained in this Information Circular and, if given or made, any such information or representation must not be relied upon as having been authorized by Jet or CJL.

All information herein with respect to Jet has been provided by Jet. CJL and its directors and officers have relied upon Jet with respect to such information. Although CJL does not have any knowledge that would indicate that such information is untrue or incomplete, neither CJL nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information, including any of Jet's financial statements, or for the failure by Jet to disclose events or information that may affect the completeness or accuracy of such information.

All information herein with respect to CJL has been provided by CJL. Jet and its directors and officers have relied upon CJL with respect to such information. Although Jet does not have any knowledge that would indicate that such information is untrue or incomplete, neither Jet nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information, or for the failure by Jet to disclose events or information that may affect the completeness or accuracy of such information.

Unless otherwise defined herein, all capitalized terms in this Information Circular and the Appendices attached hereto shall have the meaning ascribed thereto in the Glossary of Terms. See "Glossary of Terms".

Except as otherwise specified in this Information Circular, the information set out herein is given as at June 17, 2016.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Information Circular contains "forward-looking statements" and "forward-looking information" within the meaning of applicable Canadian securities legislation (together, "forward looking information"). Except for statements of historical fact relating to Jet and CJL, the statements contained herein constitute forward-looking information, including any information as to strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as "plan", "expect", "budget", "target", "project", "intend", "believe", "anticipate", "estimate" and other similar words or statements that certain events or conditions "may" or "will" occur. Forward-looking information is based on the opinions, assumptions and estimates of management that are considered to be reasonable at the time the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include the inability of Jet and/or CJL to meet the conditions necessary to consummate the transactions contemplated under the Amalgamation Agreement; the need for additional financing; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters; the absence of dividends; competition; dilution; the volatility of Jet's common share prices and volumes; the ability of Jet to effectively integrate any future acquisitions into its business structure; inability to secure required governmental, regulatory, stock exchange or other such approvals; and general economic, market or business conditions. See the sections entitled "Risk Factors Related to the Transaction" in the Information Circular and "Risk Factors Related to the Business of CJL" in Appendix "B" - "Information Concerning CJL".

In particular, this Information Circular contains forward-looking statements pertaining to the following:

·	the expected use of proceeds from the Offering, the completion of the Transaction, the obtaining of all required regulatory approvals in connection with the Transaction, including the listing of the Resulting Issuer Shares and the Closing Date and the completion of the Transaction;

·	expectations as to future operations of the Resulting Issuer and the timing and receipt of all regulatory approvals required for operations by the Resulting Issuer;

·	desirability of operating aircraft on routes that are currently un-served or under-served and the pricing of airfares on such routes;

·	anticipated competitive response from existing airlines in Canada as well as potential new market entrants which may compete with the Resulting Issuer;

·	impact of governmental regulation on the Resulting Issuer;

·	future development and growth prospects;

·	expected operating costs, general administrative costs, costs of services and other costs and expenses;

·	the anticipated increase in the size of the airline passenger market in Canada;

·	ability to generate revenue from ancillary products and services;

·	ability to offer lower base airfares than existing airlines operating in Canada;

·	ability to meet current and future obligations;

·	treatment under governmental regulatory regimes;

·	projections of market prices and costs;

·	ability to obtain equipment, services and supplies in a timely manner, including the ability to lease or purchase aircraft; and

·	ability to obtain financing on acceptable terms or at all.

With respect to forward-looking statements contained in this Information Circular, Jet and CJL have made assumptions regarding, among other things, the following:

·	the completion of, and the expected closing date of, the Transaction and related matters;

·	the timely receipt of governmental approvals, including the receipt of approval from regulators in Canada, the United States, Mexico and other jurisdictions where the Resulting Issuer may operate;

·	the listing of the Resulting Issuer Shares on the TSXV;

·	the timely commencement of operations by the Resulting Issuer and the success of such operations;

·	the ability of the Resulting Issuer to implement its business plan as intended;

·	the legislative and regulatory environments of the jurisdictions where the Resulting Issuer will carry on business or have operations;

·	the impact of competition and the competitive response to the Resulting Issuer's business strategy;

·	availability of aircraft;

·	timing and amount of capital expenditures;

·	conditions in general economic and financial markets; and

·	the Resulting Issuer's ability to obtain additional financing on satisfactory terms.

The actual results, performance or achievements of the Resulting Issuer could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and under "Risk Factors" in this Information Circular, including but not limited to:

·	general economic conditions;

·	the ability of management to execute its business plan;

·	the competitive response from existing airlines in Canada and potential new market entrants which may compete with the Resulting Issuer;

·	the availability of sufficient financial resources to fund the Resulting Issuer's expenditures;

·	the possibility that government policies, regulations or laws may change or governmental approvals may be delayed, withheld or conditioned;

·	stock market volatility and market valuations;

·	the availability of capital on acceptable terms or at all;

·	failure to realize the anticipated benefits of the Transaction; and

·	the other factors considered under "Risk Factors" in this Information Circular.

Although Jet and CJL have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from what is anticipated in such information. The reader is cautioned not to place undue reliance on forward-looking information. The forward-looking information contained herein is presented for the purpose of assisting Jet Shareholders (as defined herein) in understanding the Transaction, Jet's expected financial and operational performance and Jet's and CJL's plans and objectives and may not be appropriate for other purposes. Management of Jet and CJL do not undertake to provide updates with respect to forward-looking information, except as may be required by law.

GLOSSARY OF TERMS

The following is a glossary of certain terms used in this Information Circular, including the Summary hereof and in the Appendices attached thereto.

"1933 Act" means the United States Securities Act of 1933, as amended;

"Affiliate" means a Company that is affiliated with another Company as described below.

A Company is an "Affiliate" of another Company if:

(a)	one of them is the subsidiary of the other, or

(b)	each of them is controlled by the same Person.

A Company is "controlled" by a Person if:

(a)	voting securities of Jet are held, other than by way of security only, by or for the benefit of that Person, and

(b)	the voting securities, if voted, entitle the Person to elect a majority of the directors of Jet.

A Person beneficially owns securities that are beneficially owned by:

(a)	a Company controlled by that Person, or

(b)	an Affiliate of that Person or an Affiliate of any Company controlled by that Person;

"Amalco" means the continuing amalgamated corporation following the Effective Time created by the Amalgamation;

"Amalgamation" means the amalgamation of Jet Subco and CJL under the provisions of section 181 of the CBCA, as contemplated by the Amalgamation Agreement;

"Amalgamation Agreement" means the amalgamation agreement dated April 12, 2016 between Jet, Jet Subco and CJL;

"Amalco Common Voting Shares" means the common voting shares in the capital of Amalco;

"Amalco Shares" means the Amalco Common Voting Shares and Amalco Variable Voting Shares;

"Amalco Variable Voting Shares" means the variable voting shares in the capital of Amalco;

"Associate" when used to indicate a relationship with a Person, means

(a)	an issuer of which the Person beneficially owns or controls, directly or indirectly, voting securities entitling him to more than 10% of the voting rights attached to outstanding securities of the issuer,

(b)	any partner of the Person,

(c)	any trust or estate in which the Person has a substantial beneficial interest or in respect of which a Person serves as trustee or in a similar capacity,

(d)	in the case of a Person who is an individual:

(i)	that Person's spouse or child, or

(ii)	any relative of the Person or of his spouse who has the same residence as that Person;

but

(e)

where the Exchange determines that two Persons shall, or shall not, be deemed to be associates with respect to a Member firm, Member corporation or holding company of a Member corporation, then such determination shall be determinative of their relationships in the application of Rule D.1.00 of the TSXV Rule Book and Policies with respect to that Member firm, Member corporation or holding company;

"BCBCA" means the Business Corporations Act (British Columbia), as amended;

"Beneficial Shareholders" means shareholders who do not hold their shares in their own names;

"Business Day" means a day on which banks are ordinarily open for business in Vancouver, British Columbia;

"Cambrian" means Cambrian Mining Finance Ltd.;

"CBCA" means the Canada Business Corporations Act;

"Change of Business" has the meaning ascribed to that term in TSXV Policy 1.1 – Interpretation as it applies to Jet changing its business from a "mining issuer" to an "industrial issuer";

"CJL" means Canada Jetlines Ltd., a company incorporated and existing under the federal laws of Canada;

"CJL Board" means the board of directors of CJL;

"CJL Common Voting Shares" means the issued and outstanding common voting shares of CJL, as currently constituted;

"CJL Options" means the options to purchase CJL Shares;

"CJL Shareholder" means a Holder of CJL Shares;

"CJL Shares" means the CJL Common Voting Shares and the CJL Variable Voting Shares, as currently constituted;

"CJL Variable Voting Shares" means the issued and outstanding common voting shares and variable voting shares of CJL, as currently constituted;

"CJL Warrants" means common share purchase warrants of CJL;

"Closing" means the closing of the Transaction in accordance with the terms of the Amalgamation Agreement;

"Closing Date" means the day that the Closing occurs;

"Closing Time" means the time that Closing occurs on the Closing Date;

"Company" means a corporation, incorporated association or organization, body corporate, partnership, trust, association or other entity other than an individual;

"Consolidation" means the proposed consolidation of the issued and outstanding Jet Shares such that one (1) Jet Share will be issued in exchange for every one and one-half (1.5) existing Jet Shares held at the effective time of the Consolidation;

"Continuance" means the continuance of Jet from the jurisdiction of British Columbia to the jurisdiction of Canada pursuant to section 308 of the BCBCA and section 187 of the CBCA, such continuance to occur prior to the Amalgamation;

"Control Person" means any Person that holds or is one of a combination of Persons that holds a sufficient number of any of the securities of an issuer so as to affect materially the control of that issuer, or that holds more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holder of those securities does not materially affect the control of the issuer;

"Current Jet Directors" means Mark Morabito, Mark Lotz, Stewart Wallis and Ken Brophy and who are to be elected to become directors of Jet immediately upon approval of the Jet Shareholders until the earlier of the next annual meeting of the Jet Shareholders, or until their successors are elected or appointed, or the Closing Time;

"Debt Settlement" has the meaning ascribed thereto under "The Jet Meeting – Approval of Debt Settlement" in this Information Circular;

"Effective Date" means the date the Amalgamation is effective as set out on the Certificate of Amalgamation;

"Effective Time" means 12:01 a.m. (Vancouver time) on the Effective Date, or such other time as the parties may agree;

"Exchange or TSXV" means the TSX Venture Exchange Inc.;

"Exchange Ratio" means the exchange ratio for which CJL shares will be exchanged for Jet Shares being each one (1) issued and outstanding CJL Share shall be exchanged for one and one-half (1.5) Resulting Issuer Share, provided that Holders of CJL Shares, as applicable that are not Canadian, shall receive Resulting Issuer Variable Voting Shares and Holders of CJL shares that are Canadian shall receive Resulting Issuer Common Voting Shares;

"Governmental Entity" means: (i) any multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, agency or entity, domestic or foreign; (ii) any stock exchange, including the TSXV; (iii) any subdivision, agent, commission, board or authority of any of the foregoing; or (iv) any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

"Holders" means, when used with reference to securities of a Company, the holders of such securities, shown from time to time in the registers maintained by or on behalf of such Company, in respect of such securities, and "Holder" means any one of them;

"IFRS" means International Financial Reporting Standards then in effect and generally accepted in Canada and consistently applied;

"Information Circular" means this management information circular, together with all appendices hereto and including the summary hereof, distributed by Jet in connection with the Jet Meeting;

"Insider" if used in relation to an issuer, means:

(a)	a director or senior officer of the issuer;

(b)	a director or senior officer of the issuer that is an insider or subsidiary of the issuer;

(c)	a Person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the Issuer; or

(d)	the issuer itself if it holds any of its own securities;

"In-the-Money Amount" in respect of a stock option means the amount, if any, by which the aggregate fair market value at that time of the securities subject to the option exceeds the aggregate exercise price of the option;

"Jet" means Jet Metal Corp., a corporation incorporated under the BCBCA;

"Jet Board" means the board of directors of Jet as the same is constituted from time to time;

"Jet Common Voting Shares" means the common voting shares in the capital of Jet;

"Jet Meeting" or "Meeting" means the annual general and special meeting of the Jet Shareholders to be held on July 27, 2016 and any adjournment(s) or postponement(s) thereof;

"Jet Notice of Meeting" means the Notice of the Meeting of Jet Shareholders dated June 17, 2016 which accompanies this Information Circular being sent to Jet Shareholders;

"Jet Options" means options exercisable to purchase Jet Shares, each of which entitles the Holder thereof to purchase one Jet Share;

"Jet Resolutions" means, collectively, the resolutions to be considered, and if deemed advisable, approved by the Jet Shareholders at the Jet Meeting;

"Jet Shares" means the Jet Common Voting Shares, and after the Continuance, means the Jet Common Voting Shares and the Jet Variable Voting Shares;

"Jet Shareholder" means a Holder of Jet Shares;

"Jet Shareholder Approval" means that the requisite approval for the Jet Transaction Resolution, which shall be 66⅔% of the votes cast on such resolutions by Jet Shareholders, present in person or by proxy at the Jet Meeting;

"Jet Stock Option Plan" means the stock option plan of Jet, pursuant to which options to purchase Jet Shares may be issued in accordance with the policies of the TSXV;

"Jet Subco" means Jet Metal Acquisition Corp., a company to be incorporated under the CBCA to facilitate the Amalgamation;

"Jet Transaction Resolution" means the special resolution of the Jet Shareholders approving the Change of Business, Consolidation and Continuance which is to be considered at the Jet Meeting, substantially in the form and content of Schedule "A" hereto;

"Jet Transfer Agent" means Computershare Investor Services Inc. at its office in Vancouver, British Columbia;

"Jet Variable Voting Shares" means, after the Continuance, the variable voting shares in the capital of Jet;

"King & Bay West" means King & Bay West Management Corp.;

"King & Bay West Agreement" means the Management Services Agreement between Jet and King & Bay West dated September 16, 2014;

"Laws" means all laws, by-laws, rules, regulations, orders, ordinances, codes, guidelines, instruments, policies, notices, directions and judgments or other requirements of any Governmental Entity;

"Material Adverse Effect" means any one or more changes, effects, events, occurrences or states of fact, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), business, operations, prospects, results of operations, capital, property, obligations (whether absolute, accrued, conditional or otherwise) or financial condition of Jet or CJL, as applicable, other than changes, effects, events, occurrences or states of fact resulting from: (a) a change in the market price of the Jet Shares or CJL Shares, as applicable, following and reasonably attributable to the public announcement of the execution of this Agreement and the transactions contemplated hereby, (b) any changes affecting the global airline industry generally; (c) general economic, financial, currency exchange, securities or commodity market conditions in Canada or the United States; (d) any change in IFRS occurring after the date hereof; (e) any change in applicable Laws or in the interpretation thereof by any Governmental Entity occurring after the date hereof; (f) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism; or (g) any natural disaster, provided, however, that with respect to clauses (b) to (g), such changes do not relate primarily to Jet or CJL, as applicable, or do not have a disproportionate effect on Jet or CJL, as applicable, compared to other companies of similar size operating in the airline industry and references in the Amalgamation Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a "Material Adverse Effect" has occurred;

"Member" has the meaning ascribed thereto in Rule A.1.00 of the TSXV Rule Book and Policies;

"New Jet Directors" means Mark J. Morabito, Daniel James Scott, Rejean Bourque, Donald Sorochan, Deborah Robinson, John Sutherland and Mark Lotz, all of whom will be directors of Jet immediately upon completion of the Transaction;

"New King & Bay West Agreement" means the King & Bay West Agreement with amendments that have been agreed to by Jet and CJL;

"NI 43-101" means National Instrument 43-101 – Standards of Disclosure for Mineral Projects;

Offering" means the private placement of up to of 20,000,000 Resulting Issuer Units, at a price of $0.30 per Resulting Issuer Unit, for gross proceeds of up to $6,000,000¹;

"Ordinary Resolution" means a resolution passed by a majority of the votes cast by the shareholders in respect of that resolution;

"Person" or "person" means a Company or individual;

"Promoter" has the meaning ascribed thereto in applicable securities law;

"Proxy" means the form of proxy which accompanies this Information Circular;

"Resulting Issuer" means Jet after completion of the Transaction;

"Resulting Issuer Common Voting Shares" means the Jet Common Voting Shares after the Continuance;

"Resulting Issuer Shares" means the Resulting Issuer Common Voting Shares and the Resulting Issuer Variable Voting Shares;

"Resulting Issuer Units" means the up to 20,000,000 units to be issued pursuant to the Offering, with each Resulting Issuer Unit consisting of one Resulting Issuer Share and one-half of one Resulting Issuer Offering Warrant;

¹ The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

"Resulting Issuer Variable Voting Shares" means the Jet Variable Voting Shares after the Continuance;

"Resulting Issuer Offering Warrants" means the means the warrants, one-half of which forms part of a Resulting Issuer Unit, with each whole warrant entitling the Holder thereof to purchase one Resulting Issuer Share at a price of $0.50 per Resulting Issuer Share for a period of twenty-four (24) months from the closing of the Offering;

"Resulting Issuer Options" means after the Closing of the Transaction, the Jet Options and the CJL Options (as exchanged for Replacement Options pursuant to the Amalgamation);

"Resulting Issuer Warrants" means after the Closing of the Transaction, the Jet Warrants (as adjusted for the Consolidation), Resulting Issuer Offering Warrants and the CJL Warrants (as adjusted for the Amalgamation);

"SEC" means the United States Securities and Exchange Commission;

"SEDAR" means the System for Electronic Document Analysis and Retrieval;

"Securities Act" means the Securities Act (British Columbia);

"Special Resolution" means a resolution passed by a majority of not less than two-thirds (66⅔) of the votes cast by shareholders who voted in respect of that resolution;

"Tax Act" means the Income Tax Act (Canada), as amended, including the regulations promulgated thereunder;

"Transaction" means the transactions contemplated under the Amalgamation Agreement including, without limitation, the Consolidation, Continuance, the Change of Business and the Offering, and the documents, instruments, certificates, and other agreements to be executed in connection with the Amalgamation Agreement;

"TSXV" has the same meaning as that given to "Exchange" herein;

"TSXV Policy 4.4" means the TSXV Corporate Finance Manual Policy 4.4 – Incentive Stock Options;

"TSXV Policy 5.2" means the TSXV Corporate Finance Manual Policy 5.2 – Change of Business and Reverse Take-Overs;

"U.S." or "United States" means the United States of America;

Words importing the singular number, where the context requires, include the plural and vice versa and words importing any gender include all genders. All dollar amounts herein are in Canadian dollars, unless otherwise stated.

SELECT AIRLINE INDUSTRY TERMS

The following airline industry specific terms are used in this Information Circular:

"ASM" or "Available Seat Miles" is a measure of capacity, calculated by multiplying the total number of seats available for passengers by miles flown.

"Base Airfare" means the airfare advertised by an airline excluding surcharges, taxes, other fees or ancillary revenue items.

"CASM" or "Cost Per Available Seat Mile" is a measure of cost per unit of capacity, calculated by dividing total operating costs by ASMs.

"FTE employee" means full-time equivalent employee.

"LCC" means low cost carrier.

"load factor" is a measure of production relative to capacity calculated by dividing RPMs by ASMs.

"MCDA" means the two major Canadian domestic airlines, Air Canada and WestJet and their affiliate airlines.

"RASM" or "Revenue Per Available Seat Mile" is a measure of revenue per unit of capacity, calculated by dividing total revenue by ASMs.

"RPM" or "Revenue Passenger Mile" is a measure of production based upon one passenger flying one mile.

"SM" or "statute mile" means the straight line distance from one minute of latitude to the next, not taking into account the curvature of the earth.

"stage length" means the average distance flown, measured in statute miles, per aircraft departure. The measure is calculated by dividing total aircraft miles flown by the number of total aircraft departures performed.

"turboprop" means an aircraft with a turbine engine which drives an aircraft propeller.

"ULCC" means ultra-low cost carrier.

"yield" means the revenue generated per passenger per mile travelled, represented in cents per mile and includes the NAV Canada surcharge fee but excludes ancillary revenue and is calculated by dividing revenue by RPM.

SUMMARY

The following is a summary relating to CJL, Jet and the Resulting Issuer and should be read together with the more detailed information and financial statements and data contained elsewhere in this Information Circular. This summary is provided for convenience of reference only and is qualified in its entirety by the more detailed information and financial statements and data appearing elsewhere in this Information Circular and in the Appendices attached hereto.

Jet

Jet was incorporated pursuant to the Company Act (British Columbia) (replaced by the BCBCA effective March 29, 2004) on September 2, 1966 under the name Shasta Mines & Oil Ltd. On February 4, 1975 Jet changed its name to International Shasta Resources Ltd. On May 20, 1994, Jet changed its name to Consolidated Shasta Resources Inc. On November 23, 1994, Jet changed its name to Lima Gold Corporation and on September 21, 1999 Jet changed its name to International Lima Resources Corp On March 1, 2004 Jet changed its name to Crosshair Exploration & Mining Corp. On June 1, 2004 Jet transitioned under the BCBCA. On October 28, 2011 Jet changed its name to Crosshair Energy Corporation. On September 17, 2013, Jet changed its name to Jet Metal Corp. The Jet Shares are currently listed on the TSXV under the symbol "Jet". See Appendix "A" - "Information Concerning Jet Metal Corp." for additional information relating to Jet. Following the completion of the Transaction, it is anticipated that the Jet Board will be comprised of the New Jet Directors.

CJL

CJL was incorporated under the CBCA on August 28, 2012 under the name "Canada Jetlines Ltd." See Appendix "B" – "Information Concerning CJL" for additional information relating to CJL.

The Jet Meeting

The Jet Meeting will be held on July 27, 2016 at 10:00 a.m. (Vancouver Time) at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia for the purpose of considering and, if deemed advisable, passing, with or without variation the Jet Resolutions.

Jet Shareholder Approval

Pursuant to the BCBCA and TSXV Policy 5.2, the Jet Transaction Resolution requires approval by a majority of not less than two-thirds of the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting. The remaining Jet Resolutions require approval by a majority of not less than fifty percent (50%) of the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting.

Dissent Rights

Pursuant to Sections 237 to 247 of the BCBCA, Jet Shareholders have the right to dissent in respect of the Continuance. This dissent right is described in the Appendices "F" and "G" attached to this Information Circular. If a Jet Shareholder wishes to dissent, a written notice must be received by Jet at least two business days (excluding Saturdays, Sundays and holidays) before the date of the Jet Meeting. As a result of giving a notice of dissent, a Jet Shareholder may, if the Continuance becomes effective, require the Resulting Issuer to purchase all of such Jet Shares held by the Jet Shareholder. Failure to strictly comply with the dissent procedures described in this Information Circular may result in the loss or unavailability of any right of dissent.

The Transaction

On April 12, 2016, Jet and CJL entered into the Amalgamation Agreement in connection with the Transaction. Subject to TSXV and applicable shareholder approvals, Jet and CJL have agreed to complete the Transaction pursuant to which Jet will effect the Continuance and Jet Subco and CJL will amalgamate and continue as a single company (Amalco) that is a wholly-owned subsidiary of Jet. In connection with the Transaction Jet will change its name to "Canada Jetlines Ltd." (the "Resulting Issuer"). The Resulting Issuer Shares will be listed on the TSXV under the symbol "JET". The Transaction will be effected pursuant to the terms and conditions of the Amalgamation Agreement and the provisions of the CBCA and the BCBCA. The Transaction is an arm's length transaction.

The Amalgamation

On April 12, 2016, Jet and CJL entered into the Amalgamation Agreement, to effect the Transaction pursuant to which Jet has agreed to effect the Continuance prior to the Effective Time and thereafter Jet Subco and CJL will amalgamate at the Effective Time to form Amalco. Pursuant to the Amalgamation Agreement one and one-half (1.5) Resulting Issuer Shares will be issued in exchange for every one (1) CJL Share held, provided that Holders of CJL Shares that are not Canadian shall receive Resulting Issuer Variable Voting Shares and Holders of CJL Shares that are Canadian shall receive Resulting Issuer Common Voting Shares. No fractional Resulting Issuer Shares will be issued to CJL Shareholders in connection with the Amalgamation. Where the number of Resulting Issuer Shares to which a CJL Shareholder is entitled is not a whole number, the number of Resulting Issuer Shares issued to such CJL Shareholder will be rounded down to the nearest whole number without any compensation therefor.

Outstanding warrants of Jet and CJL and the outstanding stock options of Jet and CJL will automatically become exercisable for or shall be exchanged for Resulting Issuer Shares, subject to all necessary adjustments to reflect the terms of the Transaction and subject to the terms governing the warrants and options. After the Transaction is complete, all of the tangible and intangible assets of Jet Subco and CJL will be owned by and held in Amalco and Amalco shall be a wholly-owned subsidiary of Jet. In accordance with the provisions of the BCBCA, Jet will require shareholder approval by way of special resolution in connection with the Continuance that will occur prior to the Amalgamation.

Completion of the Transaction is subject to compliance with the terms and conditions set forth in the Amalgamation Agreement which is incorporated by reference into this Information Circular and a copy of which is available on SEDAR at www.sedar.com. The respective obligations of Jet and CJL to complete the Transaction are subject to a number of conditions which must be satisfied or waived in order for Closing of the Transaction to occur. The summary of the Amalgamation Agreement contained in this Information Circular is qualified entirely by the full text of the Amalgamation Agreement.

If the Jet Resolution are approved as required and the other conditions precedent to the Transaction specified in the Amalgamation Agreement are satisfied or waived, Jet and CJL expect that the Closing Date will be on or before August 12, 2016 unless such date is extended in accordance with the terms of the Amalgamation Agreement.

The Consolidation

Prior to the effective time of the Continuance, Jet will alter its share capital by consolidating all of the issued and outstanding Jet Shares on the basis of one post-consolidation Jet Share for every one and-one-half (1.5) pre-consolidation Jet Shares. In the event that the Consolidation would result in the issuance of a fractional Jet Share, no fractional Jet Shares will be issued and such fraction will be rounded down to the next whole number:

The Continuance

Prior to the Effective Time, Jet will complete the Continuance under the CBCA, subject to regulatory and Jet Shareholder approval. This means that Jet will continue its corporate existence as a corporation governed by the CBCA rather than the BCBCA and the Transaction will be governed by the CBCA. The Continuance requires approval of not less than two-thirds of Jet Shareholders present in person or by proxy at the Meeting.

Offering²

Jet expects to complete the Offering of Resulting Issuer Units for aggregate gross proceeds of up to of $6,000,000. It is currently anticipated that Jet will issue up to 20,000,000 Resulting Issuer Units at a price of $0.30. Each Resulting Issuer Unit will consist of one Resulting Issuer Share and one half of one Resulting Issuer Warrant exercisable for twenty-four (24) months at a price of $0.50 for each whole Resulting Issuer Share.

² The number of securities issued pursuant to the Offering and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by Jet and CJL.

Interests of Insiders, Promoters or Control Persons of Jet

The following chart summarizes the interests of Insiders, Promoters and Control Persons of Jet and their respective Associates and Affiliates both before and after giving effect to the Transaction:

INSIDER, PROMOTER OR CONTROL PERSON OF JET	JET SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) PRIOR TO GIVING EFFECT TO THE CONSOLIDATION AND THE TRANSACTION		RESULTING ISSUER SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) AFTER GIVING EFFECT TO THE TRANSACTION
INSIDER, PROMOTER OR CONTROL PERSON OF JET	NUMBER	PERCENTAGE	NUMBER	PERCENTAGE⁽¹⁾⁽²⁾
Mark J. Morabito	2,979,971	10.56%	2,319,980	4.33%
Stewart Wallis	103,150	<1.00%	68,766	<1.00%
Mark Lotz	0	0.00%	0	0.00%
Ken Brophy	100,630	<1.00%	67,086	<1.00%
Kate-Lynn Genzel	0	0.0%	0	0.0%
Sheila Paine	1,250	<1.00%	833	<1.00%

Note:

(1)

On a partially diluted basis, assuming the issuance of (i) 14,246,559 Resulting Issuer Shares to CJL Shareholders, (ii) 20,000,000 Resulting Issuer Shares issued pursuant to the Offering; (iii) 333,333 Resulting Issuer Shares for the Debt Settlement; and (iv) 420,547 Resulting Issuer Shares to Cambrian. The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

(2)	Assuming no shares are purchased by these persons under the Offering.

See Appendix "C" - "Information Concerning the Resulting Issuer Upon Completion of the Transaction" for additional information.

Selected Pro Forma Financial Information

The following table sets out selected pro forma financial information of Jet prior to and after giving effect to the Offering and the Transaction.

		AS AT JANUARY 31, 2016⁽¹⁾				AS AT JANUARY 31, 2016 AFTER GIVING EFFECT TO THE OFFERING AND THE TRANSACTION⁽¹⁾⁽²⁾
Cash		$	2,029,126			$	7,462,116

Note:

(1)	Extracted from Appendix "E" – "Pro Forma Unaudited Financial Statements of Jet Metal Corp.".

(2)	Assuming that gross proceeds of $6,000,000 are raised pursuant to the Offering. The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

Available Funds and Principal Purposes

Funds Available

After giving effect to the Transaction and assuming completion of the Offering for gross proceeds of $6,000,000 the unaudited pro forma working capital of the Resulting Issuer would be approximately $6,392,357 as at May 31, 2016.

		JET AS AT MAY 31, 2016				CJL AS AT MAY 31, 2016				AFTER GIVING EFFECT TO THE OFFERING AND THE TRANSACTION⁽¹⁾
Working Capital (Deficiency) (unaudited)		$	1,411,333			$	(601,046	)		$	6,392,357

Note:

(1)

Assuming net proceeds of $5,567,945 are raised pursuant to the Offering ($6,000,000 gross proceeds less $432,055 in finder's fees). The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

Principal Purposes of Funds

The Resulting Issuer will use the funds available upon completion of the Transaction to further the business objectives of CJL, as described in Appendix "B" – "Information Concerning CJL". Utilization of funds is anticipated to be as follows:

Activity
Plan & Execute Phase 1 Marketing Strategy	$	500,000
Launch website for merchandising and destination content	$	350,000
Execute Human Resources Plan	$	200,000
Execute Phase 1 of Reservation System procurement	$	400,000
Complete the Canadian Transportation Agency licensing process, including achieving a 705 Air Operator Certificate	$	100,000
Phase 1 Aircraft Launch activities, including acquisition of initial two aircraft	$	2,000,000
Launch Phase 1 Air Crew and Cabin Crew recruiting and equipping	$	250,000
Execute operations systems acquisition project	$	250,000
Transaction Costs	$	150,000
Estimated 12-month General & Administrative Expenses	$	1,800,000	⁽¹⁾
Unallocated Working Capital	$	392,358
TOTAL	$	6,392,357	⁽²⁾

Notes:

(1)

Inclusive of: compensation of FTE employees leading up to the period of operations, including executive salaries, marketing, finance and administration; consulting; insurance; facilities rental and improvements; property taxes; legal; audit; accounting; employee benefits; information technology equipment, services, training and software, vehicle leases and rentals; general office; and travel.

(2)

Assuming (i) existing net working capital position of $810,287 and (ii) that net proceeds of $5,567,945 are raised pursuant to the Offering ($6,000,000 gross proceeds less $432,055 in finder's fees). The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

See Appendix "C" - "Information Concerning the Resulting Issuer Upon Completion of the Transaction"

Stock Exchange Listings

The issued and outstanding Jet Shares are listed and posted for trading on the TSXV under the symbol "JET". In accordance with the policies of the TSXV, the Jet Shares were halted from trading on February 17, 2016, the date on which the proposed Transaction was announced by Jet and CJL. On February 16, 2016, the last day that Jet Shares traded prior to the announcement of the Transaction, the closing price of the Jet Shares was $0.085. The Jet Warrants are currently listed on the TSXV under the trading symbol "JET.WT" and on closing of the Transaction will be listed on the TSXV under the symbol JET.WT and exercisable for Resulting Issuer Shares based on the Exchange Ratio.

Interest of Experts

No person or company who is named herein as having prepared or certified a part of this Information Circular or prepared or certified a report or valuation described or included in this Information Circular has, or will have immediately following completion of the Transaction, any direct or indirect interest in Jet or CJL.

Relationship with Cambrian

Pursuant to a finder's fee agreement dated January 7, 2016 (the "FF Agreement"), Jet has agreed to pay Cambrian a finder's fee. Cambrian does not hold any shares in Jet and is an arm's length party.

Risk Factors

There are number of risk factors associated with the completion of the Transaction and in respect of the business of each of Jet and CJL upon completion of the Transaction, including but not limited to:

·	there is no assurance that all conditions precedent to the Transaction will be satisfied;

·	the ability of management to execute its business plan;

·	major safety incidents may occur;

·	the lack of operational history of CJL and the Resulting Issuer;

·	the competitive response from existing airlines in Canada and potential new market entrants which may compete with the Resulting Issuer;

·	the availability of sufficient financial resources to fund the Resulting Issuer's expenditures;

·	the possibility that government policies, regulations or laws may change or governmental approvals may be delayed, withheld or conditioned;

·	stock market volatility and market valuations;

·	the seasonal nature of the airline business in Canada;

·	foreign currency fluctuations;

·	the risk of future litigation;

·	the availability of capital on acceptable terms or at all;

·	failure to realize the anticipated benefits of the Transaction; and

·	the other factors considered under "Cautionary Statement Regarding Forward Looking Information" in this Information Circular, "Risk Factors Related to the Transaction" in the Information Circular and "Risk Factors Related to the Business of CJL" in Appendix "B" – "Information Concerning CJL".

GENERAL PROXY INFORMATION

Solicitation of Proxies

This Information Circular is furnished in connection with the solicitation of proxies by or on behalf of management of Jet to be used at the Jet Meeting to be held at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia on July 27, 2016 at 10:00 a.m. (Vancouver time) for the purpose set forth in the accompanying Jet Notice of Meeting.

Persons or Companies Making the Solicitation

The enclosed Instrument of Proxy is solicited by management of Jet ("Management"). Solicitations will be made by mail and possibly supplemented by telephone or other personal contact to be made without special compensation by regular officers and employees of Jet. Jet does not reimburse Jet Shareholders' nominees or agents (including brokers holding shares on behalf of clients) for the cost incurred in obtaining from their principals, authorization to execute the Instrument of Proxy. No solicitation will be made by specifically engaged employees or soliciting agents. The cost of solicitation will be borne by Jet. None of the directors of Jet have advised that they intend to oppose any action intended to be taken by Management as set forth in this Information Circular. The contents and the sending of this Information Circular have been approved by the Jet Board.

Appointment and Revocation of Proxies

The persons named in the accompanying Instrument of Proxy are directors or officers of Jet and are nominees of Management. A Jet Shareholder has the right to appoint a person to attend and act for him/her on his/her behalf at the Jet Meeting other than the persons named in the enclosed Instrument of Proxy. To exercise this right, a Jet Shareholder should strike out the names of the persons named in the Instrument of Proxy and insert the name of his/her nominee in the blank space provided, or complete another proper form of Instrument of Proxy. The completed Instrument of Proxy should be deposited with Jet's Registrar and Transfer Agent, Computershare Investor Services Inc., 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, at least 48 hours before the time of the Jet Meeting or any adjournment thereof, excluding Saturdays, Sundays and holidays.

The Instrument of Proxy must be dated and be signed by the Jet Shareholder or by his/her attorney in writing, or, if the Jet Shareholder is a Company, it must either be under its common seal or signed by a duly authorized officer.

In addition to revocation in any other manner permitted by law, a Jet Shareholder may revoke a Proxy either by (a) signing a Proxy bearing a later date and depositing it at the place and within the time aforesaid, or (b) signing and dating a written notice of revocation (in the same manner as the Instrument of Proxy is required to be executed as set out in the notes to the Instrument of Proxy) and either depositing it at the place and within the time aforesaid or with the Chairman of the Jet Meeting on the day of the Jet Meeting or on the day of any adjournment thereof, or (c) registering with the Scrutineer at the Jet Meeting as a Jet Shareholder present in person, whereupon such Proxy shall be deemed to have been revoked.

Non-Registered Holders of Jet Shares

Only Jet Shareholders whose names appear in Jet's Central Securities Register (the "Registered Jet Shareholders") or duly appointed proxyholders are permitted to vote at the Jet Meeting. Jet Shareholders who do not hold their common shares in their own name ("Beneficial Jet Shareholders") are advised that only proxies from Jet Shareholders of record can be recognized and voted at the Jet Meeting. Beneficial Jet Shareholders who complete and return an Instrument of Proxy must indicate thereon the person (usually a brokerage house) who holds their common shares as registered Jet Shareholder. Every intermediary (broker) has its own mailing procedure, and provides its own return instructions, which should be carefully followed. The form of proxy supplied to Beneficial Jet Shareholders is similar to that provided to Registered Jet Shareholders. However, its purpose is limited to instructing the registered Jet Shareholder how to vote on behalf of the Beneficial Jet Shareholder. Management of Jet does not intend to pay for intermediaries to forward to objecting beneficial owners under National Instrument 54-101 the proxy-related materials and Form 54-101F7 – Request for Voting Instructions Made by Intermediary, and in case of an objecting beneficial owner, the objecting beneficial owner will not receive the materials unless the objecting beneficial owner's intermediary assumes the cost of delivery.

If common shares are listed in an account statement provided to a Jet Shareholder by a broker, then in almost all cases those common shares will not be registered in such Jet Shareholder's name on the records of Jet. Such common shares will more likely be registered under the name of the Jet Shareholder's broker or agent of that broker. In Canada, the vast majority of such common shares are registered under the name of CDS & Co. (the registration for the Canadian Depository for Securities, which company acts as nominee for many Canadian brokerage firms). Common shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Jet Shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares for their clients. The directors and officers of Jet do not know for whose benefit the common shares registered in the name of CDS & Co. are held.

In accordance with National Instrument 54-101 of the Canadian Securities Administrators, Jet has distributed copies of the Notice of Jet Meeting, this Information Circular and the Instrument of Proxy to the clearing agencies and intermediaries for onward distribution. Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Jet Shareholders in advance of Jet Shareholders' meetings unless the Beneficial Jet Shareholders have waived the right to receive meeting materials. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Jet Shareholders in order to ensure that their common shares are voted at the Jet Meeting. Often the form of proxy supplied to a Beneficial Jet Shareholder by its broker is identical to the Instrument of Proxy provided by Jet to the Registered Jet Shareholders. However, its purpose is limited to instructing the Registered Jet Shareholder how to vote on behalf of the Beneficial Jet Shareholder. Should a Beneficial Jet Shareholder receive such a form and wish to vote at the Jet Meeting, the Beneficial Jet Shareholder should strike out the Management proxyholder's name in the form and insert the Beneficial Jet Shareholder's name in the blank provided. The majority of brokers now delegate the responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge"). Broadridge typically applies a special sticker to the proxy forms, mails those forms to the Beneficial Jet Shareholders and requests Beneficial Jet Shareholders to return the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Jet Meeting. A Beneficial Jet Shareholder receiving a proxy with a Broadridge sticker on it cannot use that proxy to vote common shares directly at the Jet Meeting – the proxy must be returned to Broadridge well in advance of the Jet Meeting in order to have the common shares voted. All references to Jet Shareholders in this Information Circular and the accompanying Instrument of Proxy and Notice of Jet Meeting are to Jet Shareholders of record unless specifically stated otherwise.

Voting of Shares and Exercise of Discretion of Proxies

On any poll, the persons named in the enclosed Instrument of Proxy will vote the shares in respect of which they are appointed and, where directions are given by the Jet Shareholder in respect of voting for or against any resolution, will do so in accordance with such direction.

If no choice is specified on the proxy with respect to a matter to be acted upon, the proxy confers discretionary authority with respect to the matter upon the proxyholder named on the Instrument of Proxy. In the absence of any direction in the Instrument of Proxy, it is intended that the proxyholder named by Management in the Instrument of Proxy will vote the shares represented by the proxy in favour of the motions proposed to be made at the Jet Meeting as stated under the headings in this Information Circular. The Instrument of Proxy enclosed, when properly signed, confers discretionary authority with respect to amendments or variations to any matters which may properly be brought before the Jet Meeting.

At the time of printing of this Information Circular, the Management of Jet is not aware that any such amendments, variations or other matters are to be presented for action at the Jet Meeting. However, if any other matters which are not now known to the Management should properly come before the Jet Meeting, the Proxies hereby solicited will be exercised on such matters in accordance with the best judgement of the nominee.

Quorum

A quorum of Jet Shareholders will be present at the Jet Meeting if two persons who are Jet Shareholders who, in the aggregate, hold at least five percent (5%) of the issued Jet Shares entitled to be voted at the Jet Meeting are present in person or by proxy.

Voting Shares and Principal Holders Thereof

As of the date of this Information Circular, Jet has 28,218,451 Jet Shares without par value issued and outstanding. All Jet Shares in the capital of Jet are of the same class and each carries the right to one vote.

June 27, 2016 has been determined as the record date as of which Jet Shareholders are entitled to receive notice of and attend and vote at the Jet Meeting. Jet Shareholders desiring to be represented by proxy at the Jet Meeting must deposit their proxies at the place and within the time set forth in the notes to the Instrument of Proxy in order to entitle the person duly appointed by the proxy to attend and vote thereat.

Other than as set out below, to the knowledge of the directors or executive officers of Jet, as of the date of this Information Circular, 2016 no Shareholder beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to the Common Shares of Jet.

Mark J. Morabito is the beneficial owner, directly and indirectly, of 2,979,971 Common Shares representing approximately 10.56% of the issued and outstanding Common Shares of Jet.

Interest of Certain Persons or Companies in Matters to be Acted Upon

Other than as set forth above and elsewhere herein, Jet is not aware of any material interests, other than as Holders of Jet Shares, direct or indirect, by way of beneficial ownership of securities or otherwise, of any director or executive officer of Jet or any Jet Shareholder holding more than 10% of the voting rights attached to the Jet Shares or any Associate or Affiliate of any of the foregoing in any transaction which has or will materially affect Jet, or in any matters to be considered at the Jet Meeting.

As at the date of this Information Circular, the directors and officers of Jet, as a group, owned, directly or indirectly, 3,185,001 Jet Shares or 11.29% of the issued and outstanding Jet Shares. To the knowledge of Jet, as of the date hereof, no directors, officers or Insiders of Jet, own, directly or indirectly, or exercise control of or direction over, any CJL Shares.

As at the date hereof, to the knowledge of Jet, no directors or officers or other Insiders of CJL own, directly or indirectly, or exercise control of or direction over, any Jet Shares. See Appendix "A" - "Information Concerning Jet Metal Corp. – Interests of Insiders, Promoters or Control Persons of Jet Metal Corp."

Interest of Informed Persons in Material Transactions

Other than as disclosed in this Information Circular and transactions carried out in the ordinary course of business of Jet or its subsidiary, none of the directors or executive officers of Jet, any shareholder directly or indirectly beneficially owning, or exercising control or direction over, more than 10% of the outstanding Jet Shares, nor an associate or affiliate of any of the foregoing persons has had, during the most recently completed financial year of Jet or during the current financial year, any material interest, direct or indirect, in any transactions that materially affected or would materially affect Jet or its subsidiary.

THE TRANSACTION

Reasons for and Background to the Transaction

Jet was introduced to CJL by Cambrian in January 2016. Jet and CJL subsequently negotiated the terms of a letter of intent for the Transaction which was entered into by the parties and then announced on February 17, 2016. The Amalgamation Agreement was executed on April 12, 2016.

The principal rational for the Transaction is to transform Jet into an industrial issuer and merge the considerable management and capital markets expertise of Jet's management company, King & Bay West, with the assets and considerable airline operational expertise of CJL. CJL plans to operate scheduled point-to-point all jet air service nationally with primary bases at the Vancouver International Airport and the Hamilton International Airport, with a secondary base at the Winnipeg International Airport. CJL plans to operate flights throughout Canada, the United States, Mexico and the Caribbean.

CJL will use the proven commercial aviation ULCC profitability model to attract new passengers with low airfares and plans to retain these passengers by demonstrating a passion for service. The proven ULCC model provides the

capability for specifically designed airlines to reduce their costs in a manner that provides scheduled airline service at base airfares averaging 40% below their nearest competitor thus creating new passenger demand by market stimulation. The worldwide success of other ULCC airlines such as Allegiant Air and Spirit Airlines in the United Sates, Air Asia in Asia, and Ryanair and EasyJet in Europe demonstrates the power of these ULCC airlines to attract and significantly stimulate passenger traffic and lead the markets they operate in while generating strong returns for shareholders.

Recommendation of the Jet Board

After extensive analysis, discussion and reflection with senior management of Jet, the Jet Board unanimously concluded that the Transaction:

(a)	offers Jet Shareholders the greatest opportunity for creating the financial strength necessary to sustain the long-term viability of Jet;

(b)	is the best option available to maximize the value of the Jet Shares;

(c)	is in the best interest of the Jet Shareholders and Jet.

In coming to its conclusions and recommendations, the Jet Board considered information concerning the financial condition, results of operations, business, future plans and prospects of each of Jet and CJL and the resulting potential for enhanced business efficiency.

The Jet Board has unanimously determined that the Transaction is in the best interest of Jet and the Jet Shareholders, and has authorized the submission of the Jet Resolutions to the Jet Shareholders for their approval. The Jet Board unanimously recommends that Jet Shareholders vote in favour of the Jet Resolutions.

The Amalgamation Agreement

The Amalgamation Agreement sets out the terms and conditions relating to the Transaction. The provisions of the Amalgamation Agreement are the result of arm's length negotiations conducted between representatives of Jet and CJL. Below are summaries of certain of the material terms and conditions of the Amalgamation Agreement, which summaries are subject to, and qualified in their entirety by reference to, the terms and conditions of the full text of the Amalgamation Agreement which is incorporated by reference into this Information Circular, and a copy of which is available on SEDAR at www.sedar.com. All capitalized terms used in this summary and not otherwise defined in this Information Circular have the meanings ascribed to them in the Amalgamation Agreement.

The Consolidation

The Continuance

Prior to the Effective Time, Jet will complete the Continuance under the CBCA, subject to regulatory and shareholder approval. This means that Jet will continue its corporate existence as a corporation governed by the CBCA rather than the BCBCA and the Transaction will be governed by the CBCA. The Continuance requires approval of a special resolution by a majority of not less than two-thirds of the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting.

The Change of Business

Jet is currently listed on the TSXV as a "mining issuer" with a focus on mineral resource exploration and development. This means that as the Transaction is outside of the mining sector, the Transaction represents a "Change of Business" under the policies of the TSXV which, among other things, requires that Jet obtain shareholder approval for such Change of Business.

Terms of the Amalgamation

In connection with the Transaction, Jet Subco and CJL will amalgamate under the provisions of Section 181 of the CBCA. In connection with the Amalgamation one and one-half (1.5) Resulting Issuer Shares will be issued in exchange for every one (1) CJL Share held, provided that Holders of CJL Shares that are not Canadian shall receive Resulting Issuer Variable Voting Shares and Holders of CJL Shares that are Canadian shall receive Resulting Issuer Common Voting Shares. No fractional Resulting Issuer Shares will be issued to CJL Shareholders in connection with the Amalgamation. Where the number of Resulting Issuer Shares to which a CJL Shareholder is entitled is not a whole number, the number of Resulting Issuer Shares issued to such CJL Shareholder will be rounded down to the nearest whole number without any compensation therefor.

In connection with the Amalgamation, CJL Options shall be exchanged for an option (each, a "Replacement Option") entitling such Holder to receive one and one-half (1.5) Resulting Issuer Shares for each CJL Share previously issuable under such CJL Option, at an exercise price per one and one-half (1.5) Resulting Issuer Shares equal to the respective exercise prices per CJL Share under such CJL Option. It is intended that the provisions of subsection 7(1.4) of the Tax Act apply to the aforesaid exchange of options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Replacement Option will be adjusted such that the In-The-Money Amount of the Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the CJL Option immediately before the exchange.

Following the consummation of the Amalgamation Holders of CJL Warrants shall be entitled to acquire, subject to the terms and conditions of the CJL Warrants, one and one-half (1.5) Resulting Issuer Shares in lieu of each one (1) CJL Share that would otherwise be issued pursuant to the terms of the CJL Warrants.

Prior to the Effective Time, the Amalgamation Agreement may be supplemented, modified, amended, waived, discharged or terminated by an agreement in writing. The Transaction requires approval of a special resolution of not less than two-thirds of the votes cast by CJL shareholders present in person or by proxy at a special meeting of CJL shareholders. The Jet Transaction Resolution requires approval of a special resolution by a majority of not less than two-thirds of the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting.

Representations, Warranties and Covenants

Under the Amalgamation Agreement, Jet provides representations and warranties to CJL with respect to, among other things, organization and qualification; corporate authority; absence of conflicts and required consents; ownership of subsidiaries; compliance with laws; necessary authorizations; capitalization and status of listing; absence of shareholder agreements; United States securities law matters; reports; preparation of financial statements in accordance with IFRS; financial reporting and internal controls; absence of undisclosed liabilities; operational matters; employment matters; absence of certain changes or events; absence of litigation; certain tax-related matters; accuracy and completeness of books and records; insurance coverage; absence of non-arm's length transactions; benefit plans; environmental matters; absence of restrictions on business activities; material contracts; absence of brokers; reporting issuer status; status of mineral rights; compliance with stock exchange policies; compliance with money laundering laws; and compliance with corrupt practices legislation.

Under the Amalgamation Agreement, CJL provides representations and warranties to Jet with respect to, among other things, organization and qualification; corporate authority; absence of conflicts and required consents; ownership of subsidiaries; compliance with laws; necessary authorizations; capitalization and status of listing; absence of shareholder agreements; United States securities law matters; reports; preparation of financial statements in accordance with IFRS; financial reporting and internal controls; absence of undisclosed liabilities; operational matters; employment matters; absence of certain changes or events; absence of litigation; certain tax-related matters; accuracy and completeness of books and records; insurance coverage; absence of non-arm's length transactions; absence of restrictions on business activities; material contracts; absence of brokers; reporting issuer status; compliance with money laundering laws; and compliance with corrupt practices legislation.

Under the terms of the Amalgamation Agreement, each of Jet and CJL make certain covenants, including with respect to providing the other party access to corporate documents and personnel; confidentiality; the preparation of filings; conduct of business; consents; litigation; and standstill. The Amalgamation Agreement also sets out the Resulting Issuer Board and the management of the Resulting Issuer upon completion of the Transaction.

Conditions Precedent to the Transaction

The obligations of the parties to consummate the Transaction are subject to conditions that must be satisfied or waived (in accordance with the terms of the Amalgamation Agreement) by the applicable party prior to the consummation of the Transaction. There can be no assurance that the relevant conditions will be satisfied or that such conditions will be waived by the applicable party or parties to the extent the conditions could be waived.

Conditions in favour of Jet

The obligation of Jet to complete the Transaction is subject to the satisfaction of certain conditions or waiver (in accordance with the terms of the Amalgamation Agreement) by Jet prior to consummation of the Transaction, including, among other things, approval of the Transaction by shareholders of CJL; approval of the Transaction by Jet Shareholders; implementation of the Consolidation; implementation of the Continuance; approval of the TSXV of the Transaction and the Offering; receipt of regulatory approvals and consents; completion of the Offering; absence of litigation or prohibition in respect of the Transaction; absence of a Material Adverse Effect with respect to CJL; there being fewer than 5% of Holders of CJL Shares exercising dissent rights in respect of the Transaction; the representations and warranties of CJL shall be true and correct, as well as other customary closing conditions.

Conditions in favour of CJL

The obligation of CJL to complete the Transaction is subject to the satisfaction of certain conditions or waiver (in accordance with the terms of the Amalgamation Agreement) by CJL prior to consummation of the Transaction, including, among other things, approval of the Transaction by shareholders of CJL; approval of the Transaction by shareholders of Jet; implementation of the Continuance; implementation of the Consolidation; approval of the TSXV of the Transaction and the Offering; receipt of regulatory approvals and consents; completion of, or removal of conditions in respect of, the Offering; absence of litigation or prohibition in respect of the Transaction; absence of a Material Adverse Effect with respect to Jet; there being fewer than 5% of Holders of Jet Shares exercising dissent rights in respect of the Transaction; the representations and warranties of Jet shall be true and correct, as well as other customary closing conditions.

Closing

Once the closing conditions contained in the Amalgamation Agreement have been satisfied or waived, articles of amalgamation will be filed with the Director appointed under the CBCA to effect the Transaction. Upon completion of the Transaction, the articles and bylaws of the Resulting Issuer will be the same as the articles of incorporation and bylaws of CJL.

Offering³

Jet expects to complete the Offering of Resulting Issuer Units for aggregate gross proceeds of up to $6,000,000. It is currently anticipated that Jet will issue up to 20,000,000 Resulting Issuer Units at a price of $0.30 (post-Consolidation). Each Resulting Issuer Unit will consist of one Resulting Issuer Share and one half of one Resulting Issuer Warrant exercisable for twenty-four (24) months at a price of $0.50 for each whole Resulting Issuer Share. Jet expects to pay finder's fees in connection with the Offering consisting of a cash fee of 6.5% of the aggregate proceeds raised by a finder and broker warrants equal to 6.5% of the securities sold in the Offering, with each broker warrant exercisable into a Resulting Issuer Share at an exercise price of $0.30 (post-Consolidation).

³ The number of securities issued pursuant to the Offering and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by Jet and CJL.

Relationship with Cambrian

Pursuant to the FF Agreement, Jet has agreed to pay Cambrian a finder's fee equal to 5% of the first $2 million of consideration payable to CJL by Jet and 3% of the balance of such consideration. The finder's fee is payable partly in Resulting Issuer Shares (75%) and partly in cash (25%). Such finder's fee is payable on the completion of the Transaction. Cambrian does not hold any shares in Jet and is an arm's length party.

Regulatory Approvals

It is a mutual condition of the Amalgamation Agreement that requisite regulatory approvals be obtained prior to the Closing Date. It is anticipted that Jet and CJL will have made application to all applicable regulatory authorities prior to the Closing date in order to obtain all approvals required with respect to the Transaction. There is no guarantee that approvals from the relevant regulatory authorities will be obtained on a timely basis or on terms and conditions satisfactory to Jet and CJL.

It is a condition to the completion of the Transaction that the TSXV has approved the listing of the Resulting Issuer Shares to be issued pursuant to the Transaction subject only to the filing of required documents which cannot be filed prior to the Closing Date. Jet has applied to list the Resulting Issuer Shares to be issued pursuant to the Transaction on the TSXV and listing will be subject to Jet and CJL fulfilling all of the listing requirements of the TSXV. Provided that conditional approval is obtained, the listing on the TSXV of the Resulting Issuer Shares to be issued pursuant to the Transaction will be subject to the ongoing requirements of the TSXV.

Timing

If the Jet Resolutions are approved as required and the other conditions precedent to the Transaction specified in the Amalgamation Agreement are satisfied or waived, Jet and CJL expect that the Closing Date will be on or before August 12, 2016 unless such date is extended in accordance with the terms of the Amalgamation Agreement.

Effect of the Transaction

The Transaction will result in the issuance of 14,246,559 Resulting Issuer Shares to current CJL Shareholders. There will be an aggregate of 53,812,739 Resulting Issuer Shares outstanding upon completion of the Transaction and the Offering, of which the current CJL Shareholders, the current Jet Shareholders and purchasers of Resulting Issuer Units of the Offering will own approximately 26.47%, 34.96% and 37.17%, respectively, on an undiluted basis assuming completion of the Offering.

RISK FACTORS RELATING TO THE TRANSACTION

There are a number of risk factors associated with the completion of the Transaction. These risks are summarized below.

Uncertainties associated with the Transaction

The Transaction will involve the integration of companies that previously operated independently. An important factor in the success of the Transaction will be the ability of the management of the Resulting Issuer to integrate all or part of the operations, systems and technologies of Jet and CJL following completion of the Transaction. The Transaction and/or the integration of the two businesses can result in unanticipated operational problems and interruptions, expenses and liabilities, the diversion of management attention and the loss of key employees. There can be no assurance that the Transaction and business integration will be successful or that the combination will not adversely affect the business, financial condition or operating results of Jet or CJL. In addition, Jet or CJL may incur costs related to the Transaction and related to the Amalgamation. There can be no assurance that Jet, CJL or the Resulting Issuer will not incur additional material costs in subsequent quarters to reflect additional costs associated with the Transaction or that that the benefits expected from the Transaction will be realized.

Jet and CJL expect to incur significant costs associated with the Transaction

Jet and CJL will collectively incur significant direct transaction costs in connection with the Transaction. Actual direct transaction costs incurred in connection with the Transaction may be higher than expected. Moreover, certain of Jet's and CJL's costs related to the Transaction, including legal, financial advisory services, accounting, printing and mailing costs, must be paid even if the Transaction is not completed. There are also opportunity costs associated

with the diversion of management attention away from the conduct of Jet and CJL's respective businesses in the ordinary course.

Trading Halt

Upon public announcement of the Transaction, trading in shares of Jet was halted for an indefinite period of time until preliminary reviews of the proposed transaction were conducted by the TSXV. Trading in Jet Shares remains halted as of the date of this Information Circular. Reinstatement of trading prior to completion of the Transaction, to the extent it occurs, provides no assurance with respect to the merits of the Transaction or the likelihood of Jet completing the proposed Transaction.

Jet has not verified the reliability of the information regarding CJL included in, or which may have been omitted from, this Information Circular

All historical information regarding CJL contained in this Information Circular, including all CJL financial information and all pro forma financial information reflecting the pro forma effects of the Transaction, has been provided by CJL. Although Jet has no reason to doubt the accuracy or completeness of such information, any inaccuracy or material omission in the information about or relating to CJL contained in the Information Circular could result in unanticipated liabilities or expenses, increase the cost of integrating the companies or adversely affect the operational plans of the Resulting Issuer and its results of operations and financial condition.

The Amalgamation Agreement may be terminated in certain circumstances

Each of Jet and CJL has the right to terminate the Amalgamation Agreement in certain circumstances. Accordingly, there is no certainty, nor can either of CJL or Jet provide any assurance, that the Amalgamation Agreement will not be terminated by either CJL or Jet before the completion of the Transaction. For instance, Jet and CJL have the right, in certain circumstances, to terminate the Amalgamation Agreement if changes occur that have a Material Adverse Effect. There is no assurance that a Material Adverse Effect will not occur before the Effective Date, in which case either Jet or CJL could elect to terminate the Amalgamation Agreement and the Transaction would not proceed.

There can be no assurance that all conditions precedent to the Transaction will be satisfied

The completion of the Transaction is subject to a number of conditions precedent, certain of which are outside the control of Jet and CJL, including obtaining the requisite approvals from Jet Shareholders and certain regulatory approvals. There is no certainty, nor can CJL or Jet provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. The requirement to take certain actions or to agree to certain conditions to satisfy such requirements or obtain any such approvals may have a Material Adverse Effect on the business and affairs of Jet or CJL or the trading price of the Jet Shares. If for any reason the Transaction is not completed, the market price of the Jet Shares may be adversely affected. Moreover, if the Amalgamation Agreement is terminated, there is no assurance that the Jet Board will be able to find another similar transaction to pursue.

Entry into New Business Activities

Completion of the Transaction will result in a combination of the current business activities carried on by each of Jet and CJL as separate entities. While Jet has had minimal operations for several years, the combination of these activities into the merged entity may expose Jet Shareholders and creditors to different business risks than those to which they were exposed prior to the Transaction. In particular, Jet Shareholders will gain exposure to the business of CJL.

If the Transaction is not completed, Jet's future business and operations could be harmed

If the Transaction is not completed, Jet may be subject to a number of additional material risks, including the following:

Jet may have lost opportunities that would have otherwise been available had the Amalgamation Agreement not been executed, including, without limitation, opportunities not pursued as a result of affirmative and negative covenants made by it in the Amalgamation Agreement, such as covenants affecting the conduct of its business outside the ordinary course of business;

·	Jet may be unable to obtain additional sources of financing or conclude another sale, merger or amalgamation on terms as favourable as those of the Transaction, in a timely manner, or at all.

THE JET MEETING

The Jet Meeting

Financial Statements

The audited financial statements of Jet for the year ended April 30, 2015 will be presented to the Jet Shareholders at the Jet Meeting.

Jet Shareholder Approval

Pursuant to the BCBCA and TSXV Policy 5.2, the Jet Transaction Resolution requires approval by a majority of not less than 66⅔% the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting. The remaining resolutions require approval by a majority of not less than 50% of the votes cast by Jet Shareholders present in person or by proxy at the Jet Meeting.

Continuance

General

Currently, Jet is governed by the BCBCA. In order to facilitate the Transaction and given the international nature of CJL's business, the Jet Board has determined that it would be appropriate, and in the best interests of Jet, to continue Jet from the laws of British Columbia to the federal laws of Canada under the CBCA.

Upon the Continuance under the CBCA becoming effective, Jet will become a corporation to which the CBCA applies as if it had been incorporated under the CBCA, and the BCBCA will cease to apply to Jet. Upon the Continuance becoming effective, Jet Shareholders will continue to hold one (1) Jet Share for each one Jet Share currently held. The principal attributes of the Jet Shares after the Continuance will be identical to the corresponding Jet Shares prior to the Continuance other than differences in shareholders' rights under the CBCA and the BCBCA, a summary of which is provided in Appendix "H".

The directors and officers of Jet immediately following the Continuance will be identical to the directors and officers of Jet immediately prior to the Continuance. As of the effective date of the Continuance, the election, duties, resignations and removal of Jet's directors and officers shall be governed by the CBCA, and the proposed Articles of Continuance, as approved by Jet Shareholders and adopted by Jet Board. See "Articles of Continuance" for more information.

Continuance Process

In order to continue as a corporation under the CBCA, the following principal steps must be taken:

·	pursuant to the provisions of the BCBCA, Jet must obtain the approval of the Jet Shareholders by special resolution, being a resolution passed by a majority of not less than two-thirds (2/3) of the votes cast in person or by proxy at the Meeting;

·	if the Continuance is approved by Jet Shareholders at the Jet Meeting, Jet must make application to Corporations Canada under the CBCA for a Certificate of Continuance; and

·	if the Continuance is approved by Jet Shareholders at the Jet Meeting, Jet must make application to the BCBCA Registrar of Companies under the BCBCA for a Certificate of Discontinuance.

The foregoing does not purport to be a comprehensive statement of the steps needed to continue Jet federally; rather, it is a broad outline of the steps involved.

Differences Between the BCBCA and the CBCA

The Continuance, if approved, will effect a change in the legal domicile of Jet as of the effective date and time thereof and will affect certain of the rights of Jet Shareholders as they currently exist under the BCBCA and the existing Articles (as defined below) of Jet. Management of Jet is of the view that the CBCA will provide to Jet

Shareholders substantively the same rights as are available to Jet Shareholders under the BCBCA, including rights of dissent and appraisal and rights to bring derivative actions and oppression actions, and is consistent with corporate legislation in most other Canadian jurisdictions and that Jet Shareholders will not be adversely affected by the Continuance. However, Jet Shareholders should consult their legal advisors regarding implications of the Continuance which may be of particular importance to them. Also see Appendix "H" for a summary of the principal differences between the BCBCA and the CBCA.

Articles of Continuance

Approval of the Continuance will require the adoption by Jet of Articles of Continuance, a copy of which is attached as Appendix "I" hereto. Upon the Continuance of Jet federally becoming effective, the Articles of Continuance will replace the existing Notice of Articles and Articles of Jet. Accordingly, as part of the resolution to approve the Continuance incorporated in the Jet Transaction Resolution, Jet Shareholders will be asked to consider and, if deemed appropriate, to approve, with or without variation, by special resolution the filing of the Articles of Continuance. The following is a summary of the key components of the proposed Articles of Continuance that differ from the existing Notice of Articles and Articles of Jet:

Capital Alteration

Currently, the authorized share capital of Jet as contained in Jet's Notice of Articles consists of an unlimited number of Jet Common Voting Shares.

The Articles of Continuance alter the authorized capital of Jet by creating a new class of shares of Jet so that the authorized capital will consist of a class of unlimited Jet Common Voting Shares and a class of unlimited Jet Variable Voting Shares.

Number of Directors

The Articles of Continuance provide that the number of directors shall be a minimum of three (3) and a maximum of nine (9). The Articles of Continuance, similar to the existing Articles of Jet, further provide that the directors shall have the authority, pursuant to section 106(8) of the CBCA, to increase the number of directors without shareholder approval so long as the total number of directors so appointed does not exceed one-third (1/3) of the number of directors elected at the previous annual general meeting of Shareholders.

Registered Address

The current registered address of Jet is in British Columbia. The Articles of Continuance provide that the registered address of Jet is in British Columbia, or such other address located in British Columbia that the board of directors shall determine in its discretion.

By-law No. 1

If the Continuance is approved and effected, By-law No. 1 under the CBCA, which has been conditionally approved by the Current Jet Directors subject to ratification and confirmation by Jet Shareholders upon the Continuance becoming effective, will be implemented as the general by-law of Jet. As part of the Continuance Resolution, Jet Shareholders are being asked to ratify and confirm By-law No. 1.

By-law No. 1 is standard in its form and will govern all aspects of the business and affairs of Jet, such as the establishment of a quorum for meetings of directors and Jet Shareholders, the conduct of such meetings, signing authorities, the appointment of officers, the description of the officers' duties, the establishment of committees of the board of directors, the authority of persons to contract on behalf of Jet, the special rights and restrictions attached to the Jet Common Voting Shares and the Jet Variable Voting Shares and similar matters. The complete text of By-law No. 1 is attached hereto as Appendix "I".

Procedure for Dissent

Pursuant to Sections 237 to 247 of the BCBCA, Jet Shareholders have the right to dissent in respect of the Continuance. This dissent right is described in the Appendices "F" and "G" attached to this Information Circular. If a Jet Shareholder wishes to dissent, a written notice must be received by Jet at least two business days (excluding Saturdays, Sundays and holidays) before the date of the Jet Meeting. As a result of giving a notice of dissent, a Jet Shareholder may, if the Continuance, becomes effective, require the Resulting Issuer to purchase all of such Jet

Shares held by the Jet Shareholder. Failure to strictly comply with the dissent procedures described in this Information Circular may result in the loss or unavailability of any right of dissent.

Particulars of Matters to be Acted Upon

Approval of Transaction - Transaction Resolution

BE IT RESOLVED AS A SPECIAL RESOLUTION, THAT:

1.	Jet Metal Corp. ("Jet") is hereby authorized to amend its authorized share capital as follows:

a.	the authorized share capital of Jet is altered by consolidating all of the issued and outstanding common shares of Jet ("Common Shares") on the basis of one (1) post-consolidation Common Share for every one and one-half (1.5) pre-consolidation Common Shares;

b.	in the event that the consolidation would otherwise result in the issuance of a fractional Common Share, no fractional Common Share shall be issued and such fraction will be rounded down to the nearest whole number; and

c.	the effective date and time of such consolidation shall be the date and time determined by resolution of the directors of Jet.

2.	The "Change of Business" (as such term is defined in TSX Venture Exchange Policy 5.2 – Changes of Business and Reverse Takeovers) of Jet from a "mining issuer" to an "industrial issuer" be and is hereby approved.

Jet is hereby authorized to make an application to the Registrar of Companies, under the Business Corporations Act (British Columbia), requesting that Jet be continued from the Province of British Columbia to the federal jurisdiction of Canada as if it had been incorporated under the laws of Canada (the "Continuance");

4.	Jet is hereby authorized to make an application to the Director under the Canada Business Corporations Act for a Certificate of Continuance continuing Jet under the Canada Business Corporations Act;

5.	Any one director, officer or agent of Jet be and is hereby authorized and directed to electronically file the Articles of Continuance under the Canada Business Corporations Act and the Certificate of Continuance under the Business Corporations Act (British Columbia);

6.	the execution and adoption of the Articles of Continuance be and is hereby authorized and approved;

7.	the authorized capital of Jet following the Continuance of Jet into the federal jurisdiction of Canada shall consist of an unlimited number of Common Voting Shares and an unlimited number of Variable Voting Shares, all without par value;

subject to the Continuance, and without affecting the validity and existence of Jet or of any act by or under its Notice of Articles, its Notice of Articles is amended by substituting the provisions of the Notice of Articles of Jet with the provisions in the Articles of Continuance, set out in the attached Appendix "I" to the Information Circular of Jet dated June 17, 2016;

By-Law No. 1 in the form attached to the Information Circular of Jet dated June 17, 2016 as Appendix "I" is hereby ratified and confirmed as By-Law No. 1 of Jet, subject to such additions, deletions or other changes thereto, if any, as any one director or any one officer of Jet may consider necessary or desirable and shall approve, to be effective upon the Continuance of Jet under the CBCA;

10.	The directors of Jet are hereby authorized to revoke this resolution at any time prior to the Continuance becoming effective without further approval of the shareholders of Jet and to determine not to proceed with the Continuance; and

11.

Any one or more officers and directors of Jet is hereby authorized and directed for and on behalf of Jet to execute and deliver articles of amalgamation to the Director under the Canada Business Corporations Act and to execute and deliver for and in the name of and on behalf of Jet, whether under corporate seal or not, all such other certificates, instruments, agreements, documents and notices, and to take all such further actions that such person may determine to be necessary or appropriate to carry out the purposes and intent of the foregoing resolutions, such determination to be conclusively evidenced by the execution and delivery of such certificate, instrument, agreement, document or notice and taking of such action.

The Jet Board believes that the Transaction is in the best interests of Jet and the Jet Shareholders and the Board unanimously recommends that the Jet Shareholders vote in favour of the foregoing special resolution. The persons named in the enclosed proxy intend to vote for the approval of the Transaction at the Jet Meeting unless otherwise directed by the shareholders appointing them.

Approval of Debt Settlement

It is a condition precedent to the closing of the Transaction that the Debt Settlement (defined below) be completed. Jet has entered into a Debt Settlement Agreement (the "Debt Settlement Agreement") with King & Bay West ("the "Creditor") to settle a total of $100,000.00 of dated accounts payable through the issuance of 500,000 Jet Shares prior to the completion of the Consolidation (the "Debt Settlement"). The 500,000 Jet Shares would be issued at a deemed price of $0.20 (pre-Consolidation).

The dated accounts payable were on account of fees for administrative and management services provided to Jet by King & Bay West pursuant to the King & Bay West Agreement. The total of 500,000 Jet Shares issued to the Creditors pursuant to the Debt Settlement will, after the consolidation equal 333,333 Resulting Issuer Shares and represent approximately 0.62% of the issued and outstanding Resulting Issuer Shares following completion of the Transaction. As a result of the Debt Settlement and the completion of the Transaction, Mr. Mark Morabito, through companies that he controls, will beneficially own and control 2,319,980 Resulting Issuer Shares, representing approximately 4.31% of the issued and outstanding Resulting Issuer Shares following the completion of the Transaction.

Mr. Morabito has declared his interest in, and abstained from voting on, the terms of the Debt Settlement. The Board of Directors of Jet approved the Debt Settlement, with Mr. Morabito abstaining from such approval. The Board of Directors of Jet believe that the proposed Debt Settlement is in the best interests of Jet because the Creditor has agreed to settle the amounts owed to it through the issuance of Jet Shares, thus enabling Jet to preserve its cash for operations.

At the Jet Meeting, the Jet Shareholders will be asked to approve the following Ordinary Resolution substantially in the following form:

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

Jet is hereby authorized to settle liabilities owing to King & Bay West Management Corp. (the "Creditor") in the aggregate amount of $100,000.00 in consideration of the issuance to the Creditor of 500,000 common shares in the capital of Jet at a deemed price per common share of $0.20 (the "Settlement Shares").

Any one director or officer of Jet is hereby authorized and directed for and in the name of and on behalf of Jet to execute or cause to be executed, whether under the corporate seal of Jet or otherwise, and to deliver or cause to be delivered all such other documents and instruments, and to do or cause to be done all such other acts and things as, in the opinion of such director or officer, may be necessary or desirable in order to carry out the intent of this resolution, the executive of any such document or the doing of any such act or thing being conclusive evidence of such determination.

3.	Notwithstanding the foregoing, the directors of Jet are hereby authorized, without further approval of or notice to, the Shareholders of Jet, to revoke this resolution at any time before the Settlement Shares are issued to the Creditor."

If the Transaction Resolution is approved, the Jet Board unanimously recommends that the Jet Shareholders vote in favour of the resolution approving the Debt Settlement. In the absence of contrary instruction, the persons named in the enclosed Instrument of Proxy intend to vote in favour of the resolution approving the Debt Settlement.

Election of Jet Directors

The Jet Shareholders are required to elect the directors of Jet to hold office until the next annual meeting of Jet Shareholders or until the successors of such directors are elected or appointed. Ordinarily, that would involve re-electing the three members of the Current Jet Directors (as described more particularly below, the "Current Jet Directors"). However, if the Transaction is completed, it will be necessary to replace the Current Jet Directors with the New Jet Directors (as described more particularly below, the "New Jet Directors") two of which will be members of the existing current Jet Board. At the time of the Jet Meeting, the Transaction will not yet have been completed and there can be no assurance at that time that it will be completed.

It is not appropriate to give effect to the replacement of the Jet Board by the new Jet Board until the Transaction is completed. In order to avoid a premature election of the New Jet Directors, and in order to dispense with the need to call an additional meeting of Jet Shareholders to elect the New Jet Directors following completion of the Transaction, the Jet Shareholders will be asked at the Jet Meeting to consider, and if thought appropriate, to pass two separate ordinary resolutions, the text of which is as follows:

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

1.	the election of Mark Morabito, Mark Lotz, Stewart Wallis and Ken Brophy as directors of Jet to hold office until the earlier of

i.	the next annual meeting of the Jet Shareholders, or until their successors are elected or appointed, or

ii.	immediately upon the Closing Time,

is hereby approved.

Unless authority to do so is withheld, the persons named in the accompanying proxy intend to vote in favour of the election of the directors, whose names are set forth above.

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

1.	at the Closing Time, the increase in number of directors on the Jet Board from four (4) to seven (7) is hereby approved; and

at the Closing Time, the election of Mark J. Morabito, Daniel James Scott, Rejean Bourque, Donald Sorochan, Deborah Robinson, John Sutherland and Mark Lotz as directors of Jet to hold office from the Closing Time until the next annual meeting of the Jet Shareholders, or until their successors are elected or appointed, is hereby approved."

Unless authority to do so is withheld, the persons named in the accompanying proxy intend to vote in favour of the election of the directors, whose names are set forth above, to take effect immediately upon completion of the Transaction.

In the event the Transaction is not completed, the persons named in the accompanying proxy as the New Jet Directors will not become directors of Jet. Assuming completion of the Transaction, Stewart Wallis and Ken Brophy have agreed to resign from the Jet Board with effect from Closing. Each of the directors elected as the New Jet Directors at the Jet Meeting will hold office until the close of the first annual meeting of shareholders of Jet following his election unless his or her office is earlier vacated in accordance with Jet's constating documents at that time.

Current Jet Directors

Jet Shares that will be beneficially owned by each of the current Jet Board. The number of Jet Shares beneficially owned, directly or indirectly, or over which control or direction is exercised by the directors hereinafter named is in each instance based upon information furnished by the person concerned and is as at the date of this Information Circular.

NAME AND PROVINCE/STATE AND COUNTRY OF RESIDENCE AND AGE	PRINCIPAL OCCUPATION, BUSINESS OR EMPLOYMENT	DATE(S) SERVED AS A DIRECTOR OF JET	NUMBER OF JET SHARES BENEFICIALLY OWNED, DIRECTLY OR INDIRECTLY OR OVER WHICH CONTROL IS DIRECTED	JET SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) AFTER GIVING EFFECT TO THE CONSOLIDATION AND THE TRANSACTION⁽¹⁾⁽²⁾
Mark J. Morabito British Columbia, Canada	Founder and CEO of King & Bay West Management Corp. since December 2009	December 10, 2015; previously November 1998 to August 2013	2,979,971	2,319,980
Stewart Wallis British Columbia, Canada	Consulting geologist and President of Sundance Geological Ltd	March 31, 2009	103,150	68,766
Ken Brophy British Columbia, Canada	Vice President, Sustainability of Ram River Coal Corp.	February 16, 2015	100,630	67,086
Mark Lotz British Columbia, Canada Age: 52	Self-employed Chartered Professional Accountant since 1998.	April 1, 2014	Nil	Nil

Notes:

(1)

On a partially diluted basis, assuming the issuance of (i) 14,216,559 Resulting Issuer Shares to CJL Shareholders, (ii) 20,000,000 Resulting Issuer Shares issued pursuant to the Offering; (iii) 333,333 Resulting Issuer Shares for the Debt Settlement; and (iv) 419,872 Resulting Issuer Shares to Cambrian. The number, price and terms of securities issued pursuant to the Offering, and the gross proceeds therefrom are subject to change, to the extent agreed upon in writing by CJL and Jet.

(2)	Assuming no shares are purchased by these persons under the Offering.

Other than as disclosed below, no proposed director of Jet is, or within the 10 years prior to the date of this Information Circular, has been, a director, chief executive officer or chief financial officer of any company that while that person was acting in that capacity:

(a)

was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or

(b)

was the subject of a cease trade order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 days, that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer, that resulted from an event that occurred while that person was acting in such capacity.

any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Other than as disclosed below, no proposed director has individually, within the 10 years prior to this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, officer or Jet Shareholder.

Other than as disclosed below, no proposed director of Jet has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

In 2008, Mr. Lotz was subject to a proceeding by the Investment Dealers Association of Canada (now Investment Industry Regulatory Organization of Canada ("IIROC")). On January 5, 2009, An IIROC appeal panel found Mr. Lotz to have committed a negligent omission that violated IIROC bylaws by failing to disclose an outside business activity in a registration form and failing to disclose that he had become the Chief Financial Officer of a publicly traded company. As a result of this decision, Mr. Lotz was subject to fines totalling $20,000 and required to write and pass the examination based on the Partners, Directors and Officers Course administered by the Canadian Securities Institute.

New Jet Directors

The following table sets forth the name, province or state and country of residence, present principal occupation, business or employment, the period or periods during which each has served as a director of Jet and the number of Jet Shares that will be beneficially owned by each of the New Jet Directors. The number of Jet Shares beneficially owned, directly or indirectly, or over which control or direction is exercised by the directors hereinafter named is in each instance based upon information furnished by the person concerned and is as at the date of this Information Circular.

NAME AND PROVINCE/STATE AND COUNTRY OF RESIDENCE AND AGE	PRINCIPAL OCCUPATION, BUSINESS OR EMPLOYMENT	DATE(S) SERVED AS A DIRECTOR OF JET	NUMBER OF JET SHARES BENEFICIALLY OWNED, DIRECTLY OR INDIRECTLY OR OVER WHICH CONTROL IS DIRECTED	JET SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) AFTER GIVING EFFECT TO THE CONSOLIDATION AND THE TRANSACTION⁽¹⁾⁽²⁾
Mark J. Morabito British Columbia, Canada Age: 49	Founder and CEO of King & Bay West Management Corp. since December 2009	December 10, 2015; previously November 1998 to August 2013	2,979,971	2,319,980
Daniel James Scott British Columbia, Canada Age: 55	CEO OF CJL since August 2013; Airline Pilot, Aviation Consultant & Police Officer from September 1985 to July 2013	N/A	Nil	1,900,002
Rejean Bourque Quebec, Canada Age: 61	Senior Vice President of March Canada Limited since 2006	N/A	Nil	Nil
Donald Sorochan British Columbia, Canada Age: 71	Practicing lawyer at the law firm, Miller Thomson LLP since 1971.	N/A	Nil	90,000
Deborah Robinson Ontario, Canada Age: 53	Founder and President of Bay Street HR since 2001.	N/A	Nil	Nil
Mark Lotz British Columbia, Canada Age: 52	Self-employed Chartered Professional Accountant since 1998.	April 1, 2014	Nil	Nil
John Sutherland British Columbia, Canada Age: 66	CFO and Vice President, Human Resources and Director of CJL since July 2015, CFO of Grande West Transport from March 2013 to April 2015; VP and CFO of Goldgroup Mining Inc. from February 2007 to November 2012.	N/A	Nil	142,500

Notes:

(1)

(2)	Assuming no shares are purchased by these persons under the Offering.

The principal occupations, businesses or employment of each of the New Jet Directors during the past five years, and additional information concerning each of the New Jet Directors, are disclosed in their biographies set forth in Appendix "C" – "Information Concerning Jet Metal Corp. Upon Completion of the Transaction".

(a)

was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or

(b)

Other than as disclosed below, no proposed director of Jet is, or within the 10 years prior to the date of this Information Circular, has been, a director or executive officer of any company that while that person was acting in that capacity or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Approval and Ratification of Jet Stock Option Plan

The Exchange requires Issuers to obtain shareholder approval annually of a "rolling" stock option plan. Jet's shareholders approved the current 10% rolling stock option plan (the "Jet Stock Option Plan") at the Company's annual general meeting held December 10, 2015 and there have been no changes made to the Jet Stock Option Plan, which will be submitted to Jet's shareholders for approval at the Meeting.

The Jet Stock Option Plan reserves for issuance a maximum of 10% of the Jet Shares at the time of a grant of options under the Jet Stock Option Plan. The Jet Stock Option Plan is administered by the Jet Board and provides for grants of non-transferable options under the Jet Stock Option Plan at the discretion of the Jet Board to directors, senior officers, employees, management company employees of, or consultants to, the Company and its subsidiaries, or their permitted assigns (each an "Eligible Person").

The Jet Board has the authority under the Jet Stock Option Plan to determine the exercise price per Common Share at the time an option is granted, but such price shall not be less than the closing price of the Jet Shares on the TSXV on the last trading day preceding the date on which the grant of the option is approved by the Jet Board. The Jet Board also has the authority under the Jet Stock Option Plan to determine other terms and conditions relating to the grant of options, including any applicable vesting provisions, provided that any options granted to Consultants performing Investor Relations Activities must vest in stages over a period of not less than 12 months with no more than one-quarter of the options vesting in any three-month period.

The term of options granted under the Jet Stock Option Plan shall not exceed 10 years from the date of grant. However, as permitted by the Policy, the Jet Stock Option Plan has been amended to include an automatic extension of the expiry date associated with any option that expires during a trading blackout period imposed by the Company in accordance with insider trading policies. Under the Jet Stock Option Plan, if an option expires within a blackout period, the expiry date will be automatically extended to ten (10) business days following the date on which the blackout period is lifted.

All options granted under the Jet Stock Option Plan are not assignable or transferable other than by will or the laws of dissent and distribution. Other than Eligible Persons engaged in Investor Relations Activities, if an optionee ceases to be an Eligible Person for any reason whatsoever other than termination for cause or death, each fully vested option held by such optionee will cease to be exercisable 90 days following the termination date (being the date on which such optionee ceases to be an Eligible Person), provided that in no event shall such right extend beyond the expiry date of such options. If an optionee dies, the legal representative of the optionee may exercise the optionee's options within one year after the date of the optionee's death but only up to and including the original option expiry date. In the case of an optionee who is an Eligible Person engaged in Investor Relations Activities, each fully vested option held by such optionee will cease to be exercisable within 30 days from the date such optionee ceases to provide Investor Relations Activities, provided that in no event shall such right extend beyond the expiry date of such options. In the case of an optionee who is an Eligible Person who is terminated for cause, any option held by such optionee shall expire immediately.

In adherence with the Policy, the Jet Stock Option Plan also includes the following limitations on stock option grants:

(a)

unless the Company obtains shareholder approval (which must be disinterested shareholder approval if required by the policies of the TSXV) the aggregate number of Jet Shares issuable pursuant to options granted under the Jet Stock Option Plan, together with Jet Shares issuable under any other Share Compensation Arrangement of the Company shall not at any time exceed 10% of the number of Jet Shares outstanding immediately prior to the grant of any such option;

(b)	the aggregate number of Jet Shares issuable to any one Eligible Person who is a Consultant (as defined in the Jet Stock Option Plan) shall not, within a one year period, exceed 2% of the number of Jet Shares outstanding immediately prior to the grant of any such option;

(c)	the aggregate number of Jet Shares issuable to all Eligible Persons retained in Investor Relations Activities shall not, within a one year period, exceed 2% of the number of Jet Shares outstanding immediately prior to the grant of any such option; and

(d)

unless the Company obtains disinterested shareholder approval, the aggregate number of Jet Shares issuable to any one Eligible Person (and where permitted, any companies that are wholly owned by that Eligible) shall not, within a one year period, exceed 5% of the number of Jet Shares outstanding immediately prior to the grant of any such option.

Furthermore, the Jet Stock Option Plan states that shareholder approval must be obtained to effect any of the following modifications to the Jet Stock Option Plan: (a) an increase in the benefits under the Jet Stock Option Plan; (b) an increase in the number of Jet Shares which may be issued under the Jet Stock Option Plan; (c) modifications to the requirements as to the eligibility for participation in the Jet Stock Option Plan; (d) modifications to the limitations on the number of options that may be granted to any one person or category of persons under the Jet Stock Option Plan; (e) modifications to the method for determining the exercise price of options granted under the Jet Stock Option Plan; (f) an increase in the maximum option period; or (g) modifications to the expiry and termination provisions applicable to options granted under the Jet Stock Option Plan.

The Company currently has 28,218,451 Jet Shares outstanding which means 2,821,845 Jet Shares could be reserved for issuance upon the exercise of stock options. As of the date of this circular, there are nil Jet Shares reserved for the exercise of outstanding stock options.

Therefore, at the Meeting, Shareholders will be asked to pass a resolution in the following form:

"BE IT RESOLVED, as an Ordinary Resolution of the Shareholders of the Company, that:

Subject to regulatory approval, the stock option plan (the "Jet Stock Option Plan") pursuant to which the directors may, from time to time, authorize the issuance of options to directors, officers, employees and consultants of the company to a maximum of 10% of the issued and outstanding Jet Shares at the time of the grant, with a maximum of 5% of the Company's issued and outstanding shares being reserved to any one person on a yearly basis, be and is hereby approved and ratified.

2.	The Company be and is hereby authorized to grant stock options pursuant to and subject to the terms and conditions of the Jet Stock Option Plan entitling the option holders to purchase Jet Shares of the Company.

3.	Any one director or officer of the Company be and is hereby authorized to execute any and all documents as the director or officer deems necessary to give effect to the transactions contemplated in the Jet Stock Option Plan."

The full text of the Jet Stock Option Plan will be available for review at the Meeting and may be obtained from the Company prior to the Meeting by sending a request in writing to the Company at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia, V6E 4G1.

The Jet Board recommends that Jet Shareholders vote in favour of the resolution to approve the Jet Stock Option Plan. In the absence of contrary instruction, the persons named in the enclosed Instrument of Proxy intend to vote for the approval of the resolution to approve the Jet Stock Option Plan.

APPOINTMENT AND REMUNERATION OF AUDITOR

Davidson & Company LLP, Chartered Accountants, of Vancouver, British Columbia, the current Auditors of the Company, were appointed on June 30, 2007, and are the current Auditors of the Company. The persons named in the enclosed Instrument of Proxy will vote for the reappointment of Davidson & Company LLP, Chartered Accountants, of Vancouver, British Columbia, as Auditors of the Company, to hold office until the next Annual General Meeting of the Shareholders at remuneration to be fixed by the directors.

INFORMATION CONCERNING JET

Jet

Jet was incorporated pursuant to the Company Act (British Columbia) (replaced by the BCBCA effective March 29, 2004) on September 2, 1966 under the name Shasta Mines & Oil Ltd. On February 4, 1975 Jet changed its name to International Shasta Resources Ltd. On May 20, 1994, Jet changed its name to Consolidated Shasta Resources Inc. On November 23, 1994, Jet changed its name to Lima Gold Corporation and on September 21, 1999 Jet changed its name to International Lima Resources Corp on March 1, 2004 Jet changed its name to Crosshair Exploration & Mining Corp. On June 1, 2004 Jet transitioned under the BCBCA. On October 28, 2011 Jet changed its name to Crosshair Energy Corporation. On September 17, 2013, Jet changed its name to Jet Metal Corp. The Jet Shares are currently listed on the TSXV under the symbol "Jet".

See Appendix "A" – "Information Concerning Jet Metal Corp." for additional information relating to Jet.

The audited annual consolidated financial statements of Jet as at and for the financial years ended April 30, 2015, 2014 and 2013 and the interim audited financial statements of Jet as at and for the nine-month period ended January 31, 2016 are incorporated by reference into this Information Circular and copies are available on SEDAR at www.sedar.com. In addition, upon request Jet Shareholders may obtain a copy of the financial statements prior to the date of the Meeting.

INFORMATION CONCERNING CJL

CJL was incorporated under the CBCA on August 28, 2012 under the name "Canada Jetlines Ltd.". See Appendix "B" – "Information Concerning CJL" for additional information relating to CJL.

AUDIT COMMITTEE

For information regarding the Audit Committee, see Jet's 2015 Annual Information Form on Form 20-F (the "20-F") for the year ended April 30, 2015 under the heading, "Audit Committee", including a copy of the audit committee charter which is attached to the 20-F. The 20-F is available under Jet's profile at www.sedar.com. Upon request, Jet will promptly provide a copy of the 20-F free of charge to any securityholder of the Company.

As of the date of this Information Circular, Jet's Audit Committee members are Ken Brophy, Mark Lotz and Stewart Wallis.

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

For information regarding Jet's corporate governance practices, see Appendix "C" – "Information Concerning Jet Metal Corp. Upon Completion of the Transaction – Statement of Corporate Governance Practices".

EXECUTIVE COMPENSATION

For information regarding Jet's executive compensation, see Appendix "A" – "Information Concerning Jet Metal Corp. – Executive Compensation".

Indebtedness of Directors and Executive Officers

For information regarding the indebtedness of Jet directors and executive officers, see Appendix "A" – "Information Concerning Jet Metal Corp. – Indebtedness of Directors and Executive Officers".

For information regarding the indebtedness of CJL directors and executive officers, see Appendix "B" – "Information Concerning CJL – Indebtedness of Directors and Executive Officers".

Management Contracts

Jet has entered into a management services agreement (the "King & Bay West Management Services Contract") with King & Bay West. See Appendix "A" – "Information Concerning Jet Metal Corp." for additional information relating to the King & Bay West Management Services Contract.

OTHER MATTERS

Except as set out above, management of Jet has no knowledge, as at the date hereof, of any business other than that set forth in the Jet Notice of Meeting of Shareholders, to be presented for action by the Jet Shareholders at the Jet Meeting. However, the Instrument of Proxy solicited hereunder confers upon the proxy holder discretionary authority to exercise the powers conferred thereunder with respect to any amendments or variations to matters identified in this Information Circular, and any other matters and proposals that may properly be brought before the Jet Meeting, or any adjournment or adjournments thereof.

EXPERTS

Davidson & Company LLP, Chartered Accountants, prepared the audit report for Jet dated July 22, 2015, relating to the consolidated financial statements of Jet for the financial years ended April 30, 2015, and 2014 and July 17, 2014 for the years ended April 30, 2014 and 2013, which are incorporated by reference into this Information Circular and available on SEDAR at www.sedar.com.

Davidson & Company LLP, Chartered Accountants, prepared the audit report for CJL dated March 28, 2016, relating to the financial statements of CJL for the financial years ended December 31, 2015, and 2014 and July 22, 2015 for the years ended December 31, 2014 and 2013, with such financial statements, including the notes thereto, attached to this Information Circular as Appendix "D" – Audited Annual Financial Statements, Unaudited Interim Financial Statements and Management's Discussion and Analysis of Canada Jetlines Ltd."

No person or company who is named above as having prepared or certified a part of this Information Circular or prepared or certified a report or valuation described or included in this Information Circular has, or will have immediately following completion of the Transaction, any direct or indirect interest in Jet.

ADDITIONAL INFORMATION

Additional information regarding Jet is available on SEDAR at www.sedar.com. Jet Shareholders can obtain copies of the Jet's financial statements and management discussion and analysis of financial results by sending a request in

writing to Jet at 1240, 1140 West Pender Street, Vancouver, British Columbia V6E 4G1. Financial information regarding Jet is provided in Jet's audited comparative financial statements for the years ended March 31, 2015 and 2014 and in the accompanying management's discussion and analysis, both of which are available on SEDAR at www.sedar.com.

Additional information regarding CJL is available by sending a request in writing to CJL at 327 - 5360 Airport South Road, Richmond, B.C. V7B 1B4.

JET BOARD APPROVAL

The contents and sending of this Information Circular to Jet Shareholders have been approved by the Jet Board.

CJL has provided the information contained in this Information Circular concerning CJL's business and operations and CJL's financial information and financial statements. Jet assumes no responsibility for the accuracy or completeness of such information, nor for any omission on the part of CJL to disclose facts or events which may affect the accuracy of any such information.

DATED at Vancouver, British Columbia on June 17, 2016.

BY ORDER OF THE BOARD OF DIRECTORS

"Mark J. Morabito"

Mark J. Morabito

Chief Executive Officer

(1)

(2)	Assuming no shares are purchased by these persons under the Offering.

(3)	Includes shares held by King & Bay West Management Corp. and MJM Consulting Corp., entities controlled or directed by Mr. Morabito.

(4)	Includes shares held by D.W. Lawson Consulting Inc., entities controlled or directed by Mr. Lawson.

Audit Committee

The members of the Audit Committee of the Resulting Issuer upon completion of the Transaction will be John Sutherland, Rejean Bourque, and Mark Lotz. It is expected that each of the members of the Audit Committee will be independent of the Resulting Issuer. To be considered independent, a member of the Audit Committee must not have any direct or indirect "material relationship" with the Resulting Issuer. A material relationship is a relationship which could, in the view of the board of directors of the Resulting Issuer, be reasonably expected to interfere with the exercise of a member's independent judgment. All members of the Audit Committee of the Resulting Issuer upon completion of the Transaction are financially literate. To be considered financially literate, a member of the Audit Committee must have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Resulting Issuer's financial statements. See "Management" below for the qualifications of each of the potential members of the Audit Committee.

The mandate of the Audit Committee will be to ensure the Resulting Issuer effectively maintains the necessary management systems and controls to allow for timely and accurate financial reporting, to meet all relevant regulatory requirements, and to identify ways to continuously improve management systems and controls.

For additional information regarding the Audit Committee, see Jet's 2015 Annual Information Form on Form 20-F (the "20-F") for the year ended April 30, 2015 under the heading, "Audit Committee", including a copy of the audit

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committee charter which is attached to the 20-F. The 20-F is available under Jet's profile at www.sedar.com. Upon request, the Company will promptly provide a copy of the 20-F free of charge to any securityholder of the Company.

Management

The following list details biographical information for each proposed member of management and the Resulting Issuer Board.

Mark J. Morabito (Age 49), BA, JD, Director and Executive Chairman – Mr. Morabito has over fifteen years' experience in public markets and extensive experience in capital-raising and corporate development. Mr. Morabito founded and has been the principal driving force behind a number of successful resource development companies including Alderon Iron Ore Corp., Excelsior Mining Corp. and others. He led the team that struck an off-take agreement with Hebei, China's largest steel producer, worth over $400 million. Mr. Morabito has a BA from Simon Fraser University and completed his J.D. at the University of Western Ontario. It is anticipated that Mr. Morabito will devote approximately 40% of his professional time to the Resulting Issuer. Mr. Morabito's services will be provided on a consulting basis and the terms of his consulting agreement are expected to include a confidentiality agreement and a non-competition agreement.

Daniel James Scott (Age 55), BGS, MA & ATPL, Director and Chief Executive Officer – Mr. Scott is one of the founders of CJL has been working on the business model since 2005. With over 25 years of aviation experience in North America, Europe and Asia his experience includes regional jet airline operations as a pilot for Time Air (Canadian Regional Airlines) in Western Canada and as a jet airline captain for Transport Aérien Transrégional contracted to operate flights for Air France throughout Europe, and major airline operation experience as a Boeing 747-400 pilot for Cathay Pacific Airways on worldwide routes. While at Cathay Pacific Airways, Mr. Scott specialized in transport category aircraft performance at airports, specifically being involved in winter operations. As an aviation consultant he provided airline culture & safety management training to aviation companies, oversaw a major university airline feasibility study, and performed pilot testing as a Transport Canada appointed examiner. Mr. Scott holds a Canadian Airline Transport Pilots Licence endorsed for the Fokker F28 regional jet, the Boeing 747-200, and the Boeing 747-400, has 9000 hours flying experience, and is appointed by Transport Canada as a pilot examiner. He holds a Bachelor's Degree that includes the study of aviation and aircraft performance, and a Masters of Arts Degree that focused on cybercrime and corporate network intrusion prevention, both from the University of the Fraser Valley in Canada.

In addition to his aviation experience, Mr. Scott has an extensive leadership background in project start-ups, leading organizations, and financial oversight. Previously, he was a senior planner for the 2010 Vancouver Winter Olympic Games involved in organizational structure and communications, Vice-President of an airline start-up venture (Nexus Project), local Chairperson for the Canadian Airline Pilots Association, founder and initial Chairperson for the Canadian Hong Kong Aircrew Association Officers' Pension Program that now has $120 million of assets, EDA President for the Conservative Party of Canada (WRSSC), Director for the Better Business Bureau of Mainland BC Vancouver, Director for the Society for the Policing of Cyberspace, and he ran a financial investigation unit for the Vancouver Police Department including working regularly with the BC Securities Commission and other financial regulators. It is anticipated that Mr. Scott will devote approximately 95% of his professional time to the Resulting Issuer. The terms of Mr. Scott's employment agreement include a confidentiality agreement and a non-solicitation clause.

Rejean Bourque (Age 61), BAA, ICD.D, Director – Mr. Bourque has been a member of the management team of Marsh Canada since 2006, playing a leading role in risk management and financial products, heading surety and credit insurance practices in Montreal; a member of Marsh Canada's Global Infrastructure‐Construction and Lenders Insurance and advising expert groups. He has held executive positions in investor relations and spokesperson with financial markets with Bombardier as Vice President of Investor Relations (2002‐ 2006) and Government Relations (1988 – 2006). Mr. Bourque has expertise in financial engineering, namely corporate finance, sales, project and international financing and also applied to a large number of government financings. He has over 20 years of experience in domestic and international markets, in implementing and managing large and innovative financing transactions. Mr. Bourque is an excellent communicator and negotiator with recognized skills in personnel training and mentoring, giving importance to community involvement. It is anticipated that Mr. Bourque will devote

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approximately 10% of his professional time to the Resulting Issuer. Mr. Bourque has not entered into a confidentiality agreement or a non-competition agreement with the Resulting Issuer.

Donald Sorochan (Age 71), BA, LLB QC, Director - Mr. Sorochan was called to the Bar of British Columbia in 1972 and joined Swinton & Company, the predecessor of Miller Thomson, Vancouver. As one of the firm's senior partners, his practice encompasses the areas of securities, criminal defence work, commercial and construction litigation, administrative law, and criminal prosecution for both the federal and provincial governments. Mr. Sorochan's advocacy work has resulted in several landmark decisions in Canadian law in those areas. After obtaining his Bachelor of Arts degree from the University of Alberta (B.A., 1966), Mr. Sorochan graduated from the University of British Columbia Faculty of Law (LL.B., 1971). He was called to the Bar of Yukon in 1990 and was appointed Queen's Counsel (British Columbia) in 1990. It is anticipated that Mr. Sorochan will devote approximately 10% of his professional time to the Resulting Issuer. Mr. Sorochan has not entered into a confidentiality agreement or a non-competition agreement with the Resulting Issuer.

Deborah Robinson (Age 53), Director - Ms. Robinson is the founder and President of Bay Street HR, an outsourced human resources service provider to small and mid-sized financial and professional service firms. Prior to founding Bay Street HR, Ms. Robinson was Executive Director at CIBC World Markets, where she oversaw human resources for global Investment Banking, Merchant Banking and Loan Products. She also held senior HR positions at Fidelity Investments and American Express in Boston and New York City. Ms. Robinson sat on the board of Frontline Technologies Inc., a TSX-listed company, and was also a member of the Human Resources Committee, of which she was later named Chairperson. Ms. Robinson has been serving on the board of Best Buddies Canada, a non-profit charitable organization, as Director and Chairperson of the Human Resources and Governance Committee. A graduate of the Directors Education Program at the Institute of Corporate Directors, she has earned its ICD.D designation. It is anticipated that Ms. Robinson will devote approximately 10% of her professional time to the Resulting Issuer. Ms. Robinson has not entered into a confidentiality agreement or a non-competition agreement with the Resulting Issuer.

Mark Lotz (Age 52), Director - Mr. Lotz is a Chartered Accountant with 18 years of experience primarily in the minerals industry and related securities businesses. He has held CFO positions with several well-known mining and exploration companies including African Queen Mines, Sacre-Coeur Minerals, Ltd., and Prophecy Resources Corp. He has also served as a senior executive officer for two Vancouver based securities firms and a financial compliance officer for the Vancouver Stock Exchange. Mr. Lotz holds a Bachelor's degree in Business Administration with a joint major in Economics. It is anticipated that Mr. Lotz will devote approximately 10% of his professional time to the Resulting Issuer. Mr. Lotz has not entered into a confidentiality agreement or a non-competition agreement with the Resulting Issuer.

John Sutherland (Age 66), CPA, CGA, Director – Mr. Sutherland is a finance and operations executive and corporate director with experience in building public and private companies. Mr. Sutherland has taken 12 companies public and raised over $250 million in equity and debt financing. Mr. Sutherland's previous career history includes: Chief Accountant – BC Sugar (1971 – 1978), Controller and Treasurer – AMAX of Canada and Canada Tungsten (1978 – 1983), Site General Manager and CFO – Sonora Gold (1983 – 1986), Partner and Vice President - Dimension House International, a venture capital firm (1986 – 1988), Corporate Director and Financial Consultant (1989-1993), Vice President, Operations and Finance - D.A. Townley, a benefits administration firm (1993 – 1995), Vice President, Finance and CFO – Arequipa Resources (1996 – 1997), President and CEO – ASC Avcan Systems (1997 – 2001), Project Manager – International Absorbents (2001 - 2002), Executive Director – Arthritis Research Centre of Canada (2002 – 2003), Founder, Vice President and CFO – Tekion, Inc. (2003-2006), Vice President and CFO – Goldgroup Mining (2007 – 2012) and CFO - Grande West Transportation Group Inc. (2013-2015), a bus manufacturer utilizing global trade to meet market demands for public transit.

Mr. Sutherland has served on numerous public company boards listed on the TSX.V, TSX and NYSE MKT exchanges as an independent director, specializing in audit committees and corporate governance with specific expertise in operations and M&A including 3 transactions totaling $1.8 billion being the take-overs of: Arequipa Resources (CFO) by Barrick Gold, Aquiline Resources by Pan American Silver and International Absorbents by Kinderhook. It is anticipated that Mr. Sutherland will devote approximately 10% of his professional time to the Resulting Issuer. The terms of Mr. Sutherland's employment agreement include a confidentiality agreement and a non-solicitation clause.

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Dixon Lawson (Age 64), OMM, CD, MPM, PMP, PCIP, Vice President Strategic Planning - Mr. Lawson is a professional project manager and a former field officer in the Canadian Military. He has a Master's Degree in Project Management (MPM) and maintains his currency as a certified Project Management Professional (PMP). He is using his applied Military Science Diploma, from Cranfield University, Shrivenham, UK, to assist with his work in the technical planning and operational planning of CJL build-out and transition to the revenue stage. Mr. Lawson has well developed Portfolio/Program/Project Management knowledge and skills. He has a strong background in operational planning and support activities, managing risk, executing strategy and plans, and integrating multiple projects to achieve Program goals. He has worked on a number of large projects and programs covering a range of equipment projects of $50 - $80 million, building infrastructure project of $50 million, and a Supply Chain re-engineering project with savings valued at $200 million.

For three years Mr. Lawson was the Program Manager for security of the 2010 Vancouver Olympic Winter Games Security program where he worked as a member of the Royal Canadian Mounted Police executive management team to integrate more than 40 projects affecting the preparation and planning for security. His work impacted approximately $200 million of spending of the $525 million allocated for security. It is anticipated that Mr. Lawson will devote approximately 95% of his professional time to the Resulting Issuer. The terms of Mr. Lawson's employment agreement include a confidentiality agreement and a non-solicitation clause.

John Korenic (Age 63), BSC, MBA, Vice President Commercial & IT – Mr. Korenic's role encompasses a wide range of commercial activities including route planning, sales and marketing, revenue generation/management including ancillary revenues, reservations, forecasting, communications and community relations. Mr. Korenic has nearly 30 years aviation experience, most recently 16 years with the Vancouver Airport Authority and prior to those 13 years with Canadian Airlines and Wardair. He is highly regarded in the industry for his broad and extensive knowledge. John has also twice been a sessional lecturer at the University of British Columbia on Air Transport Management and Policy and has participated on various tourism boards and chaired a number of committees. Mr. Korenic obtained a BSc from the University of Calgary, and an MBA degree from the University of British Columbia.

With the Vancouver Airport Authority Mr. Korenic re-launched YVR's business development and marketing strategies to make YVR one of North America's leading airports. The focus was to create an environment conducive to airlines considering YVR as a new or growth opportunity. This was evidenced by successfully attracting 12 major international airlines to YVR. In partnership with an array of airlines, John spearheaded the development and implementation of innovative and successful joint marketing programs. As Director of Alliances with Canadian Airlines, Mr. Korenic was accountable for the development, expansion and ongoing management of the airline's alliances. Prior to that role he was involved in various facets of the airline including operations, route planning, international affairs and marketing. His key accomplishments included the development of 5-year strategic plans and the restructuring of its route networks. It is anticipated that Mr. Korenic will devote approximately 95% of his professional time to the Resulting Issuer. The terms of Mr. Korenic's employment agreement include a confidentiality agreement and a non-solicitation clause.

Rick Lang (Age 68), BSc., Chief Operating Officer – Mr. Lang is an experienced airline executive specializing in airport operations, airline start-ups, and in-flight services including managing the flight attendant work force. Mr. Lang was the Vice–President of Service Delivery for the start-up airline Air Astana in Kazakhstan, an airline with scheduled service using the Boeing 767, Boeing 757, Airbus A319, Airbus A320, Airbus A321 and Embraer 190 aircraft. Previously, Mr. Lang was in-charge of World-Wide Airport Operations for Cathay Pacific Airways, Hong Kong, a position classified as General Manager in Asia, or Vice-President by North American terms. In this role Mr. Lang controlled a U.S. $200 million budget for Cathay Pacific Airways' 45 airport operations throughout the world. Between 1993 and 2000 Mr. Lang was the Director of In-flight Service Development & Standards for Cathay Pacific Airways. Mr. Lang has also held the position of Vancouver Base Manager of Cabin Crew for Canadian Airlines and Wardair. Mr. Lang holds a Bachelor of Science degree from Simon Fraser University, Canada, and has undergone business studies at Instead University, France. It is anticipated that Mr. Korenic will devote approximately 95% of his professional time to the Resulting Issuer. The terms of Mr. Lang's employment agreement include a confidentiality agreement and a non-solicitation clause.

Carlo Valente (Age 40), CPA, CA, Chief Financial Officer – Mr. Valente is a chartered accountant with a background in corporate transactions, public markets and accounting obtained over a fifteen-year span with the

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Vancouver and Milan offices of PricewaterhouseCoopers. He is currently the CFO of Excelsior Mining and Logan Resources and Executive VP of Business Development at King & Bay West. Mr. Valente graduated from Simon Fraser University in 1997 with a BBA and obtained his CA designation in 2000. He is a member of both the Institute of Chartered Accountants of British Columbia and the Canadian Institute of Chartered Accountants. It is anticipated that Mr. Valente will devote approximately 70% of his professional time to the Resulting Issuer. The services of Mr. Valente will be provided under the King & Bay West Agreement and such agreement includes a confidentiality agreement and a non-competition agreement.

Olen J. Aasen (Age 33), J.D., Vice President, Legal – Mr. Aasen is a practicing corporate and securities lawyer. He is currently Executive VP and General Counsel with King & Bay West Management Corp., a management company that provides management services to companies in the resource sector. Mr. Aasen is also the Corporate Secretary of Alderon Iron Ore Corp. (TSX: ADV / NYSE MKT: AXX). Mr. Aasen began his career as an associate in the securities and business law group of Blake, Cassels & Graydon LLP where he gained significant experience with respect to public companies, capital markets, securities laws and the natural resources sector. He obtained his J.D. from the University of British Columbia in 2006 and is a member of the British Columbia Bar. It is anticipated that Mr. Aasen will devote approximately 25% of his professional time to the Resulting Issuer. The services of Mr. Aasen will be provided under the King & Bay West Agreement and such agreement includes a confidentiality agreement and a non-competition agreement.

Corporate Cease Trade Orders

No proposed director or executive officer of the Resulting Issuer, as constituted upon completion of the Transaction is, as of the date hereof, or was within ten years before the date hereof, a director, chief executive officer or chief financial officer of any company, that:

(a)

was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

(b)

was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Bankruptcies and Other Proceedings

No proposed director or executive officer of the Resulting Issuer as constituted upon completion of the Transaction, or a shareholder anticipated to hold a sufficient number is securities of the Resulting Issuer as constituted upon completion of the Transaction to affect materially the control of the Resulting Issuer as constituted upon completion of the Transaction:

(a)

is, as of the date hereof, or has been within the ten years before the date hereof, a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(b)

has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

C-11

Ms. Deborah Robinson was a director and chair of Frontline Technologies Inc. On January 3, 2013, Frontline Technologies Inc. filed an assignment into bankruptcy with the Official Receiver of all of Frontline Technologies Inc.'s property for the general benefit of its creditors pursuant to the Bankruptcy and Insolvency Act (Canada), which assignment became effective January 4, 2013.

Penalties or Sanctions

Except as disclosed below, no proposed director or executive officer of the Resulting Issuer as constituted upon the completion of the Transaction, or a shareholder anticipated to hold a sufficient number is securities of the Resulting Issuer as constituted upon the completion of the Transaction to affect materially the control of the Resulting Issuer as constituted upon completion of the Transaction, has been subject to:

(a)	any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b)	any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision;

Mr. John Sutherland entered into a Settlement Agreement in February 1998 with the Alberta Securities Commission as a result of the late filing of insider reports. Mr. Sutherland paid a fine of $500 to the Alberta Securities Commission and agreed to be more diligent in complying with his responsibilities to report trades in a timely manner under applicable securities laws.

Conflicts of Interest

There are potential conflicts of interest to which the proposed directors, officers and promoters of the Resulting Issuer will be subject with respect to the operations of the Resulting Issuer as constituted upon completion of the Transaction. Certain of the proposed directors and/or officers serve as directors and/or officers of other companies or have significant shareholdings in other companies. Situations may arise where the directors, officers and promoters of the Resulting Issuer will be engaged in direct competition with the Resulting Issuer as constituted upon the completion of the Transaction. Any conflicts of interest will be subject to and governed by the law applicable to directors' and officers' conflicts of interest, including the procedures prescribed by the CBCA. The CBCA requires that directors and officers of the Resulting Issuer as constituted upon completion of the Transaction, who are also directors or officers of a party which enters into a material contract with the Resulting Issuer or otherwise have a material interest in a material contract entered into by the Resulting Issuer as constituted upon completion of the Transaction, must disclose their interest and, in certain instances, refrain from voting on any resolution of the Resulting Issuer's directors to approve the contract.

Other Reporting Issuer Experience

The following table sets out the proposed directors, officers and promoters of the Resulting Issuer that are, or have been within the last five years, directors, officers or promoters of other reporting issuers.

C-12

NAME	NAME & JURISDICTION OF REPORTING ISSUER	NAME OF EXCHANGE OR MARKET	POSITION	TERM
Mark J. Morabito	Excelsior Mining Corp. (British Columbia) Alderon Iron Ore Corp. (British Columbia) Roughrider Exploration Ltd. (British Columbia) Logan Resources Ltd. (British Columbia) Ridgemont Iron Ore Corp. (British Columbia) Midlands Minerals Corporation (Ontario) Savary Gold Corp. (British Columbia) Silver Quest Resources Ltd. (British Columbia) Santa Fe Metals Corp. (British Columbia)	TSXV, OTCQX TSX, NYSE MKT, TSXV TSXV TSXV TSXV TSXV TSXV TSXV TSXV	Chairman, Director Chairman, Director, President & CEO Director Director Chairman, Director, President & CEO Director Director Director Director Director	Apr. 2007-Present Dec. 2009-Present Nov. 2014-Present Sept. 2010-July 2012 Nov. 2010-June 2013 June 2011-June 2012 Sept. 2012-May 2013 Mar. 2007-Oct. 2011 Feb. 2007-Sept. 2011
Daniel James Scott	None	N/A	N/A	N/A
Rejean Bourque	None	N/A	N/A	N/A
Donald Sorochan	None	N/A	N/A	N/A
Deborah Robinson	Equity Financial Trust (Canada) Frontline Technologies Inc. (Ontario)	TSX TSXV	Officer Director	Nov. 2011 to Apr. 2014 Apr. 2011-Dec. 2012
Mark Lotz	Commander Resources Ltd. (British Columbia Ferro Iron Ore Corp. (British Columbia) Archer Petroleum Corp. (British Columbia) Sacre-Coeur Minerals Ltd. (British Columbia) African Queen Mines (British Columbia)	TSXV TSXV TSXV TSXV TSXV	Director Director, CFO & Secretary Director Director & CFO Director & CFO	Nov. 2012-Present Apr. 2012-Feb. 2013 May 2012-Feb. 2013 Aug. 2011-Aug. 2012 Aug. 2011-Apr. 2012

C-13

NAME	NAME & JURISDICTION OF REPORTING ISSUER	NAME OF EXCHANGE OR MARKET	POSITION	TERM
John Sutherland	Lake Victoria Mining Company, Inc. (Nevada) Grande West Transport Group Inc. (British Columbia) MOVIT Media Corp. (British Columbia) Uracan Resources Ltd. (British Columbia) Goldgroup Mining Inc. (British Columbia) Goldeneye Resources Corp. (British Columbia) Arco Resources Corp. (British Columbia)	TSXV TSXV TSXV TSXV TSX TSXV TSXV	Director CFO & Corporate Secretary Director CFO & Secretary Director VP & CFO Corporate Secretary Director Director	Apr. 2015 – Nov. 2015 Apr. 2013 to Apr. 2015 Dec. 2009 to Aug. 2015 May 2007 to Apr. 2013 Apr. 2009 to Mar. 2014 Feb. 2007 to Nov. 2012 Jun. 2010 to Mar. 2011 Mar. 2011 to Oct. 2012 Dec. 2007 to Oct. 2012
Dixon Lawson	None	N/A	N/A	N/A
John Korenic	None	N/A	N/A	N/A
Rick Lang	None	N/A	N/A	N/A
Carlo Valente	Excelsior Mining Corp. (British Columbia) Logan Resources Ltd. (British Columbia) Golden Raven Resources Ltd. (British Columbia) Savary Gold Corp. (British Columbia)	TSXV TSXV None TSXV	Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer	Dec 2014-Present July 2013-Present June 2012-Present Sep 2012-June 2013
Olen Aasen	Alderon Iron Ore Corp. (British Columbia)	TSX, NYSE MKT, TSXV	Corporate Secretary	Sept 2012-Present

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

Canadian securities regulatory policy as reflected in National Instrument 58-101 – Disclosure of Corporate Governance Practices ("NI 58-101") requires that TSXV-listed companies must disclose on an annual basis their approach to corporate governance. National Policy 58-201 – Corporate Governance Guidelines ("NP 58-201") provides regulatory staff guidance as to preferred governance practices, although the guidelines are not prescriptive, other than for audit committees. Disclosure of Jet and the Resulting Issuer's approach to corporate governance in the context of NI 58-101 and NP 58-201 (together, the "Policies"), as well as its compliance with the mandatory rules relating to audit committees, is set out below.

Composition of the Board of Directors

NI 58-201 recommends that boards of directors of reporting issuers be composed of a majority of independent directors. NI 52-110 sets out the standard for director independence. Under NI 52-110, a director is independent if he or she has no direct or indirect material relationship with Jet or the Resulting Issuer. A material relationship is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director's independent judgment.

C-14

With respect to the Current Jet Directors, three are considered independent. Mark J. Morabito is the Company's CEO and therefore is not considered independent. If the Current Jet Directors are elected, the Company's Board will be composed of four directors, three independent (Stewart Wallis, Ken Brophy and Mark Lotz) and one (Mark J. Morabito) non-independent.

Assuming the closing of the Transaction, the board of directors will be comprised of seven (7) individuals, of whom five (5) will be considered "independent" directors. Donald Sorochan, Rejean Bourque, Deborah Robinson, John Sutherland and Mark Lotz are considered to be independent directors. The non-independent directors (and the reasons for that status) will be Daniel James Scott and Mark Morabito. Daniel James Scott and Mark J. Morabito will be officers of the Resulting Issuer and therefore not independent.

Until the present, the independent directors have met from time to time and otherwise communicated as they deemed necessary. Independent directors are encouraged to discuss amongst themselves matters involving non-independent directors. The small size of the current Jet Board and the small number of independent directors have made this informal approach practicable.

During the year ended April 30, 2015, the independent directors did not hold regularly scheduled meetings at which the non-independent directors and members of management are not in attendance. The Jet Board believes that, given Jet's inactivity, management was effectively supervised by the non-management directors of Jet, on an informal basis, as the non-management directors are actively and regularly involved in reviewing the operations of Jet and have regular and full access to management. It is anticipated however, with an increased board size of seven (7) of whom five (5) will be independent, the Resulting Issuer Board will put in place more formal arrangements to ensure the regular communication of the independent directors.

Stewart Wallis currently serves as the Chair of Jet's Board. The Chair is independent. The Chair's responsibilities include, without limitation, ensuring that Jet's Board works together as a cohesive team with open communication and works to ensure that a process is in place by which the effectiveness of Jet's Board, its committees and its individual directors can be evaluated on a regular basis. The Chair also acts as the primary spokesperson for Jet's Board, ensuring that management is aware of concerns of Jet's Board, shareholders, other stakeholders and the public and, in addition, ensures that management strategies, plans and performance are appropriately represented to Jet's Board.

Orientation and Continuing Education

Jet provides an orientation program to new directors. This program consists of:

·	A detailed briefing with the Chairman.

·	A detailed briefing with the President & Chief Executive Officer.

·	Jet's General Counsel providing education regarding directors' responsibilities, corporate governance issues and recent and developing issues related to corporate governance and regulatory reporting.

·	Provision of Jet's committee charters and corporate governance policies to the new director.

·	Access to Jet's independent directors, as required, for the new director to discuss the operation of Jet and the Board.

Jet also encourages senior management to participate in professional development programs and courses and supports Management's commitment to training and developing employees. The Board of Directors provides comprehensive information regarding Jet to new directors and continuing education for directors on an ad hoc basis in respect of issues that are necessary for them to understand to meet their obligations as directors. The Resulting Issuer will continue and enhance the existing practices of Jet.

C-15

Other Directorships

Mr. Brophy is also a director of Golden Raven Resources Ltd. and Mr. Wallis is also a director of Logan Resources Ltd. Please refer to " – Directors, Officers and Promoters – Other Reporting Issuer Experience" for the details of the the other directorships of the other proposed Jet Directors.

Ethical Business Conduct

The Board of Directors expects Management to operate the business of Jet in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected to execute Jet's business plan and to meet performance goals and objectives. On February 19, 2009, the Board of Directors adopted a formal written Code of Business Conduct and Ethics (the "Code") which is available on SEDAR at www.sedar.com.

The Board endeavors to ensure that directors, officers and employees exercise independent judgement in considering transactions and agreements in respect of which a director, officer or employee of Jet has a material interest, which include ensuring that directors, officers and employees are thoroughly familiar with the Code and, in particular, the rules concerning reporting conflicts of interest. In addition, in accordance with the Business Corporations Act (British Columbia), if a director is a director or officer of, or has a material interest in, any person who is a party to a transaction or proposed transaction with Jet, that director is not entitled to vote on any directors' resolutions in respect of such transaction, in most circumstances. The Resulting Issuer will continue and enhance the existing practices of Jet.

Nomination of Directors

Jet does not at this time have a specific committee responsible for the nomination of directors. The nomination of directors is currently addressed by the Board of Directors as a whole, although a formal process has not been adopted. The nominees are generally the result of recruitment efforts by the Board of Directors members, including both formal and informal discussions among Board of Directors members and the President and CEO. The process by which the Board of Directors identifies new candidates for director positions begins with the approval by the board of a statement of competencies and experience sought with respect to each new candidate. Proposed directors' credentials are reviewed in advance of a Board of Directors meeting with one or more members of the Board of Directors prior to the proposed director's nomination. An invitation to join the board is made only where board consensus regarding the proposed candidate is obtained. The Resulting Issuer will continue and enhance the existing practices of Jet and is expected to appoint a committee that is responsible for the nomination of directors.

Compensation

The quantity and quality of the directors' and executive officers' compensation is reviewed on an annual basis by the Compensation Committee or the Board of Directors as a whole. At present, the Board of Directors is satisfied that the current Board of Directors' compensation arrangements adequately reflect the responsibilities and risks involved in being an effective director of Jet. Further details about Jet's compensation practices are disclosed in Appendix "A" – Information Concerning Jet Metal Corp.

Other Board Committees

The only committee of the Board that Jet has, other than the Audit Committee and Compensation Committee, is the Corporate Governance Committee. The purpose of the Corporate Governance Committee is to review Jet's corporate governance documents and practices.

Assessments

The Jet Board does not, at present, have a formal process in place for assessing the effectiveness of the Jet Board as a whole, its committees or individual directors, but will consider implementing one in the future should circumstances warrant. The Resulting Issuer expects to adopt a formal process for assessing the effectiveness of the performance of the Resulting Issuer Board.

C-16

EXECUTIVE COMPENSATION

Set out below is the anticipated compensation, as known on the date of this Information Circular, for each of the Resulting Issuer's three most highly compensated executive officers in addition to the Chief Executive Officer and Chief Financial Officer, for the 12-month period after giving effect to the Transaction.

NAME AND PRINCIPAL POSITION	ANNUAL SALARY ($)	SHARE-BASED AWARDS ($)	OPTION-BASED AWARDS ($)⁽¹⁾	NON-EQUITY INCENTIVE PLAN COMPENSATION		PENSION VALUE ($)	ALL OTHER COMPEN- SATION ($)	TOTAL COMPEN- SATION ($)
NAME AND PRINCIPAL POSITION	ANNUAL SALARY ($)	SHARE-BASED AWARDS ($)	OPTION-BASED AWARDS ($)⁽¹⁾	Annual incentive plans ($)	Long-term incentive plans ($)	PENSION VALUE ($)	ALL OTHER COMPEN- SATION ($)	TOTAL COMPEN- SATION ($)
Mark J. Morabito Executive Chairman	Nil	Nil	82,140	Nil	Nil	Nil	145,000	227,140
Daniel James Scott CEO	145,000	Nil	68,450	Nil	Nil	Nil	Nil	213,450
Carlo Valente⁽²⁾ CFO	Nil	Nil	41,070	Nil	Nil	Nil	140,000	181,070
Rick Lang COO	140,000	Nil	54,760	Nil	Nil	Nil	Nil	194,760
Dixon Lawson VP, Strategic Planning	140,000	Nil	68,450	Nil	Nil	Nil	Nil	208,450
John Korenic VP, Commercial & IT	140,000	Nil	34,225	Nil	Nil	Nil	Nil	174,225

Notes:

⁽¹⁾

After the Closing of the Transaction, Jet will issue stock options to the executive officers listed above. The fair value of the stock options was estimated using the Black Scholes option pricing model with the following assumptions: a) average risk-free interest rate of 0.63%; b) expected life of five years; c) the estimated price of the stock on the grant date; d) expected volatility of 166% and d) no expected dividend payments. The Black Scholes model was used to compute option fair values because it is the most commonly used option pricing model and is considered to produce a reasonable estimate of fair value.

⁽²⁾

Ms. Valente is an employee of King & Bay West, a company which provides management services to Jet and will provide management services to the Resulting Issuer. King & Bay West will invoice the Resulting Issuer on a monthly basis for fees for management services provided which are determined based on the usage of such services by the Resulting Issuer. The amount set out for Mr. Valente under the heading "All other compensation" is the amount expected to be paid by King & Bay West directly to Mr. Genzel during the period based on the estimated time Mr. Valente will spend providing services to the Resulting Issuer.

For the details of the terms of the employment agreements of the officers listed in the table above see the notes to Table under Appendix "B" – "Executive Compensation – Summary Compensation Table". See also Appendix "B" – "Executive Compensation – Termination and Change of Control Benefits". The Resulting Issuer will not initially have any pension or retirement plans or arrangements for its Named Executive Officers.

C-17

INDEBTEDNESS OF DIRECTORS AND OFFICERS

None of the present directors or officers of Jet or CJL, or any person who served as a director or officer of either Jet or CJL at any point during the present or preceding fiscal year, or any of the proposed directors or officers of Jet are presently indebted to Jet or CJL.

INVESTOR RELATIONS ARRANGEMENTS

No Person has been retained in connection with providing promotional or investor relations services for the Resulting Issuer.

OPTIONS TO PURCHASE SECURITIES

The table below sets out the number of Resulting Issuer Options that will be held by executive officers of the Resulting Issuer as a group, directors of the Resulting Issuer as a group, all other employees of the Resulting Issuer as a group and consultants of the Resulting Issuer as a group, and certain terms relating to such Resulting Issuer Options following completion of the Transaction.

GROUP	NUMBER OF OPTIONS/ RIGHTS	SECURITIES UNDER OPTIONS/RIGHTS	DATE OF GRANT	EXPIRY DATE	EXERCISE PRICE PER COMMON SHARE	MARKET VALUE OF COMMON SHARES ON GRANT DATE	MARKET VALUE OF COMMON SHARES AS OF DATE OF INFORMATION CIRCULAR
Proposed Officers of the Resulting Issuer as a group (7) total officers)⁽¹⁾	2,625,000	2,850,000	Day after Closing	5 years from the date of grant	$0.30	Nil	Nil
Proposed Directors of the Resulting Issuer, who are not also officers, as a group (5) total directors)⁽²⁾	1,010,000	1,010,000	Day after Closing	5 years from the date of grant	$0.30	Nil	Nil
All other employees of the Resulting Issuer	200,000	200,000	Day after Closing	5 years from the date of grant	$0.30	Nil	Nil
All consultants of the Resulting Issuer⁽³⁾	1,215,000	1,215,000	Day after Closing	5 years from the date of grant	$0.30/$0.33	Nil	Nil

Notes:

⁽¹⁾	Mark Morabito, Daniel James Scott, Carlo Valente, Dixon Lawson, John Korenic, Rick Lang, Carlo Valente and Olen Aasen.

⁽²⁾	Donald Sorochan, Rejean Bourque, Deborah Robinson, John Sutherland and Mark Lotz.

⁽³⁾

Includes Ken Brophy, Mark Lotz and Stewart Wallis who are former directors of Jet, and Kate-Lynn Genzel and Sheila Paine who are former officers of Jet, who will hold a total of 570,000 Resulting Issuer Options granted the day after Closing at an exercise price of $0.30 exercisable for five years from the date of grant.

⁽⁴⁾	Mike Harris will become a former director of CJL and will hold 225,000 Resulting Issuer Options at an exercise price of $0.33.

C-18

Stock Option Plan

The Resulting Issuer Stock Option Plan upon the completion of the Transaction will be the Jet Stock Option Plan discussed in Appendix "A" – "Information Concerning Jet Metal Corp." in the Information Circular.

ESCROWED SECURITIES

Upon completion of the Transaction, to the knowledge of Jet and CJL, as of the date of the Information Circular, 6,228,389 Resulting Issuer Shares (collectively the "Principal Shares") held by the Principals of the Resulting Issuer will be subject to transfer restrictions pursuant to Exchange Policy 5.4 – Escrow, Vendor Consideration and Resale Restrictions. The following table lists the names of the owners of the securities that are or will be subject to transfer restrictions and the number of securities held:

		SHARES SUBJECT TO ESCROW PRIOR TO GIVING EFFECT TO THE CONSOLIDATION, THE TRANSACTION AND THE OFFERING		AFTER GIVING EFFECT TO THE CONSOLIDATION, THE TRANSACTION AND THE OFFERING⁽¹⁾
Name and municipality of residence of shareholder	Designation of Class	Number held	Percentage of class	Number held in escrow	Percentage of class
Stewart Wallis British Columbia, Canada	Common	N/A	N/A	68,766	<1.00%
Ken Brophy British Columbia, Canada	Common	N/A	N/A	67,086	<1.00%
Kate-Lynn Genzel British Columbia, Canada	Common	N/A	N/A	Nil	<1.00%
Sheila Paine British Columbia, Canada	Common	N/A	N/A	833	<1.00%
Mark Morabito British Columbia, Canada	Common	N/A	N/A	2,319,980⁽²⁾	4.33%
Mark Lotz British Columbia, Canada	Common	N/A	N/A	Nil	<1.00%
Daniel James Scott British Columbia, Canada	Common	N/A	N/A	1,900,002	3.55%
Donald Sorochan British Columbia, Canada	Common	N/A	N/A	90,000	<1.00%
Rejean Bourque Quebec, Canada	Common	N/A	N/A	Nil	<1.00%
Deborah Robinson Quebec, Canada	Common	N/A	N/A	Nil	<1.00%
Dixon Lawson British Columbia, Canada	Common	N/A	N/A	1,227,501⁽³⁾	2.29%
Rick Lang British Columbia, Canada	Common	N/A	N/A	150,000	<1.00%
John Korenic British Columbia, Canada	Common	N/A	N/A	112,500	<1.00%
John Sutherland British Columbia, Canada	Common	N/A	N/A	142,500	<1.00%
Olen Aasen British Columbia, Canada	Common	N/A	N/A	58,666	<1.00%
Carlo Valente British Columbia, Canada	Common	N/A	N/A	90,555	<1.00%

C-19

Notes:

(1)

(2)	Includes shares held by King & Bay West Management Corp. and MJM Consulting Corp., entities controlled or directed by Mr. Morabito.

(3)	Includes shares held by D.W. Lawson Consulting Inc., entities controlled or directed by Mr. Lawson.

The Principal Shares to be placed in escrow will be subject to a Tier 2 Value Escrow and released as follows:

ESCROW SECURITIES RELEASE SCHEDULE ASSUMING LISTING ON THE EXCHANGE AS A TIER 2 ISSUER
	Percentage of Total Escrowed Securities to be Released
Release Dates	Value Escrow
Upon Exchange Bulletin	10%
6 months from Exchange Bulletin	15%
12 months from Exchange Bulletin	15%
18 months from Exchange Bulletin	15%
24 months from Exchange Bulletin	15%
30 months from Exchange Bulletin	15%
36 months from Exchange Bulletin	15%

The Principal Shares may not be sold, assigned, transferred, redeemed, surrendered or otherwise dealt with in any manner except as provided for by the applicable escrow agreement, subject to receiving TSXV approval. Securities may be transferred within escrow to an individual who is a director or senior officer of Logan or a material operating subsidiary of Logan, provided that the approval of the TSXV is obtained and certain requirements of the TSXV are met, including that the transferee agrees to be bound by the terms of the agreement. Escrowed shares may be transferred within escrow to a registered retirement savings plan ("RRSP") or a registered retirement income fund ("RRIF") provided that the TSXV receives proper notice of the same, the beneficiaries of the RRSP or RRIF are limited to the security holder and the spouse, children and parents of such holder, and the trustee of the RRSP or RRIF agrees to be bound by the terms of the applicable escrow agreement. In the event of the death of a security holder, the shares held in escrow shall be released to the legal representatives of the deceased security holder subject to compliance with the procedural requirements in the applicable escrow agreement.

Escrowed shareholders who are not individuals will provide undertakings to the TSXV that they will not issue securities of their own issue or effect or permit a transfer of ownership of securities of their own issue that would have the effect of changing the beneficial ownership of, or control or direction over, the escrowed shares.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The Resulting Issuer's auditors upon completion of the Transaction will continue to be Davidson & Company LLP at their offices in Vancouver, British Columbia.

The Resulting Issuer's transfer agent and registrar will continue to be Computershare Investor Services Inc. at their offices in Vancouver, British Columbia.

C-20

Canada Jetlines Ltd.

(A Start-up Stage Company)

Financial Statements

For the Year Ended December 31, 2014

(Expressed in Canadian dollars)

D-33

Canada Jetlines Ltd.

(A Start-up Stage Company)

Financial Statements

(Expressed in Canadian dollars)

For the Year Ended December 31, 2014

Management's Report	3

Independent Auditors' Report	4-5

Statements of Financial Position	6

Statements of Loss and Comprehensive Loss	7

Statements of Changes in Shareholders' (Deficit) Equity	8

Statements of Cash Flows	9

Notes to the Financial Statements	10 - 31

D-34

Management's Report

The accompanying financial statements of Canada Jetlines Ltd. (the "Company") are the responsibility of management and have been approved by the Board of Directors. The financial statements have been prepared by management in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") as outlined in Part 1 of the Chartered Professional Accountants of Canada Handbook - Accounting, and include some amounts that are based on management's estimates and judgment.

The Board of Directors carries out its responsibility for the financial statements principally through its Audit Committee. The Audit Committee reviews the Company's annual financial statements and recommends its approval to the Board of Directors. The Company's auditors have full access to the Audit Committee, with and without management being present.

(Signed) Jim Scott

(Signed) Rick Low

Chief Executive Officer

Chief Financial Officer

Vancouver, British Columbia, Canada

July 22, 2015

D-35

INDEPENDENT AUDITORS' REPORT

To the Shareholders of

Canada Jetlines Ltd.

We have audited the accompanying financial statements of Canada Jetlines Ltd., which comprise the statements of financial position as at December 31, 2014 and 2013, and the statements of loss and comprehensive loss, changes in shareholders' (deficit) equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements.

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

Opinion

In our opinion, these financial statements present fairly, in all material respects, the financial position of Canada Jetlines Ltd. as at December 31, 2014 and 2013, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

1200 - 609 Granville Street P.O. Box 10372, Pacific Centre Vancouver, B.C., Canada V7Y 1G6

Telephone (604) 687-4947 Davidson-co.com

D-36

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the financial statements which describes conditions and matters that indicate the existence of a material uncertainty that may cast significant doubt about Canada Jetlines Ltd.'s ability to continue as a going concern.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada	Chartered Professional Accountants

July 22, 2015

D-37

Canada Jetlines Ltd.
A Start-up Stage Company
Statements of Financial Position
(Expressed in Canadian Dollars)


	December 31,			December 31,
	2014			2013
	$			$
Assets

Current Assets:
Cash		71,160			41,275
Accounts receivable		14,997			7,877
Prepaid expenses and deposits		37,604			20,727
Total current assets		123,761			69,879

Non-Current Assets:
Equipment (note 4)		7,629			5,292

Total Assets		131,390			75,171

Liabilities and Shareholders' (Deficit) Equity

Current Liabilities:
Accounts payable and accrued liabilities		159,802			60,327
Total Liabilities		159,802			60,327

Shareholders' (Deficit) Equity:
Share capital (note 6)		1,484,399			597,100
Contributed surplus		126,219			88,612
Deficit		(1,639,030	)		(670,868	)
Total Shareholders' (Deficit) Equity		(28,412	)		14,844

Total Liabilities and Shareholders' (Deficit) Equity		131,390			75,171

Nature and continuance of operations (note 1)

Commitments (note 9)

Contingencies (notes 10 and 13)

Subsequent events (notes 6 (a) and (b), 13)

Approved on behalf of the Board of Directors:

"John Sutherland" "Jim Scott"

______________________________ ________________________

John Sutherland, Director Jim Scott, Director

The accompanying notes are an integral part of these financial statements

D-38

Canada Jetlines Ltd.
A Start-up Stage Company
Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)

	For the Year Ended
	December 31,
	2014		2013
	$		$
Expenses
Consulting (note 5)		347,437		235,905
Depreciation (note 4)		2,378		661
General and administration		125,431		31,411
Marketing and advertising		9,717		12,418
Professional fees (note 13)		61,223		51,696
Salaries and benefits (note 5)		331,899		209,795
Share-based compensation (notes 5 and 6 (b))		25,847		88,612
Travel		63,756		13,024
		967,688		643,522

Interest expense		474		267

Net Loss and comprehensive loss for the year		968,162		643,789

Loss per share – basic and diluted	$	0.22	$	0.41
Weighted average number of shares outstanding - basic and diluted		4,412,513		1,555,833

The accompanying notes are an integral part of these financial statements

D-39

Canada Jetlines Ltd.
A Start-up Stage Company
Statements of Changes in Shareholders' (Deficit) Equity
(Expressed in Canadian Dollars)


	Share Capital
	Number of Shares		Amount			Contributed Surplus		Deficit			Total
			$			$		$			$
Balance as at December 31, 2012		873,334		51,000			-		(27,079	)		23,921

Issuance of common voting shares for cash		1,791,669		503,500			-		-			503,500
Issuance of common voting shares for services		333,334		50,000			-		-			50,000
Share issuance costs		-		(7,400	)		-		-			(7,400	)
Share-based compensation		-		-			88,612		-			88,612
Loss for the year		-		-			-		(643,789	)		(643,789	)
Balance as at December 31, 2013		2,998,337		597,100			88,612		(670,868	)		14,844
Issuance of common voting shares for cash (note 6 (a))		2,704,633		811,390			-		-			811,390
Issuance of common voting shares for services (note 6 (a))		243,017		72,905			-		-			72,905
Issuance of common voting shares in settlement of shareholder loan (note 6(a))		235,000		70,500			-		-			70,500
Share issuance costs		-		(68,696	)		-		-			(68,696	)
Agent's warrants issued as share issuance cost (note 6 (c))		-		-			11,760		-			11,760
Common voting shares issued as share issuance cost (note 6 (a))		4,000		1,200								1,200
Share-based compensation (note 6 (b))		-		-			25,847		-			25,847
Loss for the year		-		-			-		(968,162	)		(968,162	)
Balance as at December 31, 2014		6,184,987		1,484,399			126,219		(1,639,030	)		(28,412	)

The accompanying notes are an integral part of these financial statements

D-40

Canada Jetlines Ltd.
A Start-up Stage Company
Statements of Cash Flows
(Expressed in Canadian Dollars)


	For the Year Ended
	December 31,			December 31,
	2014			2013
	$			$
Cash Flows From Operating Activities
Net loss for the year		(968,162	)		(643,789	)
Items not involving cash:
Depreciation		2,378			661
Share-based compensation		25,847			88,612
Interest expense		474			267
Consulting		72,905			50,000
Changes in non-cash working capital:
Accounts receivable		(7,120	)		(7,877	)
Prepaid expenses and deposits		(16,877	)		(20,727	)
Accounts payable and accrued liabilities		99,475			59,327
Net Cash Used in Operating Activities		(791,080	)		(473,526	)

Cash Flows From Investing Activities
Purchase of computer equipment		(4,715	)		(5,953	)
Net Cash Used by Investing Activities		(4,715	)		(5,953	)

Cash Flows From Financing Activities
Proceeds from issuance of shares		811,390			503,500
Share issuance costs		(55,736	)		(7,400	)
Interest paid		(474	)		(267	)
Short-term loan repayment		-			(25,000	)
Shareholder loan advances		82,500			-
Shareholder loan repayments		(12,000	)		-
Net Cash provided from Financing Activities		825,680			470,833

Net Increase in Cash		29,885			(8,646	)
Cash – Beginning of Year		41,275			49,921
Cash – End of Year		71,160			41,275

Supplemental cash flow information (note 11)

The accompanying notes are an integral part of these financial statements

D-41

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

1.	NATURE AND CONTINUANCE OF OPERATIONS

Canada Jetlines Ltd. (the "Company" or "Jetlines") is incorporated under the federal laws of Canada. The Company is in the start-up stage and its principal business activities is the start-up of an ultra low cost carrier ("ULCC") scheduled airline service.

These financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assumes that the Company will continue its operations and will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. At December 31, 2014, the Company had a working capital deficit of $36,041, had not yet achieved profitable operations and expects to incur further losses in the development of its business. For the year ended December 31, 2014, the Company reported a net loss of $968,162 and as at December 31, 2014, had an accumulated deficit of $1,639,030. The Company has not generated revenues from operations and is considered to be in the start-up stage. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern. The Company is dependent on equity financings and debt to fund its operations. Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for the next 12 months from December 31, 2014. The Company will need to raise sufficient funds in order to finance its current plans, budgeted expenditures, and administrative expenses. The Company has no assurance that such financing will be available or be available on favorable terms. Factors that could affect the availability of financing include the Company's performance, the state of debt and equity markets, investor perceptions and expectations and the global financial and aviation markets. If successful, the Company would obtain additional financing through, but not limited to, the issuance of additional equity or debt.

These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary should the going concern assumption be inappropriate, and such adjustments could be material.

The Company's head office is located at Room C4408, Vancouver International Terminal Building, 3211 Grant McConachie Way, Richmond BC V7B 0A4, Canada.

2.	BASIS OF PREPARATION

Statement of Compliance

These financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

These financial statements for the year ended December 31, 2014 were approved and authorized for issue by the Board of Directors on July 22, 2015.

3.	SIGNIFICANT ACCOUNTING POLICIES

(a)	Foreign Currency Translation

The presentation and functional currency of the Company is the Canadian dollar.

The functional currency of the Company is determined based on the currency of the primary economic environment in which the Company operates.

D-42

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(a)	Foreign Currency Translation (continued)

Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the period in which they arise.

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive income to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

(b)

Equipment

Equipment is comprised of computers and is carried at cost, less accumulated depreciation. The cost of an item consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Depreciation is provided for at the following rates:

Assets	Rate
Computer equipment	3 years, straight-line method

An item is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the statement of loss and comprehensive loss.

Where an item of equipment is comprised of major components with different useful lives, the components are accounted for as separate items of equipment. Expenditures incurred to replace a component of an item of equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized.

The residual values, useful lives, and methods of depreciation are reviewed at each reporting period and adjusted prospectively if appropriate.

D-43

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(c)	Impairment of Non-Financial Assets

At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is an indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the assets belong. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no prior impairment loss been recognized for the asset.

(d)	Financial Instruments

Financial Assets

All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held-to-maturity, available-for-sale, loans-and-receivables or at fair value through profit or loss ("FVTPL").

Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through profit or loss. Regular purchases and sales of FVTPL financial assets are accounted for at trade date, as opposed to settlement date. The Company's cash is classified as FVTPL.

Financial assets classified as loans-and-receivables and held-to-maturity are measured at amortized cost. Financial assets classified as available-for-sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income (loss) except for losses in value that are considered other than temporary. The Company's accounts receivable is classified as loans-and-receivables.

Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

D-44

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(d)

Financial Instruments (continued)

Financial Liabilities

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other-financial-liabilities. Financial liabilities classified as other-financial-liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other-financial-liabilities are subsequently measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period of maturity. The effective interest rate is the rate that exactly discounts estimated future cash payments to the carrying value through the expected life of the financial liability, or, where appropriate, a shorter period. The Company's accounts payable and accrued liabilities are classified as other-financial-liabilities.

Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized through profit and loss. The Company has not classified any financial liabilities as FVTPL.

A financial liability is derecognized when the associated obligation is discharged, cancelled or expired.

(e) Impairment of Financial Assets

The Company assesses at each reporting date whether a financial asset is impaired.

If there is objective evidence that an impairment loss on assets carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The carrying amount of the asset is then reduced by the amount of the impairment. The amount of the loss is 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 to the extent that the carrying value of the asset does not exceed what the amortized cost would have been had the impairment not been recognized. Any subsequent reversal of an impairment loss is recognized in profit or loss.

In relation to trade receivables, a provision for impairment is made and an impairment loss is recognized in profit or loss when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are written off against the allowance account when they are assessed as uncollectible.

D-45

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Impairment of Financial Assets (continued)

If an available-for-sale asset is impaired, an amount comprising the difference between its cost and its current fair value, less any impairment loss previously recognized in profit or loss, is transferred from accumulated other comprehensive income (loss) to profit or loss. Management reviews the fair value of its marketable securities at the end of each reporting period. When the securities are trading below their cost for a prolonged period of time or the decline in value is significant, it is considered impaired. Reversals of impairment in respect of equity instruments classified as available-for-sale are recognized in other comprehensive income (loss) and are not recognized in profit or loss.

(f) Income Taxes

(i) Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is recognized using the asset and liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

·	Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit (tax loss).

In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled by the parent, investor or venturer and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused tax credits and any unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

D-46

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) Income Taxes (continued)

(ii) Deferred tax (continued)

·	Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available, against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of

each reporting period and are recognized to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Such deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances arises. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if it occurred during the measurement period or recognized in profit or loss thereafter.

(g) Share Capital

Instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares, options and share warrants are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares, options, or warrants are shown in equity as a deduction, net of tax, from the proceeds.

D-47

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(g) Share Capital (continued)

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component.

The fair value of the common shares issued in private placements is determined to be the more easily measurable component and are valued at their fair value, as determined by the closing price on the announcement date. The balance, if any, is allocated to the attached warrants.

In situations where share capital is issued, or received, as non-monetary consideration and the fair value of the asset or services received, or given up is not readily determinable, the fair market value (as defined) of the shares is used to record the transaction. The fair market value of the shares issued, or received, is based on the trading price of those shares on the appropriate Exchange on the date of the agreement to issue shares as determined by the Board of Directors.

(h) Earnings / Loss Per Share

Basic earnings/loss per share is computed by dividing the net income or loss applicable to common shares of the Company by the weighted average number of common shares outstanding for the relevant period.

Diluted earnings/loss per common share is computed by dividing the net income or loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding, if potentially dilutive instruments were converted.

(i) Share-based Compensation

Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of loss and comprehensive loss over the remaining vesting period.

When equity instruments are granted to non-employees, they are recorded at the fair value of the goods and services received, unless the fair value of the goods and services received cannot be reasonably measured, in which case they are measured using the equity instruments issued. Expenses are recorded in

D-48

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(i) Share-based Compensation (continued)

the statement of comprehensive loss/income. Amounts related to the cost of issuing shares are recorded as a reduction of share capital.

When the value of goods or services received in exchange for the share-based compensation cannot be reliably estimated, the fair value is measured by use of a valuation model. The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

All equity-settled share-based compensation are reflected in contributed surplus, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in contributed surplus is credited to share capital, adjusted for any consideration paid.

Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense.

(j) Segmented Reporting

The Company operates in one segment, which is the start-up of a ULCC and its operations and head office are in Canada.

(k) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the date of inception. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Finance leases that transfer substantially all of the risks and benefits incidental to ownership of the leased item to the Company, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an operating expense in profit or loss on a straight-line basis over the lease term.

D-49

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)

(l)	Significant Accounting Estimates and Judgments

The preparation of these financial statements requires management to make certain estimates, judgments and 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. Actual outcomes could differ from these estimates. These financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to the following:

i.	The carrying value and the recoverability of equipment

The application of the Company's accounting policy for identifying impairment indicators under IAS

36 requires judgement. If indicators are identified, the determination on recoverability of equipment requires judgement in determining whether future economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is recognized in loss in the period that the new information becomes available.

ii. The inputs used in accounting for share-based compensation

The fair values of share-based compensation are subject to the limitation of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share price, changes in subjective input assumptions can materially affect the fair value estimate.

Critical accounting judgments

Critical accounting judgments are accounting policies that have been identified as being complex or involving subjective judgments or assessments.

D-50

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(l)	Significant Accounting Estimates and Judgments (continued)

The analysis of the functional currency for the Company - In accordance with IAS 21, the Effects of Changes in Foreign Exchange Rates, management determined that the functional currency of Company is the Canadian dollar as this is the currency of the primary economic environment in which the Company operates.

(m)	New accounting pronoucements

Accounting standards issued and effective January 1, 2014 include amendment to IAS 32, Financial Instruments & Presentation provides for amendments relating to offsetting financial assets and financial liabilities. The Company has adopted this policy and it does not have a significant effect on the financial statements.

(n)	Accounting standards not yet adopted

IFRS 9 Financial Instruments - In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before February 1, 2015. The Company has not yet determined the impact of this standard on its financial position and results of operations.

IFRS 15 Revenue Recognition - Revenue from Contracts with Customers establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. Management anticipates that this standard will be adopted in the Company's financial statements for the period beginning January 1, 2017, and has not yet considered the potential impact of the adoption of IFRS 15.

IAS 36 Impairment of Assets is amended effective for annual periods beginning on or after July 1, 2014 to address disclosures required regarding the recoverable amount of impaired assets of cash generating units (CGUs) for periods in which the impairment loss has been recognized or reversed. As of the date of the financial statements, the Company has no impaired assets. There is no change expected to the financial presentation as a result of this amendment.

D-51

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

4. EQUIPMENT

Cost
Balance as at December 31, 2012	-
Additions	5,953
Disposals	-
Balance as at December 31, 2013	5,953
Additions	4,715
Disposals	-
Balance as at December 31, 2014	10,668

Accumulated depreciation
Balance as at December 31, 2012	-
Depreciation	661
Disposals	-
Balance as at December 31, 2013	661
Depreciation	2,378
Disposals	-
Balance as at December 31, 2014	3,039

Carrying amounts
Balance as at December 31, 2014	7,629
Balance as at December 31, 2013	5,292

5. RELATED PARTY TRANSACTIONS

Transactions with related parties were in the normal course of operations and are measured at the exchange amount established and agreed to by the related parties.

In addition to the related party transactions noted below, the Company reimbursed all these related parties for out-of-pocket direct costs incurred on behalf of the Company. Such costs include travel, postage, courier charges, printing and telephone charges.

D-52

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

5. RELATED PARTY TRANSACTIONS (continued)


	For the Year Ended
	December 31,		December 31,
	2014		2013
Transactions with Key Management Personnel	$		$
Salaries to Key Management included in salaries and benefits		270,546		157,231
Share-based compensation to Key Management		25,847		88,612
Consulting fees to Key Management included in consulting expense		83,599		87,838
		379,992		333,681

Included in consulting fees to Key Management for the year ended December 31, 2014 is $nil (2013 - $67,688) paid to a company that is controlled by the Chief Administrative Officer who is also a director.

Included in consulting fees to Key Management for the year ended December 31, 2014 is $24,061 (2013 - $nil) paid to a company that is controlled by the Chief Financial Officer.

During 2014, shareholder loans totaling $82,500 were advanced by the Chief Executive Officer and Chief Administrative Officer who are also directors. The shareholder loans were non-interest bearing, repayable on demand and unsecured. In July 2014, the loans were settled by the Company through the issuance of 235,000 common voting shares valued at $70,500 and $12,000 repayment in cash.

Included in accounts payable and accrued liabilities is $51,211 (2013 - $14,931) due to Key Management.

6.	SHARE CAPITAL

(a)	Authorized: Unlimited number of common voting shares without par value

Unlimited number of variable common voting shares without par value

During the year ended December 31, 2013, the Company:

·	Issued 1,791,669 common voting shares for gross cash proceeds of $503,500 less share issuance costs of $7,400.

·	Issued 333,334 common voting shares to settle accounts payable for consulting services valued at $50,000.

On December 31, 2013, the Company with the approval of relevant holders of the common voting shares, implemented a combination of share consolidation and stock split. This share adjustment was applied to 4,187,000 shares that were issued in 2012 and 2013. On May 1, 2014, the Company with the approval of relevant holders of the common voting shares implemented a stock split. The stock split was applied to 939,000 shares that were issued in 2013 in the ratio of one and two-thirds for one. The number of common voting shares outstanding presented for the current and comparative prior periods have been re-stated to reflect these share adjustments.

D-53

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

6.	SHARE CAPITAL (continued)

During the year ended December 31, 2014, the Company:

Completed a brokered private placement ("Private Placement") in which it issued 2,505,300 units for gross proceeds of $751,590 with each unit consisting of one common voting share plus half a warrant. In connection with the Private Placement, the Company issued 97,341 agent's warrants. The holder of each full warrant or agent's warrant is entitled to purchase one common voting share at an exercise price of $0.50 for a period of 2 years from the date of issue. Share issuance cost for the Private Placement amounted to $50,952 in cash, $1,200 as the fair value of 4,000 units issued as finder's fee and $11,760 as the fair value of the agent's warrants.

·	Issued 199,333 common voting shares for gross cash proceeds of $59,800 less share issuance costs of $4,784.

·	Issued 235,000 units in settlement of shareholder loans valued at $70,500 advanced by the Company's Chief Executive Officer and Chief Administrative Officer (Note 5). Each unit is equivalent to and has the same terms as those issued in the Private Placement.

·	Issued 233,017 common voting shares to settle accounts payable for consulting services valued at $69,905 and 10,000 units for consulting services valued at $3,000. Each unit is equivalent to and has the same terms as those issued in the Private Placement.

Subsequent to December 31, 2014, the Company:

Issued through a private placement 2,226,000 units for gross proceeds of $1,113,000 with each unit consisting of one common voting share plus half a warrant. In connection with the private placement, the Company issued 1,113,000 share purchase warrants and 52,800 agent's warrants. The holder of each full warrant or agent's warrant is entitled to purchase one common voting share at an exercise price of $1.50 for a period of 2 years from the date of issue.

(b)	Stock Options and Share-Based Compensation

Stock options granted to the Company's directors were as follows:

Grant date	Number of options		Exercise price per share		Expiry date
May 28, 2014		150,000	$	0.30	October 1, 2023
September 30, 2013		600,000	$	0.50	October 1, 2023

On February 26, 2014, the exercise price of the stock options granted on September 30, 2013 was amended to $0.30 per share.

The fair value of the 2014 grant was estimated at the grant date using the Black-Scholes Option Pricing Model. The inputs for the Black-Scholes Option Pricing Model are as follows:

Risk free interest rate		2.16%
Expected dividend yield		-
Expected annual volatility		100%
Expected life		6.2 years
Forfeiture rate		0%

D-54

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

6.	SHARE CAPITAL (continued)

The fair value of the 2013 grant was estimated at the grant date using the Black-Scholes Option Pricing Model. The inputs for the Black-Scholes Option Pricing Model are as follows:

Risk free interest rate		2.16%
Expected dividend yield		-
Expected annual volatility		100%
Expected life		6.5 years
Forfeiture rate		0%

(b)	Stock Options and Share-Based Compensation (continued)

The May 28, 2014 stock options vest at 25% on May 28, 2014 and 25% annually on May 28 of each year thereafter. The September 23, 2013 stock options vest at 25% on October 1, 2013 and 25% annually on October 1 of each year thereafter.

For the year ended December 31, 2014, the Company recognized share-based compensation of $25,847 in comprehensive loss (2013 - $88,612).

A summary of the status of the Company's stock options as at December 31, 2014 and changes during the year are as follows:

	Number of options	Weighted average exercise price $


Outstanding – December 31, 2012	-	-
Granted	600,000	0.50
Options forfeited	-	-
Outstanding – December 31, 2013	600,000	0.50
Granted	150,000	0.30
Options forfeited	(450,000)	0.30
Outstanding – December 31, 2014	300,000	0.30

The Company has the following stock options outstanding and exercisable:

Options Outstanding			Options Exercisable
Number of options at December 31, 2014	Weighted Average Remaining Contractual Life (Years)	Weighted average exercise price $	Number of options at December 31, 2014	Weighted average exercise price $


300,000	8.76	0.30	112,500	0.30

Subsequent to December 31, 2014, 150,000 stock options were forfeited due to the resignation of a director.

D-55

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

6.	SHARE CAPITAL (continued)

(c)

Warrants

A summary of the status of the Company's warrants as at December 31, 2014 and changes during the year are as follows:

	Number of Warrants	Weighted Average Exercise Price $
Outstanding - December 31, 2013 and 2012	-	-
Share purchase warrants issued	1,377,150	0.50
Agent's warrants issued	97,341	0.50
Outstanding - December 31, 2014	1,474,491	0.50

Expiry Date	Exercise Price		Number of Warrants		Warrant Valuation
July 30, 2016	$	0.50		997,883	$Nil
August 29, 2016	$	0.50		379,267	$Nil
July 30, 2016	$	0.50		82,408	$	9,956
August 29, 2016	$	0.50		14,933	$	1,804
Weighted Average	$	0.50		1,474,491	$	11,760

The agent's warrants were issued in connection with the Private Placement. The fair value of the agent's warrants was $11,760 and was estimated at the grant date using the Black-Scholes Option Pricing Model. The inputs for the Black-Scholes Option Pricing Model are as follows:

Risk free interest rate	1.10%
Expected dividend yield	0%
Expected annual volatility	100%
Expected life	2 years

(d)

Reserves

Contributed surplus

Share-based compensation are recognized in contributed surplus, until exercised. Upon exercise, shares are issued from treasury and the amount in contributed surplus is reclassified to share capital, adjusted for any consideration paid.

7. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair Value Hierarchy

Financial instruments recorded at fair value on the Statement of Financial Position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Fair values of financial instruments are determined by valuation methods depending on hierarchy levels as defined below:

Level 1 – Quoted market price in active markets for identical assets or liabilities;

D-56

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

7. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Level 2 – Inputs other than quoted prices included in level 1 that are observable for the assets or liabilities, either directly (i.e. observed prices) or indirectly (i.e. derived from prices);

Level 3 – Inputs for the assets or liabilities are not based on observable market data.

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

The following table presents the financial instruments recorded at fair value in the Statement of Financial Position, classified using the fair value hierarchy described above:

Asset	Level 1 $	Level 2 $	Level 3 $
December 31, 2014:
Cash	71,160	-	-
December 31, 2013:
Cash	41,275	-	-

The Company's risk exposures and the impact on the Company's financial instruments are summarized below:

Credit risk – is the risk of a financial loss to the Company if a counterparty fails to meet its contractual obligations. The Company's cash is held in a Canadian financial institution and management believes that the credit risk with respect to financial instruments is minimal.

Currency risk – currency risk arises due to fluctuations in the exchange rates. The Company's equity financings are sourced in Canadian dollars and the normal day-to-day expenditures are incurred in Canadian dollars. At this time there are no currency hedges in place and the Company is not exposed to foreign currency risks.

Interest rate risk – is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's interest expense is based on a fixed rate of interest on its loan. During 2014, the Company paid $474 (2013 - $267) of interest. As the rate of interest on the Company's loan is fixed, fluctuation in market interest would not affect interest expense.

Liquidity risk – is the risk that the Company will be unable to meet its obligations as they become due. The Company manages its liquidity risk by implementing a budget, forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments. As at December 31, 2014, the Company has $71,160 in cash, $159,802 in current liabilities and no long-term liabilities.

Price risk – the Company is in the start-up stage and does not have any revenues and therefore, is currently not exposed to price risks.

D-57

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

8. CAPITAL MANAGEMENT

The Company manages its capital structure, being its share capital, and makes adjustments to it, based on the funds available to the Company, in order to support future business opportunities. The Company had share capital of $1,484,399 and no debt as at December 31, 2014. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Planning, annual budgeting, cash flow forecasting and implementing controls over major investment decisions are primary tools used to manage the Company's capital.

The Company's investment policy is to hold cash in interest bearing bank accounts.

The Company currently has no source of revenues. As such, the Company is dependent upon external financings to fund activities. In order to carry future projects and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes to the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

9. COMMITMENTS

The following table shows the Company's contractual commitments as at December 31, 2014.

	2015		2016		2017		2018		2019		Total
	$		$		$		$		$		$
Office premise lease		26,892		-		-		-		-		26,892
Consulting ⁽¹⁾		39,600		39,600		29,700		-		-		108,900
Aircraft deposits ⁽²⁾		2,539,494		2,539,494		-		-		23,912,260		28,991,248
Total		2,605,986		2,579,094		29,700		-		23,912,260		29,127,040

(1)	Represents agreement for technology systems and support

(2)	Represents Deposits under the Boeing Agreement as defined below.

On December 11, 2014, the Company signed a definitive purchase agreement with The Boeing Company ("Boeing") to acquire up to twenty-one Boeing 737 MAX aircraft for delivery commencing in 2021 (the "Boeing Agreement"). The Boeing Agreement includes five firm orders, purchase rights for an additional sixteen 737 MAX and some conversion rights to the 737-8 MAX aircraft. The following is a summary of the key terms of the Boeing Agreement.

Jetlines will purchase five Boeing 737-7MAX aircraft, beginning with expected monthly deliveries in January 2021, for an aggregate estimated base price of US$438 million (2014 US$, subject to escalation), subject to certain terms and conditions. The cost for the airframe and engines is based on the 2014 price with an escalation factor to determine final price at delivery. Variable costs include the cost of optional equipment furnished by Boeing and the cost of optional equipment furnished by Jetlines. The variable cost items, while estimated, remain subject to final determination. Jetlines estimates that assuming scheduled delivery in 2021, and taking into account presently known facts and assumptions, the escalated basic list price for the five aircraft would be approximately US$515 million.

D-58

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

9. COMMITMENTS (continued)

Jetlines is required in connection with the five firm orders to pay (i) US$200,000 no later than January 30, 2015, US$100,000 no later than February 27, 2015 and 0.5% of the total basic list price of the five firm orders (such 0.5% being approximately US$2.2 million) less US$300,000 no later than November 30, 2015 (the "November 2015 payment") and (ii) 0.5% of the total basic list price of the five firm orders (such 0.5% being approximately US$2.2 million) by May 31, 2016 (the "May 2016 Payment", and together with the November 2015 Payment, the "Initial Payments"). The Company has paid the January 30, 2015 and February 27, 2015 amounts subsequent to December 31, 2014.

In the event Jetlines fails to pay the November 2015 payment, Boeing has the unilateral right to terminate the Boeing Agreement or enter into negotiations with Jetlines to amend certain terms of the Boeing Agreement. If Boeing elects to terminate the Boeing Agreement, Boeing is required to repay to Jetlines an amount equal to any deposit and advance payments received by Boeing from Jetlines less all of Boeing's costs and expenses accrued in connection with Boeing Agreement.

·	In addition to the Initial Payments, Jetlines is required to make the following payments on account of the basic list price of the five firm orders:

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12, 9, 6	5% each
On Delivery	70%
Total	100% (including Initial Payments)

·	Jetlines may elect to defer the above payments in accordance with the following schedule (which payments together with the Initial Payments are collectively referred to as the "Deferred Advance Payments"):

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12	5% each
On Delivery	80%
Total	100% (including Initial Payments)

·	Jetlines is required to pay interest on the Deferred Advance Payments from the day on which each advance payment would have been due in accordance with Boeing's regular payment schedule until the date of actual delivery of the applicable aircraft.

Jetlines will have the right to purchase up to 16 additional Boeing 737-7MAX aircraft. This purchase right is exercisable by Jetlines by notice not less than 24 months before the desired date of delivery. The additional aircraft are offered subject to available position for delivery prior to December 31, 2024. The price of the aircraft subject to the purchase right will be determined based on the provisions of the Boeing Agreement using the then current prices for such aircraft at the time of exercise of the purchase right subject to the escalation factors in the Boeing Agreement.

D-59

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

9. COMMITMENTS (continued)

months prior to the scheduled month of delivery of the Boeing 737-7MAX for which it will be substituted, if Jetlines has not previously received a substituted aircraft. The acquisition of any substituted aircraft will be subject to the execution of a definitive purchase agreement and product capabilities of the Boeing 737-8MAX. Pricing will be based on the pricing for the Boeing 737-8MAX aircraft as set out in the Boeing Agreement, subject to adjustments for configuration specifications by Boeing which arise between the date of the Boeing Agreement and the date of execution of the definitive agreement for the substitution Boeing 737-8MAX.

Jetlines may not terminate the Boeing Agreement unless there is a non-excusable delivery delay in which case either party may terminate the agreement with respect to an aircraft if there is a non-excusable delay for that aircraft which in the aggregate exceeds 180 days. Boeing has agreed to pay Jetlines a pre-determined liquidated damages amount in the event of a non-excusable delay associated with the delivery of aircraft.

·	Boeing has agreed to provide a service life policy and product assurance in respect of certain components of the aircraft.

·	Boeing has agreed to provide promotional support to Jetlines in respect of the entry of the Boeing 737-7MAX into Jetlines' operations.

The Company has not hedged its exposure to exchange rate fluctuations between the US and Canadian dollar with respect to the Boeing Agreement. The purchase price of the five aircraft is denominated in US dollars and therefore, the Company is exposed to fluctuations in the exchange rate between the Canadian dollar ("C$") and the US dollar. Assuming an exchange rate where US$1 equals C$1.1601, a 1% increase or decrease in the exchange rate will increase or decrease the aggregate base purchase price by C$5.1 million and increase or decrease the aggregate escalated purchase price by C$6 million.

10. CONTINGENCIES

The Company is, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any pending or threatened proceedings related to any matter, or any amount which it may be required to pay by reason thereof, will have a material effect on the financial condition or future results of operations of the Company.

11. SUPPLEMENTAL CASH FLOW INFORMATION

The Company's non-cash financing activities include $74,105 (2013 - $50,000) common shares issued for services and $70,500 (2013 - $nil) common shares issued as settlement of shareholder loans for the year ended December 31, 2014. Non-cash share issuance cost was $12,960 (2013 - $nil) for the year ended December 31, 2014.

D-60

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

12. INCOME TAX

(a)	The reconciliation of the Canadian statutory income tax rates to the effective tax rates are as follows:

	2014			2013

Earnings (loss) for the year	$	(968,162	)	$	(643,789	)

Expected income tax (recovery)	$	(252,000	)	$	(166,000	)
Change in statutory rates and other		1,000			(2,000	)
Permanent Difference		7,000			23,000
Share issue cost		(14,000	)		(2,000	)
Change in unrecognized deductible temporary differences		258,000			147,000
Total income tax expense (recovery)	$	-		$	-

(b)

Deferred tax assets are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable. The ability to realize the tax benefits is dependent upon numerous factors, including the future profitability of operations in the jurisdictions in which the tax benefits arose. In addition, the Company has not recognized any deferred tax liabilities resulting from temporary differences in other comprehensive loss as the Company views that those taxable temporary differences will not reverse in the foreseeable future.

The significant components of the Company's unrecognized deferred tax assets and liabilities are as follows:

	December 31,
	2014		2013
Deferred Tax Assets (liabilities)
Share issuance costs	$	13,000	$	2,000
Non-capital losses		398,000		152,000
Property and equipment		1,000		-
Net unrecognized deferred tax assets	$	412,000	$	154,000

The significant components of the Company's unrecognized temporary differences and tax losses are as follows:

	December 31, 2014		Expiry Date Range		December 31, 2013		Expiry Date Range
Temporary Differences
Property and equipment	$	3,000	No expiry date		$	-	No expiry date
Non-capital losses available for future use	$	1,532,000		2032 - 2034	$	584,000		2032 - 2033
Share issuance costs	$	49,000		2018 - 2019	$	6,000		2018

D-61

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

13. PROPOSED TRANSACTION

On June 27, 2014, the Company and Inovent Capital Inc. ("Inovent"), a capital pool company trading on the TSX Venture Exchange ("TSXV"), entered into a letter of intent ("LOI") pursuant to which the parties agreed to negotiate the terms of a business combination transaction (the "Proposed Transaction"). The Proposed Transaction would constitute Inovent's qualifying transaction in accordance with the policies of the TSXV. Pursuant to the terms of the LOI, the parties agreed as follows:

·	the Proposed Transaction was subject to the parties executing definitive transaction documents on or before August 29, 2014 (the "Amalgamation Agreement");

·	the structure of the Proposed Transaction was to be determined upon the receipt of securities, tax and financial advice.

The Proposed Transaction was subject to certain conditions including approval of the TSXV and all necessary corporate and shareholder approvals. Upon execution of the LOI, Inovent advanced to the Company a non-refundable deposit of $25,000 (the "Non-Refundable Deposit"). Inovent also advanced to the Company a refundable deposit of $120,000 (the "Deposit"). The Deposit is secured by a charge on all assets of the Company and will be refundable if the LOI is terminated in certain instances. The parties agreed to an exclusivity period ending on August 29, 2014. The exclusivity period for completing definitive Amalgamation Agreement and due diligence was extended from August 29, 2014 to January 31, 2015.

On September 12, 2014, the Company and Inovent completed the Amalgamation Agreement, which was subsequently amended. The terms of the amended Amalgamation Agreement were subject to regulatory approval and approval of the shareholders of the Company and Inovent. Concurrent with the completion of the Proposed Transaction, Inovent and the Company expected to raise aggregate gross proceeds of $50,000,000 in an offering (the "Offering"). The Offering was not completed.

As at December 31, 2014, the Company had incurred $96,008 in expenses associated with the Proposed Transaction. These expenses less the Non-Refundable Deposit and Deposit have been included in professional fees.

On February 6, 2015 in accordance with the terms of the amended Amalgamation Agreement, the Company terminated the Proposed Transaction and issued a termination payment of $30,000 to Inovent as provided for in the amended Amalgamation Agreement. On February 9, 2015, Inovent demanded a settlement of $390,000 plus 2,000,000 share purchase warrants of the Company. On March 12, 2015, Inovent filed a petition in the supreme court of British Columbia (the "Petition") seeking, among other things, enforcement of the July 31, 2014 General Security Agreement between Inovent and the Company which is registered with BC Personal Property Registry (the "GSA") in respect of $120,000 Deposit advanced by Inovent to the Company. The Petition claims, among other things, that the Company is in default of the GSA and has failed to repay the Deposit, despite demands. The Petition seeks a judgement against the Company in the amount of $120,000 plus interest and costs and the appointment of a receiver or receiver manager of the property, rights, assets, businesses and undertakings of the Company that are charged by the GSA, with appropriate powers and authorities. On April 17, 2015, Inovent filed an affidavit in support of the Petition.

The Company maintains that it has fully complied with the terms of the Proposed Transaction and amended Amalgamation Agreement. The Company denies any liability to Inovent and in response to the Petition, the Company has filed a Demand for Discharge of the GSA with the Registrar at the Personal Property Registry and an affidavit with the supreme court of British Columbia. A court hearing date has been set for September 4,

D-62

Canada Jetlines Ltd.

(A Start-up Stage Company)

Notes to the Financial Statements

For the year ended December 31, 2014

(Expressed in Canadian dollars)

13. PROPOSED TRANSACTION (continued)

2015. The Company will vigorously defend itself against any of Inovent's claims, expects the GSA to be discharged and the Petition to be dismissed. In the event that the Company is unsuccessful with its defense, the Company will recognize the loss, if any, in the period the dispute is resolved.

D-63

· Entered into arrangements with senior and experienced airline personnel to fill key managerial and operational positions for a ULCC airline in Canada.

· Commenced the application process for a licence to operate a domestic service, large aircraft pursuant to the Canadian Transportation Agency ("CTA") including payment of the application fee.

· Substantially completed various procedures and manuals in support of the Company's application for a 705 Air Operator Certificate from the Canadian Transportation Agency.

· Engaged in advanced discussions with YVR in order to establish YVR as its base airport.

· Retained Euro Pacific as advisor and agent. Euro Pacific assisted with private placement financings.

· Retained a route network planning firm to construct a detailed ULCC route network.

· A non-binding letter of intent has been signed with SkyTec of Vancouver to be responsible for Jetlines line maintenance.

· Currently in the RFP process with the YVR airport ground handlers and has entered the request for information process for other destination stations.

· Designed and ordered pilot and flight attendant uniforms.

· Designed aircraft livery and its company logo including a detailed brand analysis and identity.

· Entered into the Boeing Agreement to purchase five Boeing 737-7MAX aircraft and has the right to purchase up to an additional 16 Boeing 737MAX aircraft.

· Entered into discussions with various airports at destinations which it proposes to service for operational facilities.

The Company expects to accomplish the following in the next 12 months:

·	Raise sufficient financing to advance the Company's goals and objectives.

·	Complete the ground work and setup of support structures for flight operations.

·	Obtain the 705 Air Operator Certificate from the Canadian Transportation Agency to operate schedule flights.

·	Launch air operations initially with two aircraft and grow to six aircraft approximately 12 months after launch.

Proposed Transaction

On February 16, 2016, the Company and Jet Metal Corp. ("Jet Metal") announced that they have entered into a letter of intent (the "LOI") with respect to a business combination of the Company and Jet Metal (the "Transaction"). Jet Metal is listed on the TSXV and is a uranium explorer and developer with projects across North America.

The Transaction is subject to the execution of definitive transaction documents, approval of the TSXV, approval of the Jet Metal and the Company's shareholders and other conditions customary for a transaction of this nature.

The following are the highlights of the terms and conditions of the LOI:

·	The Transaction is subject to the parties executing definitive transaction documents on or before March 31, 2016 (the "Transaction Documents") and the final structure of the Transaction is to be determined upon the receipt of securities, tax and financial advice.

·	The exchange ratio for the Transaction will be as follows (subject to adjustment in certain circumstances):

o	each one and one-half (1.5) issued and outstanding Jet Metal shares shall be converted into one (1) share of the issuer resulting from the combination of Jet Metal and the Company (the "Resulting Issuer"); and

o	each one (1) issued and outstanding share of the Company shall be converted into one and one-half shares (1.5) of the Resulting Issuer.

The Transaction will be structured such that the outstanding warrants and stock options of Jet Metal and the Company will automatically become exercisable for or shall be exchanged for shares of the Resulting Issuer, subject to all necessary adjustments to reflect the terms of the Transaction and subject to the terms governing the warrants and options.

·	The Transaction is subject to the following key conditions:

D-67

o	the parties will execute the Transaction Documents by March 31, 2016;

Jet Metal will complete a private placement (the "Concurrent Financing") of units ("Units") for gross proceeds of up to $6,000,000. Each Unit will be priced at $0.30 per unit and will consist of one common share of Jet Metal and one half of one common share purchase warrant. Each whole warrant shall be exercisable into a common share of Jet Metal at a price of $0.50 for a period of 24 months. Subject to TSXV approval, Jet Metal may pay commissions or finder's fees in connection the Financing and may appoint a broker to assist with the Financing. The Concurrent Financing will close immediately prior to or concurrently with the Transaction;

o	$100,000 of outstanding Jet Metal debt will be converted into common shares of Jet Metal;

o	the parties will complete due diligence investigations, each to their own satisfaction, prior to executing the Transaction Documents;

o	the Transaction will have received approval of TSXV and all necessary corporate and shareholder approvals; and

o	receipt of a report of a sponsor in respect of the Transaction or waiver from the sponsorship requirement by TSXV. Jet Metal anticipates applying for a waiver of the sponsorship requirement in reliance upon completion of the Concurrent Financing.

Jet Metal will provide the Company with a secured bridge loan for up to $150,000. The loan will be advanced in tranches based on a budget agreed to between Jet Metal and the Company. The loan will be secured and accrue interest at the rate of 10% per annum (payable at maturity) and will mature on the earlier of: (a) the completion of the transaction, and (b) 60 days after the termination of the Transaction. In the event that the LOI is terminated due to non-compliance by Jet Metal, any amounts advanced to the Company shall no longer be due and payable to Jet Metal and such amounts shall accrue to the Company.

·	Prior to the closing of the Transaction, the Company may complete a financing for a maximum of $250,000 on the same terms as the Concurrent Financing.

The Transaction is being conducted entirely at arm's length. The name of the Resulting Issuer will be "Canada Jetlines Ltd." Completion of the Transaction is subject to a number of conditions, including TSXV acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approvals are obtained.

Inovent Settlement

On June 27, 2014, the Company and Inovent Capital Inc. ("Inovent"), a capital pool company trading on the TSX Venture Exchange ("TSXV"), entered into a letter of intent ("LOI") pursuant to which the parties agreed to negotiate the terms of a business combination transaction (the "Proposed Business Combination"). The Proposed Business Combination would constitute Inovent's qualifying transaction in accordance with the policies of the TSXV. Pursuant to the terms of the LOI, the parties agreed as follows:

·	the Proposed Business Combination was subject to the parties executing definitive transaction documents on or before August 29, 2014 (the "Amalgamation Agreement");

·	the structure of the Proposed Business Combination was to be determined upon the receipt of securities, tax and financial advice.

The Proposed Business Combination was subject to certain conditions including approval of the TSXV and all necessary corporate and shareholder approvals. Upon execution of the LOI, Inovent advanced to the Company a non-refundable deposit of $25,000 (the "Non-Refundable Deposit"). Inovent also advanced to the Company a refundable deposit of $120,000 (the "Deposit"). The Deposit was secured by a charge on all assets of the Company and would be refundable if the LOI was terminated in certain instances. The parties agreed to an exclusivity period ending on August 29, 2014. The exclusivity period for completing the definitive Amalgamation Agreement and due diligence was extended from August 29, 2014 to January 31, 2015.

D-68

Business Combination, Inovent and the Company expected to raise aggregate gross proceeds of $50,000,000 in an offering (the "Offering"). The Offering was not completed.

On February 6, 2015 in accordance with the terms of the amended Amalgamation Agreement, the Company terminated the Proposed Business Combination and issued a termination payment of $30,000 to Inovent as provided for in the amended Amalgamation Agreement. On February 9, 2015, Inovent demanded a settlement of $390,000 plus 2,000,000 share purchase warrants of the Company. On March 12, 2015, Inovent filed a petition in the Supreme Court of British Columbia (the "Petition") seeking, among other things, enforcement of the July 31, 2014 General Security Agreement between Inovent and the Company which is registered with BC Personal Property Registry (the "GSA") in respect of $120,000 Deposit advanced by Inovent to the Company. The Petition claims, among other things, that the Company is in default of the GSA and has failed to repay the Deposit, despite demands. The Petition seeks a judgement against the Company in the amount of $120,000 plus interest and costs and the appointment of a receiver or receiver manager of the property, rights, assets, businesses and undertakings of the Company that are charged by the GSA, with appropriate powers and authorities. On April 17, 2015, Inovent filed an affidavit in support of the Petition.

On September 2, 2015, the Company and Inovent signed a settlement agreement whereby the Company and Inovent agreed to settle all outstanding claims against each other. Pursuant to the settlement agreement, the Company paid Inovent $105,000 in cash plus the issuance of 200,000 share purchase warrants entitling Inovent to purchase one common voting share of the Company at an exercise price of $0.50 for a period of two years from the date of issue (September 30, 2015). These warrants have an estimated fair value of $52,304, which was estimated at the date of issuance using the Black-Scholes Option Pricing Model. The inputs for the Black-Scholes Option Pricing Model are a risk free interest rate of 0.53%, expected dividend yield of $nil, expected annual volatility of 100% and expected life of two years. Inovent has fully discharged the July 31, 2014 General Security Agreement and all outstanding claims against the Company in the Petition.

Annual and Fourth Quarter Financial Results

Variance Analysis

The following table sets forth Expense items with variances between the three months and years ended December 31, 2015 and 2014:

	Three Months Ended December 31,						Increase			For the Year Ended December 31,						Increase
	2015			2014			(Decrease)			2015			2014			(Decrease)
	$			$			$			$			$			$
Expenses
Consulting		100,646			131,816			(31,170	)		323,746			393,692			(69,946	)
Depreciation		889			889			-			3,556			2,378			1,178
General and administration		62,987			49,275			13,712			199,176			125,431			73,745
Marketing and advertising		2,122			8,037			(5,915	)		9,971			9,717			254
Professional Fees		286,697			(4,337	)		291,034			364,166			14,968			349,198
Salaries and benefits		93,823			113,260			(19,437	)		320,338			331,899			(11,561	)
Share-based compensation		69,224			7,592			61,632			128,967			25,847			103,120
Travel		11,364			38,656			(27,292	)		39,570			63,756			(24,186	)
		(627,752	)		(345,188	)		282,564			(1,389,490	)		(967,688	)		421,802

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Fourth Quarter

Consulting expense decreased in the fourth quarter of 2015 compared to the same period last year because the engagement of consultants was not required in the fourth quarter of 2015 to develop the Company's business and prepare operating and maintenance manuals, route planning, human resources that were substantially completed earlier on in 2015.

General and administration increased during the three months ended December 31, 2015 compared to the same period in 2014 primarily due to the setup of an administration office that included expenses for rent, insurance, communications and office supplies.

Marketing and advertising expense decreased during the three months ended December 31, 2015 compared to the same period in 2014 primarily because the Company reduced expenditures in this area and also did not incur any costs for website development.

Professional fees increased in the fourth quarter of 2015 due to the accrual of legal fees for the Proposed Business Combination. Professional fees for the fourth quarter of 2014 were negative and lower primarily because the Inovent Deposit was credited to professional fees and it more than offset the costs of legal and accounting fees for the Proposed Business Combination, drafting of a prospectus and the Company's efforts to raise financing.

Salaries and benefits expense decreased during the three months ended December 31, 2015 compared to the same period in 2015 due to the reduction of staff and salary rates in 2015.

Share-based compensation increased for the three months ended December 31, 2015 compared to the same period in 2014 because additional stock options were granted during the 2015.

Travel expense decreased during the three months ended December 31, 2015 mainly due to decreased travel compared to increased travel during the same period in 2014 for meetings with potential investors as the Company increased efforts to raise financing.

Year Ended December 31, 2014

Consulting expense decreased in 2015 compared to 2014 because there were fewer consultants were engaged for finance advisory and route planning.

General and administration increased during the year ended December 31, 2015 compared to 2014 primarily due to the setup of an administration office that included expenses for rent, insurance, communications and office supplies.

Professional fees were higher for the year ended December 31, 2015 compared to 2014 primarily due to legal and accounting fees for the Proposed Business Combination, drafting of a prospectus and the Company's efforts to raise financing.

Salaries and benefits expense decreased for the year ended December 31, 2015 compared to 2014 due to the reduction of staff and salary rates in 2015.

Share-based compensation increased for the year ended December 31, 2015 compared to 2014 because additional stock options were granted during the 2015.

Travel expense decreased during the year ended December 31, 2015 compared to 2014 mainly due to decreased travel compared to increased travel during 2014 for meetings with potential investors as the Company increased efforts to raise financing.

During 2015, the Company incurred $157,304 as settlement for the Inovent dispute. The Company also recorded a foreign exchange gain of $23,361 primarily as a result of exchange rate fluctuation for the for Boeing aircraft deposit that is denominated in US dollars.\\\

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Selected Annual Financial Information

The following table summarizes selected financial data reported by the Company for the periods indicated. The information set forth in the table should be read in conjunction with the audited financial statements and notes, prepared in accordance with IFRS for the periods indicated.

	Year ended December 31,
	2015			2014			2013
	$			$			$
Operations:
Expenses		(1,389,490	)		(967,688	)		(643,522	)
Foreign exchange		23,361			-			-
Interest expense		(634	)		(474	)		(267	)
Inovent settlement		(157,304	)		-			-
Net Loss and comprehensive loss for the year		(1,524,067	)		(968,162	)		(643,789	)
Loss per share – basic and diluted		(0.19	)		(0.22	)		(0.41	)
Net cash used in operating activities		(1,063,657	)		(791,554	)		(473,526	)
Statement of Financial Position:
Total assets		199,610			131,390			75,171
Total liabilities		521,003			159,802			60,327

Expenses – Total expenses significantly increased from 2013 to 2015. The primary reason for the increase was due to the setup of an administration office in 2013 to advance the Company's goal of starting an operating airline. As a result, the Company incurred consulting, legal, and audit fees, salaries and wages, office expenses and stock-based compensation.

Foreign exchange – Relates primarily to exchange rate fluctuation for the for Boeing aircraft deposit that is denominated in US dollars.

Inovent settlement – During 2015, the Company incurred $157,304 as settlement for the Inovent dispute.

Net cash used in operating activities – As a result of increased administrative activities, personnel and operations from 2013 to 2015, the Company's cash expenditures increased significantly each year.

Total assets – The increase in total assets from 2013 to 2015 was due to cash raised during 2014 and 2015 and the prepayment for Boeing aircraft, insurance and rent.

Total liabilities – The amount of total liabilities increased from 2013 to 2015 primarily due to increased activities that resulted in higher accounts payable for consulting, legal, and audit fees and other office expenses.

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Summary of Quarterly Financial Results

The following table provides selected financial information of the Company for each of the last 8 quarters presented in accordance with IFRS:

	For the Quarters Ended
	December 31,			September 30,			June 30,			March 31,
	2015			2015			2015			2015
	$			$			$			$
Financial Results:
Expenses		(627,752	)		(145,049	)		(233,801	)		(382,888	)
Foreign exchange		(908	)		24,269			(3,879	)		3,879
Interest expense		-			(211	)		(212	)		(211	)
Inovent settlement		-			(157,304	)		-			-
Net loss		(628,660	)		(278,295	)		(237,892	)		(379,220	)
Basic and diluted loss per share		(0.07	)		(0.03	)		(0.03	)		(0.05	)

	For the Quarters Ended
	December 31,			September 30,			June 30,			March 31,
		2014			2014			2014			2014
	$			$			$			$
Financial Results:
Expense		(345,188	)		(261,004	)		(170,153	)		(191,343	)
Interest expense		(140	)		-			(134	)		(200	)
Net loss		(345,328	)		(261,004	)		(170,287	)		(191,543	)
Basic and diluted loss per share		(0.06	)		(0.05	)		(0.06	)		(0.06	)

The Company's quarterly expenses have been increasing each quarter since inception due to the progress and increasing activities undertaken to set up an operating airline. In addition, quarterly fluctuations are due to the timing of legal fees, consulting fees and stock-based compensation. The significant increase in the fourth quarter of 2015 was due to legal fees and stock-based compensation. Quarterly expenses were lower in the first and second quarters of 2014 due to the reversal of stock-based compensation as a result of the resignations of two directors and reduction in salaries for management. The increase in expenses during the third and fourth quarters of 2014 was primarily due to the increased financing activities and licensing efforts.

Liquidity, Capital Resources, Commitments and Contingencies

Working Capital and Cash

The Company's cash position at December 31, 2015 was $14,428 compared to $71,160 at December 31, 2014. The Company raised cash financing of $1,139,226 (less share issuance cost of $96,911) during the year ended December, 31 2015 compared to $811,390 (less share issuance cost of $55,736) during 2014. The Company also received $80,000 share subscription receipts in 2015. During 2015, the Company received $112,500 from shareholders that was also repaid.

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For the year ended December 31, 2015, net cash used in operating activities was $1,063,657 primarily for consulting fees, professional fees, salaries and wages and general and administration as the Company continued increasing its efforts to advance operations and raise financing in 2015.

At December 31, 2015, the Company had working capital deficit of $463,866, had not yet achieved profitable operations and expects to incur further losses in the development of its business. For the year ended December 31, 2015, the Company reported a comprehensive loss of $1,524,067 and as at December 31, 2015, had an accumulated deficit of $3,163,097. The Company has not generated revenues from operations and is considered to be in the development stage. The Company is dependent on equity and debt financings to fund its operations. Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for the next 12 months from December 31, 2015. The Company will need to raise sufficient funds in order to finance its current plans, budgeted expenditures, and administrative expenses. The Company has no assurance that such financing will be available or be available on favourable terms. Factors that could affect the availability of financing include the Company's performance, the state of debt and equity markets, investor perceptions and expectations and the global financial and aviation markets. If successful, the Company would obtain additional financing through, but not limited to, the issuance of additional equity or debt. Management intends to monitor spending and assess results on an ongoing basis and make appropriate changes as required. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern.

Capital Management

The Company manages its capital structure, being its share capital, and makes adjustments to it, based on the funds available to the Company, in order to support future business opportunities. The Company had share capital of $2,526,757 (2014 - $1,484,399) and no debt as at December 31, 2015. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Planning, annual budgeting, cash flow forecasting and implementing controls over major investment decisions are primary tools used to manage the Company's capital.

The Company's investment policy is to hold cash in interest bearing bank accounts.

There were no changes to the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

Contractual Obligations

The following table shows the Company's contractual commitments as at December 31, 2015.

	2016		2017		2018		2019		2020		Total
	$		$		$		$		$		$
Office premise lease		27,696		27,696		27,696		27,696		27,696		138,480
Consulting⁽¹⁾		39,600		29,700		-		-		-		69,300
Aircraft deposits ⁽²⁾		5,920,835		-		-		28,527,340		-		34,448,175
Total		5,988,131		57,396		27,696		28,555,036		27,696		34,655,955

(1)	Represents agreement for technology systems and support

(2)	Represents Deposits under the Boeing Agreement as defined below.

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As at December 31, 2015, the Company has contingent liabilities totaling $95,000, of which $75,000 is for fees incurred relating to the Company's efforts to raise financing to launch airline operations. The $75,000 is payable if the Company is successful in listing on a public stock exchange where it raises a minimum of $5 million. The remaining $20,000 is a bonus payable to an employee if the Company has adequate funding or is successful in raising an aggregate amount of $7 million. These contingent liabilities have not been recorded in the Company's financial statements because it is not possible to reliably determine the outcome of the Company listing on a public stock exchange and raising the required funds. The contingent liability will be recorded in the Company's financial statements on the date when the contingent event occurs.

The Boeing Agreement

Jetlines will purchase five Boeing 737-7MAX aircraft, beginning with expected monthly deliveries in January 2021, for an aggregate estimated base price of US$434 million, subject to certain terms and conditions. The cost for the airframe and engines is based on the 2014 price with an escalation factor to determine final price at delivery. Variable costs include the cost of optional equipment furnished by Boeing and the cost of optional equipment furnished by Jetlines. The variable cost items, while estimated, remain subject to final determination. Jetlines estimates that assuming scheduled delivery in 2021, and taking into account presently known facts and assumptions, the escalated basic list price for the five aircraft would be approximately US$529 million.

·	In addition to the Initial Payments, Jetlines is required to make the following payments on account of the basic list price of the five firm orders:

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12, 9, 6	5% each
On Delivery	70%
Total	100% (including Initial Payments)

·	Jetlines may elect to defer the above payments in accordance with the following schedule (which payments together with the Initial Payments are collectively referred to as the "Deferred Advance Payments"):

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12	5% each
On Delivery	80%
Total	100% (including Initial Payments)

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·	Jetlines is required to pay interest on the Deferred Advance Payments from the day on which each advance payment would have been due in accordance with Boeing's regular payment schedule until the date of actual delivery of the applicable aircraft.

Jetlines will have the right to substitute any Boeing 737-7MAX ordered with a Boeing 737-8MAX with a scheduled month of delivery 24 months after delivery of the first Boeing 737-8MAX aircraft to a Boeing customer. Jetlines may exercise this right of substitution by providing notice to Boeing not less than the first day of the month that is: (i) 12 months prior to the scheduled month of delivery of the Boeing 737-7MAX for which it will be substituted if Jetlines has previously received a substituted aircraft; or (ii) 15 months prior to the scheduled month of delivery of the Boeing 737-7MAX for which it will be substituted, if Jetlines has not previously received a substituted aircraft. The acquisition of any substituted aircraft will be subject to the execution of a definitive purchase agreement and product capabilities of the Boeing 737-8MAX. Pricing will be based on the pricing for the Boeing 737-8MAX aircraft as set out in the Boeing Agreement, subject to adjustments for configuration specifications by Boeing which arise between the date of the Boeing Agreement and the date of execution of the definitive agreement for the substitution Boeing 737-8MAX.

·	Boeing has agreed to provide a service life policy and product assurance in respect of certain components of the aircraft.

·	Boeing has agreed to provide promotional support to Jetlines in respect of the entry of the Boeing 737-7MAX into Jetlines' operations.

The Company has not hedged its exposure to exchange rate fluctuations between the US and Canadian dollar with respect to the Boeing Agreement. The purchase price of the five aircraft is denominated in US dollars and therefore, the Company is exposed to fluctuations in the exchange rate between the Canadian dollar and the US dollar. Assuming an exchange rate where US$1 equals C$1.3840, a 10% increase or decrease in the exchange rate will increase or decrease the aggregate base purchase price by approximately C$60.1 million and increase or decrease the aggregate escalated purchase price by approximately C$73.2 million.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

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Transactions with Related Parties

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole.


	For the Year Ended
	December 31,		December 31,
	2015		2014
Transactions with Key Management Personnel	$		$
Salaries to Key Management included in salaries and benefits		230,540		270,546
Share-based compensation to Key Management		121,656		25,847
Consulting fees to Key Management		62,400		83,599
		414,596		379,992

Included in consulting fees to Key Management for the year ended December 31, 2015 is $17,400 (2014 - $24,061) paid to a company that is controlled by the Company's former Chief Financial Officer and $45,000 (2014 - $nil) for consulting work performed by the Company's Chief Operating Officer .

During 2015, loans totaling $107,500 were advanced by and repaid to the Company's Chief Executive Officer, Chief Financial Officer and Vice President Strategic Planning & Cost Control. During 2014, loans totaling $82,500 were advanced by the Chief Executive Officer and Vice President Strategic Planning & Cost Control and these loans were settled by the Company through the issuance of 235,000 common voting shares valued at $70,500 and $12,000 repayment in cash. These loans were non-interest bearing, repayable on demand and unsecured.

Included in accounts payable and accrued liabilities is $59,532 (2014 - $51,211) due to Key Management.

In addition to the related party transactions noted above, the Company reimbursed all these related parties for out-of-pocket direct costs incurred on behalf of the Company. Such costs include travel, postage, courier charges, printing and telephone charges.

Transactions with related parties were in the normal course of operations and are measured at the exchange amount established and agreed to by the related parties.

Financial Instruments and Risk Management

The Company's financial instruments at December 31, 2015 consist of cash.

Fair Value Hierarchy

Level 1 – Quoted market price in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included in level 1 that are observable for the assets or liabilities, either directly (i.e. observed prices) or indirectly (i.e. derived from prices);

Level 3 – Inputs for the assets or liabilities are not based on observable market data.

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The following table presents the financial instruments recorded at fair value in the Statement of Financial Position, classified using the fair value hierarchy described above:

Asset	Level 1 $	Level 2 $	Level 3 $
December 31, 2015:
Cash	14,428	-	-
December 31, 2014:
Cash	71,160	-	-

The Company's risk exposures and the impact on the Company's financial instruments are summarized below:

Currency risk – currency risk arises due to fluctuations in the exchange rates. The Company's equity financings are sourced in Canadian dollars and the normal day-to-day expenditures are incurred in Canadian dollars. The Company has a US dollar denominated deposit of US$100,000 with Boeing for the purchase of aircraft that is recorded as Aircraft purchase agreement deposit in the statement of financial position. At this time, the Company does not have any currency hedges in place for fluctuations in the exchange rate between the Canadian dollar ("C$") and the US dollar ("US$"). Assuming an exchange rate where US$1 equals C$1.3840, a 10% increase or decrease in the exchange rate will increase or decrease foreign exchange gain or loss by approximately $14,000.

Interest rate risk – is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's interest expense is based on a fixed rate of interest on its loan. During 2015, the Company paid $634 (2014 - $474) of interest. As the rate of interest on the Company's loan is fixed, fluctuation in market interest would not affect interest expense.

Liquidity risk – is the risk that the Company will be unable to meet its obligations as they become due. The Company manages its liquidity risk by implementing a budget, forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments. As at December 31, 2015, the Company has $14,428 (2014 - $71,160) in cash, $521,003 (2014 - $159,802) in current liabilities and no long-term liabilities.

Price risk – the Company is in the development stage and does not have any revenues and therefore, is currently not exposed to price risks.

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Outstanding Share Data

As at March 28, 2016, the following shares are outstanding:

-	Authorized: Unlimited number of common voting shares without par value

Unlimited number of variable common voting shares without par value

-	Issued and outstanding: 9,201,709 common shares and 142,500 variable voting common shares.

-	Warrants outstanding are as follows:

Expiry Date	Exercise Price		Number of Warrants
July 30, 2016	$	0.50		997,883
August 29, 2016	$	0.50		394,200
July 30, 2016	$	0.50		82,408
January 16, 2017	$	0.75		638,000
January 16, 2017	$	1.50		32,000
March 23, 2017	$	0.75		285,000
May 22, 2017	$	0.75		160,000
May 22, 2017	$	1.50		16,000
July 9, 2017	$	0.75		30,000
July 9, 2017	$	1.50		4,800
August 18, 2017	$	0.75		6,000
August 27, 2017	$	0.75		2,500
September 30, 2017	$	0.50		200,000
October 26, 2017	$	0.75		17,000
October 26, 2017	$	1.50		2,720
March 2, 2018	$	0.50		200,000
March 17, 2018	$	0.5625		42,222
				3,110,733

-	Stock options outstanding:

75,000 with exercise price of $0.30 per option and an expiry date of October 1, 2023. Due to the resignation of the holder, these stock options will expire on May 2, 2016 if unexercised by that date.

525,000 with exercise price of $0.50 per option and an expiry date of July 22, 2020. Due to the resignation of one holder, 75,000 stock options will expire on May 15, 2016 if unexercised by that date.

Critical Accounting Estimates

The preparation of the Company's financial statements requires management to make certain estimates, judgments and 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. Actual outcomes could differ from these estimates. These financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at

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the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to the following:

i.	The carrying value and the recoverability of equipment

The application of the Company's accounting policy for identifying impairment indicators under IAS

ii. The inputs used in accounting for share-based compensation

Critical accounting judgments

Critical accounting judgments are accounting policies that have been identified as being complex or involving subjective judgments or assessments.

Recent Accounting Pronouncements

Accounting standards not yet adopted

The Company is currently evaluating the following standards issued but not yet in effect and has not yet determined the impact on its financial position and results of operations:

IFRS 16, Leases - On January 13, 2016, the IASB published a new standard, IFRS 16, Leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Under the new standard, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The liability accrues interest. This will typically produce a front-loaded expense profile (whereas operating leases under IAS 17 would typically have had straight-line expenses). The standard is effective for annual periods beginning on or after December 15, 2019 (i.e., calendar periods beginning on January 1, 2020), and interim periods thereafter. Early adoption is permitted.

IFRS 15 Revenue Recognition - Revenue from Contracts with Customers establishes the principles that an entity shall

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apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. Management anticipates that this standard will be adopted in the Company's financial statements for the period beginning January 1, 2017, and has not yet considered the potential impact of the adoption of IFRS 15.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets - IAS 16 and IAS 38 both establish the principle for the basis of depreciation and amortization as being the expected pattern of consumption of the future economic benefits of an asset. The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendments are applicable to annual periods beginning on or after January 1, 2016.

IAS 1 Presentation of Financial Statements - The amendments to IAS 1 are designed to further encourage companies to apply professional judgement in determining what information to disclose in their financial statements. For example, the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. Furthermore, the amendments clarify that companies should use professional judgement in determining where and in what order information is presented in the financial disclosures. The amendments to IAS 1 can be applied immediately, and become mandatory for annual periods beginning on or after January 1, 2016.

Internal Controls over Financial Reporting

Management has designed internal controls over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The design and effectiveness of the Company's ICFR and disclosure control over financial reporting were assessed as of the date of this Management Discussion and Analysis.

Based on this assessment, it was determined that certain weaknesses existed in internal controls over financial reporting and as such, the Company's ICFR and disclosure control over financial reporting are not effective. As indicative of many small companies, the lack of segregation of duties and effective risk assessment were identified as areas where weaknesses existed. The existence of these weaknesses is to be compensated for by senior management monitoring, which exists. Management will continue to monitor very closely all financial activities of the Company and increase the level of supervision in key areas. It is important to note that this issue would also require the Company to hire additional staff in order to provide greater segregation of duties. Since there is insufficient work at this time to warrant the additional costs, management has chosen to disclose the potential risk in its filings and proceed with increased staffing only when the budgets and work load will enable the action. The Company has attempted to mitigate these weaknesses, through a combination of extensive and detailed review by management of the financial reports, the integrity and reputation of senior accounting personnel, and candid discussion of those risks with the audit committee.

Risks and Uncertainties

The risk factors set out below should be considered. It should be noted that the risks discussed below are not exhaustive and that other risks may apply.

Major Safety Incidents

A major safety incident involving the Company's aircraft during operations would likely incur substantial repair or replacement costs to the damaged aircraft and a disruption in service. The Company could also incur potentially significant claims relating to injured passengers and others, along with a negative impact on the Company's reputation for safety, adversely affecting the Company's ability to attract and retain passengers.

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On November 4, 2003, the Montreal Convention came into force in Canada, modernizing the Warsaw Convention of 1929, a set of international rules governing liability of an air carrier. The Montreal Convention has expanded an air carrier's liability exposure with the establishment of a two-tier system for determining an air carrier's liability for the death or injury of passengers in the event of an accident. Under the first tier of the system, an air carrier is strictly liable for death or injury to passengers up to approximately US$150,000, but may be subject to additional damages unless the air carrier can show it did not act negligently or that the damage was solely due to the negligence of a third party.

Development Stage of Business

Jetlines has only a limited history upon which an evaluation of its prospects and future performance can be made. The Company's proposed operations are subject to all business risks associated with new enterprises. The likelihood of the Company's success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the expansion of a business, operation in a competitive industry and the development of a customer base. There is a possibility that the Company could sustain losses in the future. If the Company is unable to generate revenues or profits, investors might not be able to realize returns on their investment or prevent the loss of their investment.

Accuracy of Jetlines Business Model

The accuracy of the Jetlines business model and the Company's ability to implement its business model is dependent on a number of inputs and assumptions, including:

·	the timing and receipt of all regulatory approvals required or desirable for operations by the Company and their impact upon expectations as to future operations of the Company;

·	the expected operations and performance of Jetlines' business as compared to its competitors;

·	desirability of operating aircraft on routes that are currently un-served or under-served and the pricing of airfares on such routes;

·	the anticipated competitive response from existing competitors as well as potential new market entrants which may compete with the Company;

·	impact of governmental regulation on the Company;

·	future development and growth prospects;

·	anticipated base airfare and ancillary revenues;

·	expected operating costs, general administrative costs, costs of services and other costs and expenses;

·	the anticipated increase in the size of the airline passenger market in Canada;

·	ability to generate revenue from ancillary products and services;

·	ability to operate at a lower cost and offer lower base airfares than competitors;

·	ability to meet current and future obligations;

·	treatment under governmental regulatory regimes;

·	projections of market prices and costs;

·	ability to obtain equipment, services and supplies in a timely manner, including the ability to lease or purchase aircraft; and

·	ability to obtain financing on acceptable terms or at all.

Should one or more of these inputs and assumptions not be correct or fail to occur as anticipated then there is a risk that the Company's business model may not be implement as anticipated and the Company may suffer a material adverse effect.

Commitment of Jetlines under the Boeing Agreement

Jetlines has entered into the Boeing Agreement for the purchase of five Boeing 737-7MAX aircraft, beginning with expected monthly deliveries beginning in January 2021, for an aggregate estimated base price of US$434 million, subject to certain terms and conditions (including availability of aircraft and an increased purchase price). Pursuant to the Boeing Agreement, Jetlines is required in connection with the five firm orders to pay (i) US$100,000 no later than January 30, 2015 and 1.0% of the total basic list price of the five firm orders (such 1.0% being approximately US$4.4 million) less US$100,000 no later than May 2, 2016 (the "Initial Payments"). The Company has paid the January 30, 2015 deposit, leaving a deposit balance of $138,400 (US$100,000) at December 31, 2015. If Boeing elects to terminate the Boeing Agreement, Boeing is required to repay to Jetlines an amount equal to any deposit and advance

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payments received by Boeing from Jetlines less all of Boeing's costs and expenses accrued in connection with Boeing Agreement.

In addition to the initial deposits under the Boeing Agreement, the Company will be required to make payments on account of the purchase price of the five Boeing 737-7MAX aircraft commencing in 2019. The Boeing Agreement also provides the Company with the option to acquire a further 16 Boeing 737-7MAX aircraft on payment terms set for the in the Boeing Agreement. To date, beyond the amounts of the initial deposits under the Boeing Agreement, Jetlines has not made arrangements for financing for the payments of the purchase price of the aircraft required to be purchased by it under the Boeing Agreement or subject to option under the Boeing Agreement. There is no guarantee that financing for the payments on account of the purchase price under the Boeing Agreement will be available on reasonable commercial terms or at all. In the event that the Company is unable to obtain aircraft acquisition financing on reasonable commercial terms, the operations of the Company may be adversely affected and the Company would be subject to material financial liabilities for which it would not be able to satisfy, each of which would have a material adverse effect.

Unanticipated Obstacles to Execution of the Company's Business Plan

The Company's business plans may change significantly. The execution of the Company's business plan is capital intensive and may become subject to statutory or regulatory requirements. The Company may need to make significant modifications to any of the Company's stated strategies depending on future events.

Route Planning and Selection

Jetlines has not yet selected its initial routes in connection with the commencement of commercial operations. The choice of flights routes and pairings will impact upon the viability of its operations. While Jetlines anticipates that the flight routes and pairings it chooses will be profitable, there are numerous factors beyond its control which may negatively affect any particular route, including: the response of competition to its route selection, the failure of demand for air travel on the route to materialize, as well as general economic and social conditions.

No Ancillary Revenues

The ULCC business model being adopted by Jetlines is dependent on ancillary revenues to offset lower base airfares. Should the estimated level of ancillary revenues fail to materialize the business plan of the Company may become unsustainable. To date Jetlines has not received any ancillary revenue and there is no guarantee that the Company will receive any ancillary revenue in the future.

Lack of Operational History

Jetlines is in the build-out stage of the airline and as a result, investors are unable to review and consider any operational background to evaluate future viability or profitability. The Company will be subject to the risks, difficulties and uncertainties associated with a start-up airline. The Company's future performance will depend upon a number of factors, including its ability to:

·	capitalize on its business strategy;

·	implement its growth strategy;

·	provide the intended products and services at the prices anticipated;

·	choose its routes successfully;

·	maintain adequate control of expenses;

·	attract, retain and motivate qualified personnel;

·	react to customer and market demands; and

·	maintain the safety and security of operations.

Data Protection and Privacy Regulation

In the proposed business of the Company, customers may provide the Company with personally identifiable information ("personal data") that has been specifically and voluntarily given. Personal data includes information that can identify a customer or a specific individual, such as name, phone number, or e-mail address. The Company may also obtain personal data from airlines, hotels, and other travel partners and from travel buyers and other travel retailers with which we may in the future have a commercial or business relationship. The Company may be required collect, use, disclose and transfer personal data in conformance with applicable privacy laws and regulations, and to

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implement technical and organizational measures designed to protect against unauthorized access, use, disclosure, modification, and destruction of personal data that we collect and maintain.

The Company may be subject to the application of data protection and privacy regulations in Canada and the provinces of Canada in which it proposes to operate and any breach of such regulations could result in economic sanctions, which could be material and/or harm the reputation of the Company.

Regulatory Approvals Required

Jetlines has not yet received its licence. In order to receive its licence, the Company must satisfy two stages of the application process. In order to satisfy stage one, among other things, the Company must prepare financial projections to satisfy the requirements of the Canadian Transportation Agency. In order to satisfy stage two, among other things, the Company must meet certain financial requirements. In order to meet these requirements, the Company will need to raise additional financing. There is no guarantee that the Company will raise sufficient financing to meet the Canadian Transportation Agency financing requirements and accordingly there is no guarantee that the Company will receive a licence in accordance with its business plan. In addition, Jetlines has not yet received an air operator certificate for the operation of an airline in accordance with its business plan. In the event that the Company does not receive an air operator certificate, the Company will be unable to operate in accordance with its business plan.

In addition, in order to fulfill its objective to fly to destinations in the United States, Mexico and the Caribbean, Jetlines will require approval from regulatory authorities in those jurisdictions. To date, Jetlines has not commenced the regulatory approval process in United States, Mexico, the Caribbean or any jurisdiction other than Canada. While Jetlines anticipates commencing the regulatory approval process in those jurisdictions in 2015 and 2016, there is no guarantee that Jetlines will receive regulatory approval in a timely fashion or at all. In the event that regulatory approval is not received or is delayed, the Company will not be able to fulfill its business plan in a timely fashion or in its entirety and Jetlines may be limited to operating in Canada only.

Dependence on Technology

The Company will rely heavily on technology, including computer and telecommunications equipment and software and Internet-based systems, to operate its business, increase its revenues and reduce its costs. These systems include those relating to Jetlines' telecommunications, websites, computerized airline reservations and airport customer services and flight operations. The Company's website and reservation system must be able to accommodate a high volume of traffic and deliver important flight information.

These technology systems may be vulnerable to a variety of sources of failure, interruption or misuse, including by reason of third party suppliers' acts or omissions, natural disasters, terrorist attacks, telecommunications failures, power failures, computer viruses, unauthorized or fraudulent users, and other operational and security issues. While Jetlines intends to invest in initiatives, including security initiatives and disaster recovery plans, these measures may not be adequate or implemented properly. Any substantial or repeated technology systems failure, interruption or misuse could reduce the attractiveness of our services or could materially and adversely affect Jetlines' operations and may result in a material adverse effect.

Dependence on Relations with Third Parties

The Company is expected to secure goods and services from a number of third party suppliers. Any significant interruption in the provision of goods and services from such suppliers, some of which would be beyond the Company's control, or any significant increase in price of such goods and services, could have a material adverse effect. The Company will be reliant upon providers of aircraft, such as The Boeing Company and other third party leasing companies, which will make the Company susceptible to any problems connected with aircraft or engines or components, including defective materials, mechanical problems or negative perceptions in the traveling community. In addition, labour action at such companies or key suppliers could delay delivery of new aircraft or parts, impacting negatively our operating and expansion plans.

The delay or inability of any provider of aircraft to deliver aircraft or engines or components as the Company requires could negatively impact the Company's growth strategy and could result in a material adverse effect.

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Limited Fleet Size

The Company plans to start operations with two aircraft with the expectation of growing to 16 aircraft by the third year of operations. Given the limited number of aircraft the Company intends to operate, if an aircraft becomes unavailable due to unscheduled maintenance, repairs or other reasons, the Company could suffer adverse financial and reputational impacts. The Company anticipates that its maintenance costs will increase as its proposed fleet ages and warranties expire. In addition, the Company's business model anticipates a high daily aircraft utilization rate. Aircraft utilization is the average amount of time per day that our aircraft spend carrying passengers. Aircraft utilization is reduced by delays and cancellations from various factors, many of which are beyond the Company's control, including air traffic congestion at airports or other air traffic control problems, adverse weather conditions, increased security measures or breaches in security, international or domestic conflicts, terrorist activity, or other changes in business conditions. Due to the limited size of the Company's proposed fleet and contemplated high daily aircraft utilization rate, the unavailability of one or more aircraft and resulting reduced capacity could result in a material adverse effect.

Ability to Obtain Additional Capital

The ability of the Company to execute its build-out strategy and achieve operations will depend on acquiring substantial additional financing through debt financing, equity financing or other means. Failure to obtain such financing may result in the delay or indefinite postponement of such growth strategy or even impact the ability of the Company to continue as a going concern.

There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company. If additional financing is raised by the Company through the issuance of securities from treasury, control of the Company may change and shareholders may suffer dilution. If additional financing is not available, or if available, not available on satisfactory terms, this could result in a material adverse effect or could require the Company to reduce, delay, scale back or eliminate portions of its actual or proposed operations at the applicable time or could prevent the Company from continuing as a going concern.

The Company may also need to raise capital by incurring long-term or short-term indebtedness in order to fund its business objectives. This could result increased interest expense or decreased net income. There can be no assurance as to the terms of such financing and whether such financing will be available. The level of the Company's indebtedness could impair its ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.

Negative Operating Cash Flow

Jetlines does not generate operating revenue and have negative cash flow from operating activities. It is anticipated that the Company will continue to have negative cash flow in the foreseeable future. Continued losses may have the following consequences:

•	increasing the Company's vulnerability to general adverse economic and industry conditions;

•	limiting the Company's ability to obtain additional financing to fund future working capital, capital expenditures, operating costs and other general corporate requirements; and

•	limiting the Company's flexibility in planning for, or reacting to, changes in its business and the industry.

Inability to Manage the Potential Growth of the Business

The Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of the Company to manage growth effectively will require it to continue to implement and improve its operations and financial systems and to expand, train, and manage its employee base. The inability of the Company to deal with potential growth could result in a material adverse effect.

Any expansion of operations the Company may undertake will entail risks; such actions may involve specific operational activities, which may negatively impact the profitability of the Company. Consequently, shareholders must assume the risk that: (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Company at that time; and (ii) management of such expanded operations may divert management's attention and resources away from any other operations, all of which factors may result in a material adverse effect.

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Capital Requirements

In order to operate in accordance with its business plan, the Company will need to acquire or lease aircraft. At present, Jetlines has not acquired any aircraft and has not entered into any leasing arrangements for aircraft. While Jetlines does not anticipate any difficulties in entering into satisfactory leasing arrangements, there is no guarantee that the Company will be able to enter into leases for aircraft on terms satisfactory to it, or at all. The terms of the Company's leasing arrangements will impact upon the potential profitability of the Company's business. In the event that the Company is unable to acquire or lease aircraft on satisfactory terms, the Company will be unable to operate in accordance with its business plan. The Company's ability to pay any fixed costs associated with aircraft lease or purchase contractual obligations will depend on the Company's operating performance, cash flow, its ability to secure adequate financing, whether fuel prices continue at current price levels and/or further increase or decrease, further weakening or improving in the Canadian and United States economy, as well as general economic and political conditions and other factors that are, to some extent, beyond the Company's control.

Management and Personnel Risks

The Company's business will be significantly dependent on the Company's management team. The loss of the Company's officers could have a material adverse effect on the Company.

The Company's success depends, in part, on its ability to attract and retain key, technical, management and operating personnel, including consultants and members of the Company Board. The Company needs to develop sufficient expertise and add skilled employees or retain consultants in order to successfully execute its business plan. The Company may be unable to attract and retain qualified personnel or develop the expertise needed in these areas. If the Company fails to attract and retain key personnel it may be unable to execute its business plan, or its business could be adversely affected. The Company does not expect to maintain key man insurance on any member of its management.

Competition Risks

If the Company fails to compete effectively against larger, more established companies with greater resources, then its business may suffer. Competition in the commercial aviation industry is intense. Competitors may be substantially better capitalized with more significant infrastructure than the Company and they might decide to enter into the ULCC airline market, bringing competitive synergies and efficiencies to the industry that the Company does not have. The Company anticipates significant competition as the ULCC airline industry grows.

Internal Controls over Financial Reporting

Effective internal controls are necessary for the Company to provide reliable financial reports, make timely disclosure of material information and help prevent fraud. Although Jetlines has undertaken a number of procedures in order to provide assurances as to the reliability of its financial reports and ability to comply with timely disclosure requirements, including those required under Canadian securities laws, Jetlines cannot be certain that measures taken by it to provide assurances as to the reliability of its financial reports and ability to comply with timely disclosure requirements, including those required under Canadian securities laws will be sufficient to ensure that the Company will maintain adequate control over financial processes and reporting or enable it to prevent fraud and ensure compliance with anti-bribery and anti-corruption requirements.

Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company's results of operations or cause it to fail to meet its reporting obligations. If the Company or its independent auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market's confidence the Company's consolidated financial statements and adversely affect the trading price of the Company Shares.

Price and Availability of Jet Fuel

The Company will be dependent on jet fuel to operate its business, and therefore, will be exposed to the risk of volatile fuel prices. Fuel prices are impacted by a host of factors outside of the Company's control, such as significant weather events, market speculation, geopolitical tensions, refinery capacity, government taxes and levies, and global demand and supply. The Company's fuel costs are expected to make up one of the largest anticipated expenses of the Company. A significant change in the price of jet fuel would materially affect the Company's projected operating results and growth strategy. A fuel supply shortage or significantly higher fuel prices could result in a curtailment of

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the Company's planned scheduled service. There can be no assurance that increases in the price of fuel can be off-set by higher fares or fuel surcharges. The higher costs to travelers may discourage air travel.

The Company does not plan to implement a fuel hedging program, although it may do so in the future. There can be no assurance that any fuel hedging program implemented by the Company will be sufficient to protect it against increases in the price of fuel due to inadequate fuel supplies or otherwise. Hedging programs also have inherent risks, including counterparty failure risk, which may deprive the Company of the benefit of "in the money" hedges and the financial exposure to post security for "out of the money" hedges.

Availability of Aircraft

Critical to Jetlines' business model is a supply of modern and cost effective aircraft that can service the various sectors required to fly the Company's planned route network. To achieve this objective, Jetlines has selected what it considers to be the best overall single-aisle aircraft to operate on all of its routes as a ULCC airline in Canada. Should these aircraft not be available in accordance with the Jetlines growth strategy or should the aircraft lease or maintenance costs increase drastically there could be an impact on the Company's growth strategy, cost structure and potential profitability.

Seasonal Nature of the Company's Business

The airline industry is seasonal. Based on a calendar year, the first quarter is usually the weakest, the end of the second quarter and start of the third quarter (June-August) the strongest, the shoulder months of the second and third quarter (April-May and September) slightly less than the prime period, with the fourth quarter better than the first quarter. While the Company plans launch operations during the second quarter, delays could occur, the impact of which would be less than expected revenue.

Government Intervention, Regulations, Rulings or Decisions

The airline industry is subject to extensive laws and regulation relating to, among other things, airline safety and security, provision of services, competition, environment and labour concerns. Government entities such as Transport Canada, the Competition Bureau, the Canadian Transportation Agency, and other domestic or foreign government entities may implement new laws or regulatory schemes, or render decisions, rulings or changes in tax policy that could have an adverse impact on the airline industry in general by significantly increasing the cost of airline operations, imposing additional requirements or operations, or reducing the demand for air travel, and could result in a material adverse effect.

The Company will be dependent on maintaining its operation certificates, permits or exemptions therefrom with the applicable regulatory authorities in Canada, the United States, Mexico and the Caribbean in order to operate its commercial air service. Laws relating to data collection on passengers and employees for security purposes and counterbalancing privacy legislation have increased industry costs of operations. Any material changes that add additional requirements to collecting, processing and filing data with, or otherwise reporting to, government agencies may materially impact the Company's business as to time and costs, and therefore, its operating results.

Terrorist Attacks and Security Measures

The September 11, 2001 terrorist attacks and subsequent terrorist activity have caused uncertainty in the minds of the traveling public. The occurrence of a major terrorist attack or attempted terrorist attack (whether domestic or international and whether involving the Company or another carrier or no carrier at all) and increasingly restrictive security measures could have a material adverse effect on passenger demand for air travel and on the number of passengers traveling on the Company's flights. It could also lead to a substantial increase in insurance, airport security and other costs. Any resulting reduction in passenger revenues and/or increases in insurance, security or other costs could result in a material adverse effect.

The increase in security measures and clearance times required for passenger travel could have a material adverse effect on passenger travel demand and the number of passengers the Company carries. Reduction in passenger numbers will impact negatively on the Company's revenues and results of operations.

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A Localized Epidemic or Global Pandemic

A widespread outbreak of influenza or any other similarly communicable illness, occurring in the United States or Canada, or a World Health Organization travel advisory primarily relating to North American cities or regions could affect the Company's ability to continue full operations and could materially adversely affect the Company's customer demand for air travel. The Company cannot predict the likelihood of such a public health emergency nor the effect it may have on the Company's business or the market price of the Company Shares. However, any significant reduction in passenger traffic on the Company's flights could result in a material adverse effect.

Foreign Currency

The Company will be susceptible to currency fluctuations in the United States dollar arising from fluctuations in exchange rates, primarily with respect to its aircraft fleet plan. Proceeds raised under the Offering are in Canadian dollars and any additional funds that may be raised in the future are expected to be Canadian dollars, which could be affected by fluctuations in the United States dollar exchange rate with respect to any payment obligations which may arise.

Limited Voting for Non Qualified Canadians

To comply with restrictions imposed by federal law on foreign ownership of Canadian airlines, the articles of incorporation of Jetlines provide that: (i) the Company Common Voting Shares may only be beneficially owned and controlled, directly or indirectly, by Qualified Canadians; and (ii) the Company Variable Voting Shares may only be beneficially owned or controlled, directly or indirectly, by non-Qualified Canadians. The Company Common Voting Shares will carry one (1) vote per share held. The Company Variable Voting Shares will carry one (1) vote per Company Variable Voting Share held, unless: (a) the number of issued and outstanding Company Variable Voting Shares exceeds 25% (or any greater percentage the Governor in Council may specify pursuant to the CTA) of the total number of all issued and outstanding Company Shares; or (b) the total number of votes cast by or on behalf of the holders of Company Variable Voting Shares at any meeting exceeds 25% (or any greater percentage that the Governor in Council may specify pursuant to the CTA) of the total number of votes that may be cast at such meeting. If either of the above noted thresholds is surpassed at any time, the vote attached to each Company Variable Voting Share will decrease automatically without further act or formality to equal the maximum permitted vote per Company Variable Voting Share such that: (x) under the circumstance described under (a) above, the Company Variable Voting Shares as a class shall not carry more than 25% (or any greater percentage that the Governor in Council may specify pursuant to the CTA) of the total voting rights attached to all issued and outstanding Company Shares; and (y) under the circumstance described under (b) above, the Company Variable Voting Shares as a class cannot, for a given shareholders meeting, carry more than 25% (or any greater percentage that the Governor in Council may specify pursuant to the CTA) of the total number of votes that can be exercised at the meeting.

General Economic Conditions

The financial success of the Company may be sensitive to adverse changes in general economic conditions in Canada such as war, terrorist attacks, recession, inflation, labour disputes, demographic changes, weather or climate changes, unemployment and interest rates. Such changing conditions could reduce demand in the marketplace for the Company's services.

Consumers' Preference and Spending Trends

The Company's operating results may fluctuate significantly from period to period as a result of a variety of factors, including spending patterns of customers, competitive pricing and general economic conditions. There is no assurance that the Company will be successful in marketing its services, or that the revenues from the sale of such services will be significant. Consequently, the Company's revenues may vary by quarter, and the Company's operating results may experience fluctuations.

Lack of Marketing Alliances

Many airlines have marketing alliances with other airlines, under which they market and advertise their status as marketing alliance partners. These alliances generally provide for code-sharing, frequent flier program reciprocity, coordinated scheduling of flights to permit convenient connections and other joint marketing activities. Such arrangements permit an airline to market flights operated by other alliance members as its own. This increases the destinations, connections and frequency of flights offered by airlines and provides an opportunity to increase traffic on that airline's segment of flights connecting with alliance partners. Jetlines does not currently have any alliances

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and it is anticipated that the Company will not have any marketing alliances. The Company's lack of marketing alliances puts the Company at a competitive disadvantage to the MCDAs who are able to attract passengers through more widespread alliances, particularly on international routes, and that disadvantage may result in a material adverse effect.

Future Litigation

The Company may be subject to litigation arising out of its operations. Damages claimed under such litigation may be material or may be indeterminate, and the outcome of such litigation may materially impact the Company's business, results of operations, or financial condition. While the Company will assess the merits of any lawsuit and defend itself accordingly, it may be required to incur significant expense or devote significant financial resources to defending itself against such litigation. In addition, the adverse publicity surrounding such claims may result in a material adverse effect.

Single Aircraft Type Fleet

The Company's plans for a single aircraft type fleet makes the Company vulnerable to any problems associated with the fleet's engines or system technology. Transport Canada could suspend or restrict the use of the Company's aircraft in the event of any actual or perceived mechanical or design problems while it conducts its own investigation. The Company's future business would also be significantly harmed if the public avoids flying our aircraft due to an adverse perception of the aircraft utilized by the Company because of safety concerns or other problems, whether real or perceived, or in the event of an accident involving such type of aircraft.

Unionization or Increased Labour Costs

The Company intends to have a non-unionized workforce. In the event that unionization activities occur with its workforce, the Company will incur increased labour costs. Increased labour costs will negatively impact upon the Company's cost structure and will adversely affect the Company's ability to operate as a ULCC.

Airport User Fees and Air Navigation Fees

Increases in air navigation fees in Canada could have a negative impact on the Company's business and its financial results. Airport authorities continue to implement or increase various user fees that impact travel costs for passengers, including landing fees for airlines and airport improvement fees. Airport authorities generally have the unilateral discretion to implement and adjust such fees. The combined increased fees, and increases in rents under various lease agreements between airport authorities and the Government of Canada, which in many instances are passed through to air carriers and air travelers may negatively impact travel, in particular, discretionary travel.

No History of Dividends or Plan to Pay Dividends

Jetlines has ever paid a dividend nor made a distribution on any of their securities. Further, the Company may never achieve a level of profitability that would permit payment of dividends or other forms of distribution to its shareholders. Given the stage of the Company's business, it will likely be a long period before the Company could be in a position to declare dividends or make distributions to its investors. The payment of any future dividends by the Company will be at the sole discretion of the Company Board. Holders of Company Shares will be entitled to receive dividends only when, as, and if declared by the Company Board. The Company Board will determine future dividend policy based upon the Company's results of operations, financial condition, capital requirements and other circumstances.

Canada Jetlines Ltd.

Condensed Interim Financial Statements

For the Three Months Ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

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Canada Jetlines Ltd.

Condensed Interim Financial Statements

(Unaudited)

(Expressed in Canadian dollars)

For the Three Months Ended March 31, 2016 Page

Condensed Interim Statements of Financial Position	3

Condensed Interim Statements of Loss and Comprehensive Loss	4

Condensed Interim Statements of Changes in Shareholders' Deficiency	5

Condensed Interim Statements of Cash Flows	6

Notes to the Condensed Interim Financial Statements	7-17

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Canada Jetlines Ltd.
Condensed Interim Statements of Financial Position
(Unaudited)
(Expressed in Canadian Dollars)

	March 31,			December 31,
	2016			2015
	$			$
Assets

Current Assets:
Cash		12,370			14,428
Receivables		29,137			33,403
Prepaid expenses and deposits		26,937			9,306
Total current assets		68,444			57,137

Non-Current Assets:
Equipment (note 3)		3,184			4,073
Aircraft purchase agreement deposit (note 6)		129,870			138,400
Total Assets		201,498			199,610

Liabilities and Shareholders' Deficiency

Current Liabilities:
Accounts payable and accrued liabilities (note 4)		506,198			441,003
Short-term loan (note 10)		66,400			-
Share subscriptions received (note 5)		80,000			80,000
Total Liabilities		652,598			521,003

Shareholders' Deficiency:
Share capital (note 5)		2,544,337			2,526,757
Reserves		413,303			314,947
Deficit		(3,408,740	)		(3,163,097	)
Total Shareholders' Deficiency		(451,100	)		(321,393	)

Total Liabilities and Shareholders' Deficiency		201,498			199,610

Nature of operations and going concern (note 1)

Commitments (note 6)

Contingencies (notes 7)

Subsequent events (note 11)

Approved on behalf of the Board of Directors:

"John Sutherland" "Jim Scott"

______________________________ ________________________

John Sutherland, Director Jim Scott, Director

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

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Canada Jetlines Ltd.
Condensed Interim Statements of Loss and Comprehensive Loss
(Unaudited)
(Expressed in Canadian Dollars)
	For the Three Months Ended
	March 31,
	2016			2015
	$			$
Operating expenses
Consulting (note 4)		1,216			173,459
Depreciation (note 3)		889			863
General and administration		47,873			48,226
Marketing and advertising		-			3,086
Professional fees		6,900			13,620
Salaries and benefits (notes 4 and 5 (c))		126,301			116,645
Share-based compensation (notes 4 and 5 (b))		65,312			7,343
Travel		8,309			19,646
		(256,800	)		(382,888	)

Foreign exchange		(7,887	)		3,879
Interest expense		(134	)		(211	)
		(8,021	)		3,668

Loss and comprehensive loss for the period		(264,821	)		(379,220	)

Loss per share – basic and diluted	$	(0.03	)	$	(0.05	)
Weighted average number of shares outstanding - basic and diluted		9,262,329			7,284,809

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

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Canada Jetlines Ltd.
Condensed Interim Statements of Changes in Shareholders' Deficiency
(Unaudited)
(Expressed in Canadian Dollars)
	Share Capital
	Number of Shares		Amount			Reserves			Deficit			Total
			$			$			$			$
Balance as at December 31, 2014		6,184,987		1,484,399			126,219			(1,639,030	)		(28,412	)
Issuance of common voting shares for cash (note 5 (a))		1,846,000		923,000			-			-			923,000
Share issuance costs (note 5 (a))		-		(81,150	)		-			-			(81,150	)
Broker warrants issued as share issuance cost (note 5 (a))		-		(4,305	)		4,305			-			-
Share-based compensation (note 5 (b))		-		-			7,343			-			7,343
Loss for the period		-		-			-			(379,220	)		(379,220	)
Balance as at March 31, 2015		8,030,987		2,321,944			137,867			(2,018,250	)		441,561
Issuance of common voting shares for cash		1,156,000		216,226			-			-			216,226
Issuance of common voting shares for services		15,000		7,500			-			-			7,500
Share issuance costs		-		(15,761	)		-			-			(15,761	)
Broker warrants issued as share issuance cost		-		(3,152	)		3,152			-			-
Warrants issued for Inovent settlement		-		-			52,304			-			52,304
Share-based compensation for stock options		-		-			90,445			-			90,445
Share-based compensation for performance shares		-		-			31,179			-			31,179
Loss for the period		-		-			-			(1,144,847	)		(1,144,847	)
Balance as at December 31, 2015		9,201,987		2,526,757			314,947			(3,163,097	)		(321,393	)
Issuance of common voting shares for cash (note 5 (a))		142,222		19,100			-			-			19,100
Share issuance costs (note 5 (a))		-		(1,520	)		-			-			(1,520	)
Warrants issued as severance payment (notes 5 (c))		-		-			52,222			-			52,222
Share-based compensation for stock options (note 5 (b))		-		-			16,931			-			16,931
Reversal of share-based compensation for forfeited stock options		-		-			(19,178	)		19,178			-
Share-based compensation for performance shares (note 5 (b))		-		-			48,381			-			48,381
Loss for the period		-		-			-			(264,821	)		(264,821	)
Balance as at March 31, 2016		9,344,209		2,544,337			413,303			(3,408,740	)		(451,100	)

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

D-93

Canada Jetlines Ltd.
Condensed Interim Statements of Cash Flows
(Unaudited)
(Expressed in Canadian Dollars)
	For the Three Months Ended
	March 31,
	2016			2015
	$			$
Cash Flows From Operating Activities
Loss for the period		(264,821	)		(379,220	)
Items not involving cash:
Depreciation		889			863
Share-based compensation		65,312			7,343
Salaries and benefits		52,222			-
Foreign exchange		8,530			(3,888	)
Changes in non-cash working capital:
Receivables		4,266			(1,071	)
Prepaid expenses and deposits		(17,631	)		(8,907	)
Accounts payable and accrued liabilities		65,195			(43,559	)
Net Cash Used in Operating Activities		(86,038	)		(428,439	)

Cash Flows From Investing Activities
Deposit on aircraft purchase agreement		-			(376,090	)
Net Cash Used in Investing Activities		-			(376,090	)

Cash Flows From Financing Activities
Proceeds from issuance of shares		19,100			923,000
Share issuance costs		(1,520	)		(81,150	)
Short-term loan advances		66,400			-
Loan advances from related parties		32,200			-
Loan repayments from related parties		(32,200	)		-
Net Cash provided from Financing Activities		83,980			841,850

(Decrease) Increase in Cash		(2,058	)		37,321
Cash – Beginning of Period		14,428			71,160
Cash – End of Period		12,370			108,481

Supplemental cash flow information (note 8)

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

D-94

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

1.	NATURE OF OPERATIONS AND GOING CONCERN

Canada Jetlines Ltd. (the "Company" or "Jetlines") is incorporated under the federal laws of Canada. The Company's principal business activity is the start-up of an ultra low cost carrier ("ULCC") scheduled airline service.

On April 12, 2016, the Company and Jet Metal Corp. ("Jet Metal") executed the transaction documents with respect to a business combination of the Company and Jet Metal. Jet Metal is listed on the TSX Venture Exchange ("TSXV") and is a uranium explorer and developer with projects across North America. Upon completion of the business combination, the name of the resulting issuer will be "Canada Jetlines Ltd." who will continue the business of the Company. Completion of the business combination is subject to a number of conditions, including TSXV acceptance and disinterested shareholder approval (see note 9).

These condensed interim financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assumes that the Company will continue its operations and will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. At March 31, 2016, the Company had a working capital deficit of $584,154, had not yet achieved profitable operations and expects to incur further losses in the development of its business. For the three months ended March 31, 2016, the Company reported a net loss of $264,821 and as at March 31, 2016, had an accumulated deficit of $3,408,740. The Company has not generated revenues from operations and is considered to be in the development stage. The Company is dependent on equity financings and debt to fund its operations. Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for the next 12 months from March 31, 2016. The Company will need to raise sufficient funds in order to finance its current plans, budgeted expenditures, and administrative expenses. The Company has no assurance that such financing will be available or be available on favorable terms. Factors that could affect the availability of financing include the Company's performance, the state of debt and equity markets, investor perceptions and expectations and the global financial and aviation markets. If successful, the Company would obtain additional financing through, but not limited to, the issuance of additional equity or debt. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern.

These condensed interim financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary should the going concern assumption be inappropriate, and such adjustments could be material.

The Company's head office is located at Room C4408, Vancouver International Terminal Building, 3211 Grant McConachie Way, Richmond BC V7B 0A4, Canada.

2.	BASIS OF PREPARATION

(a)	Statement of Compliance

These condensed interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB") effective for the Company's reporting period ending March 31, 2016. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the Company's financial statements for the year ended December 31, 2015, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB. The accounting policies applied are the same as those applied in the Company's most recent annual financial statements. The results for interim periods are not necessarily indicative of results for the entire year. The preparation of these condensed interim financial statements in conformity with IAS 34 requires management to make estimates and assumptions that affect the reported amounts of assets

D-95

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

2.	BASIS OF PREPARATION (continued)

and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of expenses during the period. As a result, actual amounts may differ from those estimates.

These condensed interim financial statements for the three months ended March 31, 2016 were approved and authorized for issue by the Board of Directors on June 17, 2016.

(b)	New accounting pronouncements

The Company adopted the following standards effective on January 1, 2016 and has determined that there was no material impact on its financial position and results of operations:

The Company is currently evaluating the following standards issued but not yet in effect and has not yet determined the impact on its financial position and results of operations:

D-96

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

2.	BASIS OF PREPARATION (continued)

(a)	New accounting pronouncements (continued)

anticipates that this standard will be adopted in the Company's financial statements for the period beginning January 1, 2018.

3. EQUIPMENT

Cost	$
Balance as at December 31, 2015 and 2014		10,668
Additions		-
Balance as at March 31, 2016		10,668

Accumulated depreciation
Balance as at December 31, 2014		3,039
Depreciation		3,556
Balance as at December 31, 2015		6,595
Depreciation		889
Balance as at March 31, 2016		7,484

Carrying amounts
Balance as at March 31, 2016		3,184
Balance as at December 31, 2015		4,073

4. RELATED PARTY TRANSACTIONS

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole.


	For the Three Months Ended
	March 31,		March 31,
	2016		2015
Transactions with Key Management Personnel	$		$
Salaries to Key Management included in salaries and benefits		50,053		54,548
Share-based compensation to Key Management		54,752		7,343
Consulting fees to Key Management		-		13,200
		104,805		75,091

D-97

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

4. RELATED PARTY TRANSACTIONS (continued)

Included in consulting fees to Key Management for the three months ended March 31, 2016 is $nil (2015 - $12,200) paid to a company that is controlled by the Company's former Chief Financial Officer.

During the three months ended March 31, 2016, loans totaling $32,200 (2015 - $nil) were advanced by and repaid to the Company's Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Vice President Strategic Planning & Cost Control. During the year ended December 31, 2015, loans totaling $107,500 were advanced and repaid by the Chief Executive Officer, Chief Financial Officer and Vice President Strategic Planning & Cost Control. These loans were non-interest bearing, repayable on demand and unsecured.

Included in accounts payable and accrued liabilities is $94,702 (December 31, 2015 - $59,532) due to Key Management for salaries, consulting fees and reimbursement of out-of-pocket direct costs such as travel, postage, courier charges, printing and telephone charges incurred on behalf of the Company.

5.	SHARE CAPITAL

(a)	Authorized: Unlimited number of common voting shares without par value

Unlimited number of variable common voting shares without par value

During the three months ended March 31, 2015, the Company:

·	Completed a brokered private placement ("Private Placement") in which it issued 1,846,000 units for gross proceeds of $923,000 with each unit consisting of one common voting share plus half a warrant. In

connection with the Private Placement, the Company issued 923,000 share purchase warrants and 32,000 broker warrants. The holder of each full warrant or broker warrant is entitled to purchase one common voting share at an exercise price of $1.50 for a period of 2 years from the date of issue. Share issuance cost for the Private Placement amounted to $81,150 in cash, $4,305 as the fair value of the broker warrants. Subsequent to the issuance of the 923,000 share purchase warrants, their exercise price was repriced to $0.75 per common voting share for a period of 2 years from the date of issue.

During the three months ended March 31, 2016, the Company:

Issued through a private placement 42,222 units for gross proceeds of $19,000 with each unit consisting of one common voting share plus one warrant. The holder of each warrant is entitled to purchase one common voting share at an exercise price of $0.5625 for a period of 2 years from the date of issue. Share issuance cost for the private placement amounted to $1,520 in cash.

·	Issued 200,000 share purchase warrants. The holder of each full warrant is entitled to purchase one common voting share at an exercise price of $0.50 for a period of 2 years from the date of issue.

Performance Shares

The Company issued 100,000 common voting shares to management for gross proceeds of $100 on February 11, 2016. These shares will be held in escrow and will be released to management on the later of (a) the date on which the Company has received the necessary funds to launch airline operations or (b) February 11, 2018. The Company has determined that the fair value of these shares is $50,000 based on the share price of the private placements completed at $0.50. The difference between the market price of these shares and the consideration received by the Company is $49,900, which will be expensed as share-based compensation over the estimated vesting period of 24 months. The Company included $3,345 in share-based compensation for the three months ended March 31, 2016 (2015 - $nil).

D-98

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

5.	SHARE CAPITAL (continued)

Share Subscriptions Received

The Company received $80,000 in advance for the intended issuance of 177,778 units with each unit consisting of one common voting share plus half a warrant. The holder of each full warrant will be entitled to purchase one common voting share at an exercise price of $0.60 for a period of 3 years from the date of issue. As of March 31, 2016, the Company has not issued the common voting shares and warrants.

(b)	Stock Options and Share-Based Compensation

The Company adopted an incentive stock option plan (the "Plan") on November 30, 2015. The essential elements of the Plan provide that the aggregate number of common shares of the Company's capital stock issuable pursuant to options granted under the Plan may not exceed 10% of the number of issued shares of the Company at the time of the granting of the options. Options granted under the Plan will have a maximum term of ten years. The exercise price of options granted under the Plan will be fixed by the Board of Directors at the time the option is granted, provided, however that the exercise price complies with the requirements of the TSX Venture Exchange. According to the Plan, the vesting periods of options granted under the plan may vary at the discretion of the Board of Directors.

There were no stock options granted during the three months ended March 31, 2016 and 2015. During the three months ended March 31, 2016, two directors resigned and forfeited 150,000 unvested stock options.

A summary of the status of the Company's stock options as at March 31, 2016 and changes during the period are as follows:

	Number of options	Weighted average exercise price $


Outstanding – December 31, 2014	300,000	0.30
Granted	600,000	0.50
Options forfeited	(150,000)	0.30
Outstanding – December 31, 2015	750,000	0.46
Granted	-	-
Options forfeited	(150,000)	0.40
Outstanding – March 31, 2016	600,000	0.48

D-99

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

5.	SHARE CAPITAL (continued)

(b)	Stock Options and Share-Based Compensation (continued)

The Company has the following stock options outstanding and exercisable:

Options Outstanding				Options Exercisable
	Number of options	Weighted Average Remaining Contractual Life (Years)	Weighted average exercise price $		Number of options	Weighted average exercise price $


As at March 31, 2016	600,000	4.7	0.48	As at March 31, 2016	300,000	0.45
As at December 31, 2015	750,000	5.2	0.46	As at December 31, 2015	225,000	0.43

During the three months ended March 31, 2016, the Company recognized share-based compensation of $65,312 (2015 - $7,343) in comprehensive loss. The amount relates to vesting of stock options and performance shares granted in the current period and prior periods.

(c)

Warrants

A summary of the status of the Company's warrants as at March 31, 2016 and changes during the period are as follows:

	Number of Warrants	Weighted Average Exercise Price $
Outstanding - December 31, 2014	1,474,491	0.50
Share purchase warrants issued	1,338,500	0.71
Broker warrants issued	55,520	1.50
Outstanding - December 31, 2015	2,868,511	0.62
Share purchase warrants issued	242,222	0.51
Outstanding - March 31, 2016	3,110,733	0.61

D-100

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

5.	SHARE CAPITAL (continued)

(c)	Warrants (continued)

Expiry Date	Exercise Price		Number of Warrants		Warrant Valuation
July 30, 2016		$0.50		997,883	$Nil
August 29, 2016		$0.50		379,267	$Nil
July 30, 2016		$0.50		82,408		$9,956
August 29, 2016		$0.50		14,933		$1,804
January 16, 2017		$0.75		638,000	$Nil
January 16, 2017		$1.50		32,000		$4,305
March 23, 2017		$0.75		285,000	$Nil
May 22, 2017		$0.75		160,000	$Nil
May 22, 2017		$1.50		16,000		$2,146
July 9, 2017		$0.75		30,000	$Nil
July 9, 2017		$1.50		4,800		$642
August 18, 2017		$0.75		6,000	$Nil
August 27, 2017		$0.75		2,500	$Nil
September 30, 2017		$0.50		200,000	$Nil
October 26, 2017		$0.75		17,000	$Nil
October 26, 2017		$1.50		2,720		$364
February 11, 2018		$0.50		200,000		$52,222
March 17, 2018		$0.5625		42,222	$Nil
Weighted Average		$0.61		3,110,733		$71,439

During the three months ended March 31, 2016, the Company issued 200,000 share purchase warrants as severance for an employee who was terminated. The holder of each full warrant is entitled to purchase one common voting share at an exercise price of $0.50 for a period of 2 years from the date of issue. The fair value of $52,222 for the warrants was estimated at the grant date using the Black-Scholes Option Pricing Model. The Company included $52,222 in salaries and benefits for the three months ended March 31, 2016 (2015 - $nil).

In connection with the Private Placement, the Company issued 32,000 broker warrants during the three months ended March 31, 2015. The fair value of $4,305 for the broker warrants was estimated at the grant date using the Black-Scholes Option Pricing Model.

The inputs for the Black-Scholes Option Pricing Model are as follows:

	2016	2015
Risk free interest rate	0.36%	0.87%
Expected dividend yield	-	-
Expected annual volatility	100%	100%
Expected life	2 years	2 years

(d)

Reserves

Share-based compensation is recognized in reserves until exercised. Upon exercise, shares are issued from treasury and the amount in reserves is reclassified to share capital, adjusted for any consideration paid.

D-101

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

6. COMMITMENTS

The following table shows the Company's contractual commitments as at March 31, 2016.

	2016		2017		2018		2019		2020		2021		Total
	$		$		$		$		$		$		$
Office premise lease		20,772		27,696		27,696		27,696		27,696		-		131,556
Consulting⁽¹⁾		29,700		29,700		-		-		-		-		59,400
Aircraft deposits ⁽²⁾		5,555,917		-		-		26,769,116		-		-		32,325,033
Total		5,606,389		57,396		27,696		26,796,812		27,696		-		32,515,989

(1)	Represents agreement for technology systems and support

(2)	Represents Deposits under the Boeing Agreement as defined below.

Jetlines will purchase five Boeing 737-7 MAX aircraft, beginning with expected monthly deliveries in January 2021, for an aggregate estimated base price of US$434 million, subject to certain terms and conditions. The cost for the airframe and engines is based on the 2014 price with an escalation factor to determine final price at delivery. Variable costs include the cost of optional equipment furnished by Boeing and the cost of optional equipment furnished by Jetlines. The variable cost items, while estimated, remain subject to final determination. Jetlines estimates that assuming scheduled delivery in 2021, and taking into account presently known facts and assumptions, the escalated basic list price for the five aircraft would be approximately US$529 million.

Jetlines is required in connection with the five firm orders to pay (i) US$100,000 no later than January 30, 2015 and 1% of the total basic list price of the five firm orders (such 1% being approximately US$4.4 million) less US$100,000 no later than May 2, 2016 (the "Initial Payments"). The Company has paid the January 30, 2015 deposit, resulting in a deposit balance of $129,870 (December 31, 2015 - $138,400) (US$100,000) as at March 31, 2016. The May 2, 2016 Initial Payment has not been made to date as the Company and Boeing are currently negotiating aspects of the B737 MAX aircraft, the payment and delivery schedule.

·	In addition to the Initial Payments, Jetlines is required to make the following payments on account of the basic list price of the five firm orders:

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12, 9, 6	5% each
On Delivery	70%
Total	100% (including Initial Payments)

D-102

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

6. COMMITMENTS (continued)

·	Jetlines may elect to defer the above payments in accordance with the following schedule (which payments together with the Initial Payments are collectively referred to as the "Deferred Advance Payments"):

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12	5% each
On Delivery	80%
Total	100% (including Initial Payments)

·	Jetlines is required to pay interest on the Deferred Advance Payments from the day on which each advance payment would have been due in accordance with Boeing's regular payment schedule until the date of actual delivery of the applicable aircraft.

Jetlines will have the right to purchase up to 16 additional Boeing 737-7 MAX aircraft. This purchase right is exercisable by Jetlines by notice not less than 24 months before the desired date of delivery. The additional aircraft are offered subject to available position for delivery prior to December 31, 2024. The price of the aircraft subject to the purchase right will be determined based on the provisions of the Boeing Agreement using the then current prices for such aircraft at the time of exercise of the purchase right subject to the escalation factors in the Boeing Agreement.

Jetlines will have the right to substitute any Boeing 737-7 MAX ordered with a Boeing 737-8 MAX with a scheduled month of delivery 24 months after delivery of the first Boeing 737-8MAX aircraft to a Boeing customer. Jetlines may exercise this right of substitution by providing notice to Boeing not less than the first day of the month that is: (i) 12 months prior to the scheduled month of delivery of the Boeing 737-7 MAX for which it will be substituted if Jetlines has previously received a substituted aircraft; or (ii) 15 months prior to the scheduled month of delivery of the Boeing 737-7 MAX for which it will be substituted, if Jetlines has not previously received a substituted aircraft. The acquisition of any substituted aircraft will be subject to the execution of a definitive purchase agreement and product capabilities of the Boeing 737-8 MAX. Pricing will be based on the pricing for the Boeing 737-8 MAX aircraft as set out in the Boeing Agreement, subject to adjustments for configuration specifications by Boeing which arise between the date of the Boeing Agreement and the date of execution of the definitive agreement for the substitution Boeing 737-8 MAX.

·	Boeing has agreed to provide a service life policy and product assurance in respect of certain components of the aircraft.

·	Boeing has agreed to provide promotional support to Jetlines in respect of the entry of the Boeing 737-7 MAX into Jetlines' operations.

The Company has not hedged its exposure to exchange rate fluctuations between the US and Canadian dollar with respect to the Boeing Agreement. The purchase price of the five aircraft is denominated in US dollars and therefore, the Company is exposed to fluctuations in the exchange rate between the Canadian dollar and the US dollar. Assuming an exchange rate where US$1 equals C$1.2987, a 10% increase or decrease in the exchange rate will increase or decrease the aggregate base purchase price by approximately C$56.4 million and increase or decrease the aggregate escalated purchase price by approximately C$68.7 million.

D-103

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

7. CONTINGENCIES

As at March 31, 2016 and December 31, 2015, the Company has contingent liabilities totaling $95,000, of which $75,000 is for fees incurred relating to the Company's efforts to raise financing to launch airline operations. The $75,000 is payable if the Company is successful in listing on a public stock exchange where it raises a minimum of $5 million. The remaining $20,000 is a bonus payable to an employee if the Company has adequate funding or is successful in raising an aggregate amount of $7 million. These contingent liabilities have not been recorded in the Company's financial statements because it is not possible to reliably determine the outcome of the Company listing on a public stock exchange and raising the required funds. The contingent liability will be recorded in the Company's financial statements on the date when the contingent event occurs.

8. SUPPLEMENTAL CASH FLOW INFORMATION

The Company's non-cash financing activities include reversal of share-based compensation for forfeited stock-options of $19,178 (2015 - $nil) and non-cash share issuance cost of $nil (2015 - $4,305) for the three months ended March 31, 2016.

9. PROPOSED TRANSACTION

On April 12, 2016, the Company and Jet Metal Corp. ("Jet Metal") entered into an amalgamation agreement with respect to a business combination of the Company and Jet Metal (the "Transaction").

The Transaction is subject to the approval of the TSXV, approval of the Jet Metal and the Company's shareholders and other conditions customary for a transaction of this nature.

The following are the highlights of the Transaction:

·	The exchange ratio for the Transaction will be as follows (subject to adjustment in certain circumstances):

o	each one and one-half (1.5) issued and outstanding Jet Metal shares shall be converted into one (1) share of the issuer resulting from the combination of Jet Metal and the Company (the "Resulting Issuer"); and

o	each one (1) issued and outstanding share of the Company shall be converted into one and one-half shares (1.5) of the Resulting Issuer.

·	The Transaction is subject to the following key conditions:

D-104

Canada Jetlines Ltd.

Notes to the Condensed Interim Financial Statements

For the three months ended March 31, 2016

(Unaudited)

(Expressed in Canadian dollars)

9. PROPOSED TRANSACTION (continued)

24 months. Subject to TSXV approval, Jet Metal may pay commissions or finder's fees in connection the Financing and may appoint a broker to assist with the Financing. The Concurrent Financing will close immediately prior to or concurrently with the Transaction;

o	$100,000 of outstanding Jet Metal debt will be converted into common shares of Jet Metal;

o	the Transaction will have received approval of TSXV and all necessary corporate and shareholder approvals; and

o	receipt of a report of a sponsor in respect of the Transaction or waiver from the sponsorship requirement by TSXV. Jet Metal anticipates applying for a waiver of the sponsorship requirement in reliance upon completion of the Concurrent Financing.

·	Jet Metal will provide the Company with a secured bridge loan for up to $150,000. The loan will be advanced in tranches based on a budget agreed to between Jet Metal and the Company.

·	Prior to the closing of the Transaction, the Company may complete a financing for a maximum of $250,000 on the same terms as the Concurrent Financing.

The Transaction is being conducted entirely at arm's length. The name of the Resulting Issuer will be "Canada Jetlines Ltd."

10. SHORT-TERM LOAN

Pursuant to the Transaction, Jet Metal advanced $66,400 of the secured bridge loan to the Company. The loan is secured and accrues interest at the rate of 10% per annum (payable at maturity) and will mature on the earlier of: (a) the completion of the Transaction, and (b) 60 days after the termination of the Transaction.

11. SUBSEQUENT EVENTS

(a)

Subsequent to March 31, 2016, the Company issued through a private placement 153,500 units for gross proceeds of $69,075. Each unit consists of one common voting share and one share purchase warrant entitling the holder of the warrant to purchase one common voting share at an exercise price of $0.5625 for a period of 2 years from the date of issue.

(b)	Subsequent to March 31, 2016, Jet Metal advanced to the Company a further $83,600 of the secured bridge loan.

(c)	Subsequent to March 31, 2016, 150,000 options were forfeited.

D105

Canada Jetlines Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three months ended March 31, 2016

As at June 17, 2016

D-106

June 17, 2016

Introduction

Canada Jetlines Ltd. (the "Company" or "Jetlines") is incorporated under the federal laws of Canada. The Company is in the pre-operating stage and its principal business activities is the development of an ultra low cost carrier ("ULCC") scheduled airline service.

This Management Discussion & Analysis ("MD&A") of the Company has been prepared by management as of June 17, 2016 and should be read in conjunction with the Company's MD&A for the year ended December 31, 2015, audited financial statements for the year ended December 31, 2015 ("Financial Statements"), which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and the unaudited condensed interim financial statements of the Company for the three months ended March 31, 2016, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board effective for the Company's reporting period ending December 31, 2016. All monetary amounts referred to herein are in Canadian dollars unless otherwise stated.

The Company's head office is located at Room C4408, Vancouver International Terminal Building, 3211 Grant McConachie Way, Richmond BC V7B 0A4, Canada.

Management's Responsibility for the Financial Statements

Information provided in this MD&A, including financial information extracted from the Financial Statements, is the responsibility of management. In the preparation of the Financial Statements, estimates are sometimes necessary to make a determination of future value for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the accompanying Financial Statements.

Forward Looking Information

This MD&A contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning applicable to Canadian legislation. These statements relate to future events or the future activities or performance of the Company. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate, plans and similar expressions, or which by their nature refer to future events. Forward-looking statements include, among other things, statements regarding expectations commence domestic scheduled point to point air service, raise sufficient financing to advance the Company's goals and objectives, and obtain the 705 Air Operator Certificate.

Forward-looking information is subject to a variety or risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking information. The Company's risks and uncertainties can be found under the heading "Risk Factors" in this MD&A. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. Except as required under applicable securities legislation, the Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events or others.

D-107

Background

The Company is currently in the pre-operating stage. The Company expects to operate flights initially using two aircraft under the ULCC model. The ULCC model is generally known as a scheduled airline service with air fares that are generally lower than those of the traditional airlines. However, airline passengers are expected to pay extra for such things as paper ticketing, baggage, food & beverage, in-flight entertainment, advance seat selection, etc. The ULCC model relies on maintaining lower costs throughout all airline operations.

Jetlines' market entry plan is to initially select routes that avoid direct competition with MCDA (the two major Canadian domestic airlines, Air Canada and WestJet and their affiliate airlines) carriers where possible and focus on cost discipline in order to keep operating costs low. Jetlines' detailed revenue and cost model has factored in an expected fierce competitive response from the MCDA carriers in the first year of operations and strong competitive response for the following three years. Modelling has determined that the MCDA carriers, given a prolonged attempt to match Jetlines airfares, may suffer significantly reduced financial results with a resulting impact to their share value. In addition to initially avoiding routes operated by the MCDA, Jetlines has factored into its financial model strong competitive response and has used projected internal cash to expand its fleet until Jetlines would be considered out of competitive vulnerability.

Upon completion of full funding, Jetlines expects to complete the build-out period in approximately six months. Jetlines plans to initially operate scheduled point-to-point air service with primary bases at the Vancouver International Airport and the Hamilton International Airport (YHM), with a secondary base at the Winnipeg International Airport. Jetlines believes that by applying the ULCC model, a new market of Canadian travelers will be created comprised of persons who: (1) are not presently flying from Canadian airports due to high airfares; (2) are not flying because of the lack of jet service from Canada's secondary airports; (3) are using American ULCC airlines in United States border towns near Canada; or (4) are not flying to trans-border destinations because the service is not currently offered, or is offered via multiple stops and connections. Jetlines anticipates this new market of passengers to be comprised of price sensitive travelers, which could include budget conscious leisure travelers, students, families and business travelers seeking to contain costs.

Jetlines expects its fleet to be based on the Boeing 737 family and Jetlines expects to start operations for the first 90 days by leasing two Boeing 737 aircraft. This start-up process is in line with the Canadian Transportation Agency requirement to have full internal operational funding in place based on zero revenue for the first 90 days of actual scheduled service operations. Once outside of this period Jetlines plans to lease and/or acquire further aircraft for a total of six aircraft in the first year. In furtherance of this objective, Jetlines has entered into a purchase agreement with The Boeing Company (the "Boeing Agreement"). Subject to the terms of the Boeing Agreement, Jetlines has agreed to purchase five Boeing 737-7MAX aircraft for delivery in 2021. In addition, Boeing has granted Jetlines the option to purchase up to an additional 16 Boeing 737MAX aircraft.

Upon receipt of its licence to operate in Canada, Jetlines intends to promptly apply for a foreign air carrier permit or an exemption therefrom from the U.S. Department of Transportation (the "U.S. Department") in order to allow Jetlines to fly into destinations in the United States and Jetlines also intends to concurrently apply for similar approvals from the regulatory authorities in Mexico and certain Caribbean countries. Provided such licences, permits or exemptions are received within the first 18 months of operations, Jetlines expects to grow its business significantly within the first 14 months of operations by expanding its fleet to eight Boeing 737 aircraft, and up to a total of 14 Boeing 737 aircraft within the first 30 months of operations and 40 Boeing 737 by year eight, leveraging its bases in Canada and increasing its route network throughout Canada and to selected locations in the United States, Mexico and the Caribbean. Jetlines believes a total new opportunity of 60 Boeing 737 is available in Canada before growth will be linked to a percentage increase of the annual GDP.

To-date, the Company has achieved the following:

·	Set up administrative offices at the Vancouver International Airport.

·	Assembled a management team to prepare and execute on the Company's strategy and plans.

·	Developed a business plan applying ULCC principles to the Canadian airline industry.

D-108

·	Entered into arrangements with senior and experienced airline personnel to fill key managerial and operational positions for a ULCC airline in Canada.

·	Commenced the application process for a licence to operate a domestic service, large aircraft pursuant to the Canadian Transportation Agency ("CTA") including payment of the application fee.

·	Received a Stage 1 letter from the CTA stating that the Company's financial requirement to receive an airline licence (financial fitness) is now $27.2 million.

·	Substantially completed various procedures and manuals in support of the Company's application for a 705 Air Operator Certificate from the Canadian Transportation Agency.

·	Engaged in advanced discussions with the Vancouver Airport ("YVR") in order to establish YVR as its base airport.

·	Retained Euro Pacific as advisor and agent. Euro Pacific assisted with private placement financings.

·	Retained a route network planning firm to construct a detailed ULCC route network.

·	A non-binding letter of intent has been signed with SkyTec of Vancouver to be responsible for Jetlines line maintenance.

·	Currently in the RFP process with the YVR airport ground handlers and has entered the request for information process for other destination stations.

·	Designed and ordered pilot and flight attendant uniforms.

·	Designed aircraft livery and its company logo including a detailed brand analysis and identity.

·	Entered into the Boeing Agreement to purchase five Boeing 737-7MAX aircraft and has the right to purchase up to an additional 16 Boeing 737MAX aircraft.

·	Entered into discussions with various airports at destinations which it proposes to service for operational facilities.

The Company expects to accomplish the following in the next 12 months:

·	Raise sufficient financing to advance the Company's goals and objectives.

·	Complete the ground work and setup of support structures for flight operations.

·	Complete the business combination with Jet Metal Corp.

·	Obtain the 705 Air Operator Certificate from the Canadian Transportation Agency to operate schedule flights.

·	Launch air operations initially with two aircraft and grow to six aircraft approximately 12 months after launch.

Proposed Transaction

On April 12, 2016, the Company and Jet Metal Corp. ("Jet Metal") entered into an amalgamation agreement with respect to a business combination of the Company and Jet Metal (the "Transaction").

The Transaction is subject to the approval of the TSXV, approval of the Jet Metal and the Company's shareholders and other conditions customary for a transaction of this nature.

The following are the highlights of the Transaction:

·	The exchange ratio for the Transaction will be as follows (subject to adjustment in certain circumstances):

o	each one and one-half (1.5) issued and outstanding Jet Metal shares shall be converted into one (1) share of the issuer resulting from the combination of Jet Metal and the Company (the "Resulting Issuer"); and

o	each one (1) issued and outstanding share of the Company shall be converted into one and one-half shares (1.5) of the Resulting Issuer.

D-109

·	The Transaction is subject to the following key conditions:

o	$100,000 of outstanding Jet Metal debt will be converted into common shares of Jet Metal;

o	the Transaction will have received approval of TSXV and all necessary corporate and shareholder approvals; and

o	receipt of a report of a sponsor in respect of the Transaction or waiver from the sponsorship requirement by TSXV. Jet Metal anticipates applying for a waiver of the sponsorship requirement in reliance upon completion of the Concurrent Financing.

·	Jet Metal will provide the Company with a secured bridge loan for up to $150,000. The loan will be advanced in tranches based on a budget agreed to between Jet Metal and the Company.

·	Prior to the closing of the Transaction, the Company may complete a financing for a maximum of $250,000 on the same terms as the Concurrent Financing.

The Transaction is being conducted entirely at arm's length. The name of the Resulting Issuer will be "Canada Jetlines Ltd."

The terms of the financing by the Company were subsequently revised to $0.30 per unit and will consist of one common share and one common share purchase warrant. Each warrant shall be exercisable into a common share at a price of $0.375 for a period of 24 months.

The date of the Shareholders' meeting for both the Company and Jet Metal to approve the Amalgamation Agreement has been set for July 27, 2016.

D-110

Results of Operations

Variance Analysis

The following table sets forth Expense items with variances between the three months ended March 31, 2016 and 2015:

	Three Months Ended
	March 31,						Increase
	2016			2015			(Decrease)
	$			$			$
Expenses
Consulting		1,216			173,459			(172,243	)
Depreciation		889			863			26
General and administration		47,873			48,226			(353	)
Marketing and advertising		-			3,086			(3,086	)
Professional Fees		6,900			13,620			(6,720	)
Salaries and benefits		126,301			116,645			9,656
Share-based compensation		65,312			7,343			57,969
Travel		8,309			19,646			(11,337	)
		(256,800	)		(382,888	)		(126,088	)

Consulting expense decreased in the first quarter of 2016 compared to the same period last year because the engagement of consultants was not required in the first quarter of 2016 to develop the Company's business and prepare operating and maintenance manuals, route planning, human resources that were substantially completed earlier on in 2015.

Marketing and advertising expense decreased during the three months ended March 31, 2016 compared to the same period in 2015 primarily because the Company reduced expenditures in this area and also did not incur any costs for website development.

Professional fees decreased during the three months ended March 31, 2016 compared to the same period in 2015 primarily because of legal fees incurred in the 2015 period for licensing procedures and negotiating a dispute settlement.

Salaries and benefits expense increased during the three months ended March 31, 2016 compared to the same period in 2015 due to the increase in staff and salary rate fluctuations.

Share-based compensation increased for the three months ended March 31, 2016 compared to the same period in 2015 due to more options outstanding and vesting during the period.

Travel expense decreased during the three months ended March 31, 2016 mainly due to decreased travel compared to increased travel during the same period in 2015 for meetings with potential investors as the Company increased efforts to raise financing.

D-111

Summary of Quarterly Financial Results

The following table provides selected financial information of the Company for each of the last 8 quarters presented in accordance with IFRS:

	For the Quarters Ended
	March 31,			December 31,			September 30,			June 30,
	2016			2015			2015			2015
	$			$			$			$
Financial Results:
Expenses		(256,800	)		(627,752	)		(145,049	)		(233,801	)
Foreign exchange		(7,887	)		(908	)		24,269			(3,879	)
Interest expense		(134	)		-			(211	)		(212	)
Inovent settlement		-			-			(157,304	)		-
Net loss		(264,821	)		(628,660	)		(278,295	)		(237,892	)
Basic and diluted loss per share		(0.03	)		(0.07	)		(0.03	)		(0.03	)

	For the Quarters Ended
	March 31,			December 31,			September 30,			June 30,
		2015			2014			2014			2014
	$			$			$			$
Financial Results:
Expense		(382,888	)		(345,188	)		(261,004	)		(170,153	)
Foreign exchange		3,879			-			-			-
Interest expense		(211	)		(140	)		-			(134	)
Inovent settlement		-			-			-			-
Net loss		(379,220	)		(345,328	)		(261,004	)		(170,287	)
Basic and diluted loss per share		(0.05	)		(0.06	)		(0.05	)		(0.06	)

Liquidity, Capital Resources, Commitments and Contingencies

Working Capital and Cash

The Company's cash position at March 31, 2016 was $12,370 compared to $14,428 at December 31, 2015. The Company raised cash financing of $19,100 (less share issuance cost of $1,520) during the three months ended March, 31, 2016 compared to $923,000 (less share issuance cost of $81,150) during the same period in 2015. During the first quarter of 2016, the Company received an aggregate loan of $32,200 from related parties that was also repaid in the quarter.

D-112

During the first quarter of 2016, the Company borrowed, under a secured bridge loan, $66,400 from Jet Metal and a further $83,600 subsequent to March 31, 2016. The loan is secured and accrues interest at the rate of 10% per annum (payable at maturity) and will mature on the earlier of: (a) the completion of the Transaction, and (b) 60 days after the termination of the Transaction.

For the three months ended March 31, 2016, net cash used in operating activities was $86,038 primarily for salaries and benefits and general and administration as the Company continued increasing its efforts to advance operations and raise financing in 2016.

Going Concern

The Company's unaudited condensed interim financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assumes that the Company will continue its operations and will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. At March 31, 2016, the Company had a working capital deficit of $584,154, had not yet achieved profitable operations and expects to incur further losses in the development of its business. For the three months ended March 31, 2016, the Company reported a net loss of $264,821 and as at March 31, 2016, had an accumulated deficit of $3,408,740. The Company has not generated revenues from operations and is considered to be in the development stage. The Company is dependent on equity financings and debt to fund its operations. Based on its current plans, budgeted expenditures, and cash requirements, the Company does not have sufficient cash to finance its current plans for the next 12 months from March 31, 2016. The Company will need to raise sufficient funds in order to finance its current plans, budgeted expenditures, and administrative expenses. The Company has no assurance that such financing will be available or be available on favorable terms. Factors that could affect the availability of financing include the Company's performance, the state of debt and equity markets, investor perceptions and expectations and the global financial and aviation markets. If successful, the Company would obtain additional financing through, but not limited to, the issuance of additional equity or debt. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern.

Capital Management

The Company manages its capital structure, being its share capital, and makes adjustments to it, based on the funds available to the Company, in order to support future business opportunities. The Company had share capital of $2,544,337 (December 31, 2015 - $2,526,757) and a short-term loan of $66,400 (December 31, 2015 - $nil) as at March 31, 2016. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Planning, annual budgeting, cash flow forecasting and implementing controls over major investment decisions are primary tools used to manage the Company's capital.

The Company's investment policy is to hold cash in interest bearing bank accounts.

There were no changes to the Company's approach to capital management during the quarter. The Company is not subject to externally imposed capital requirements.

D-113

Contractual Obligations

The following table shows the Company's contractual commitments as at March 31, 2016.

	2016		2017		2018		2019		2020		2021		Total
	$		$		$		$		$		$		$
Office premise lease		20,772		27,696		27,696		27,696		27,696		-		131,556
Consulting⁽¹⁾		29,700		29,700		-		-		-		-		59,400
Aircraft deposits ⁽²⁾		5,555,917		-		-		26,769,116		-		-		32,325,033
Total		5,606,389		57,396		27,696		26,796,812		27,696		-		32,515,989

(1)	Represents agreement for technology systems and support

(2)	Represents Deposits under the Boeing Agreement as defined below.

The Boeing Agreement

Jetlines will purchase five Boeing 737-7 MAX aircraft, beginning with expected monthly deliveries in January 2021, for an aggregate estimated base price of US$434 million, subject to certain terms and conditions. The cost for the airframe and engines is based on the 2014 price with an escalation factor to determine final price at delivery. Variable costs include the cost of optional equipment furnished by Boeing and the cost of optional equipment furnished by Jetlines. The variable cost items, while estimated, remain subject to final determination. Jetlines estimates that assuming scheduled delivery in 2021, and taking into account presently known facts and assumptions, the escalated basic list price for the five aircraft would be approximately US$529 million.

D-114

·	In addition to the Initial Payments, Jetlines is required to make the following payments on account of the basic list price of the five firm orders:

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12, 9, 6	5% each
On Delivery	70%
Total	100% (including Initial Payments)

·	Jetlines may elect to defer the above payments in accordance with the following schedule (which payments together with the Initial Payments are collectively referred to as the "Deferred Advance Payments"):

Month Prior to Scheduled Delivery Month	% of the Total Basic List Price of the Five Firm Orders
24	4%
21, 18, 12	5% each
On Delivery	80%
Total	100% (including Initial Payments)

·	Jetlines is required to pay interest on the Deferred Advance Payments from the day on which each advance payment would have been due in accordance with Boeing's regular payment schedule until the date of actual delivery of the applicable aircraft.

Jetlines will have the right to purchase up to 16 additional Boeing 737-7 MAX aircraft. This purchase right is exercisable by Jetlines by notice not less than 24 months before the desired date of delivery. The additional aircraft are offered subject to available position for delivery prior to December 31, 2024. The price of the aircraft subject to the purchase right will be determined based on the provisions of the Boeing Agreement using the then current prices for such aircraft at the time of exercise of the purchase right subject to the escalation factors in the Boeing Agreement.

Jetlines will have the right to substitute any Boeing 737-7 MAX ordered with a Boeing 737-8 MAX with a scheduled month of delivery 24 months after delivery of the first Boeing 737-8 MAX aircraft to a Boeing customer. Jetlines may exercise this right of substitution by providing notice to Boeing not less than the first day of the month that is: (i) 12 months prior to the scheduled month of delivery of the Boeing 737-7 MAX for which it will be substituted if Jetlines has previously received a substituted aircraft; or (ii) 15 months prior to the scheduled month of delivery of the Boeing 737-7 MAX for which it will be substituted, if Jetlines has not previously received a substituted aircraft. The acquisition of any substituted aircraft will be subject to the execution of a definitive purchase agreement and product capabilities of the Boeing 737-8 MAX. Pricing will be based on the pricing for the Boeing 737-8MAX aircraft as set out in the Boeing Agreement, subject to adjustments for configuration specifications by Boeing which arise between the date of the Boeing Agreement and the date of execution of the definitive agreement for the substitution Boeing 737-8 MAX.

·	Boeing has agreed to provide a service life policy and product assurance in respect of certain components of the aircraft.

·	Boeing has agreed to provide promotional support to Jetlines in respect of the entry of the Boeing 737-7MAX into Jetlines' operations.

D-115

an exchange rate where US$1 equals C$1.2987, a 10% increase or decrease in the exchange rate will increase or decrease the aggregate base purchase price by approximately C$56.4 million and increase or decrease the aggregate escalated purchase price by approximately C$68.7 million.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Transactions with Related Parties

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole.


	For the Three Months Ended
	March 31,		March 31,
	2016		2015
Transactions with Key Management Personnel	$		$
Salaries to Key Management included in salaries and benefits		50,053		54,548
Share-based compensation to Key Management		54,752		7,343
Consulting fees to Key Management		-		13,200
		104,805		75,091

Included in consulting fees to Key Management for the three months ended March 31, 2016 is $nil (2015 - $12,200) paid to a company that is controlled by the Company's former Chief Financial Officer.

Financial Instruments and Risk Management

The Company's financial instruments at March 31, 2016 consists of cash. There were no material changes to the Company's financial instruments and risk exposures for the three months ended March 31, 2016 from those as reported in the Company's MD&A for the year ended December 31, 2015.

D-116

Outstanding Share Data

As at June 17, 2016, the following shares are outstanding:

-	Authorized: Unlimited number of common voting shares without par value

Unlimited number of variable common voting shares without par value

-	Issued and outstanding: 9,355,209 common shares and 142,500 variable voting common shares.

-	Warrants outstanding are as follows:

Expiry Date	Exercise Price		Number of Warrants
July 30, 2016	$	0.50		997,883
August 29, 2016	$	0.50		379,267
July 30, 2016	$	0.50		82,408
August 29, 2016	$	0.50		14,933
January 16, 2017	$	0.75		638,000
January 16, 2017	$	1.50		32,000
March 23, 2017	$	0.75		285,000
May 22, 2017	$	0.75		160,000
May 22, 2017	$	1.50		16,000
July 9, 2017	$	0.75		30,000
July 9, 2017	$	1.50		4,800
August 18, 2017	$	0.75		6,000
August 27, 2017	$	0.75		2,500
September 30, 2017	$	0.50		200,000
October 26, 2017	$	0.75		17,000
October 26, 2017	$	1.50		2,720
February 11, 2018	$	0.50		200,000
March 17, 2018 April 7, 2018	$	0.5625 $0.5625		42,222 11,000
June 9, 2018	$	0.5625		142,500
Total				3,264,233

-	Stock options outstanding:

450,000 with exercise price of $0.50 per option and an expiry date of July 22, 2020.

Critical Accounting Estimates

There were no material changes to the Company's critical accounting estimates and judgments for the three months ended March 31, 2016 from those as reported in the Company's MD&A for the year ended December 31, 2015.

Recent Accounting Pronouncements

The Company's adoption of recent accounting pronouncements is described in note 2(b) of the Company's unaudited condensed interim financial statements for the three months ended March 31, 2016.

D-117

Internal Controls over Financial Reporting

Risks and Uncertainties

There were no material changes to the Company's risks and uncertainties for the three months ended March 31, 2016 from those as reported in the Company's MD&A for the year ended December 31, 2015.

D-118

APPENDIX "E"
PRO FORMA UNAUDITED FINANCIAL STATEMENTS
OF JET METAL CORP. UPON COMPLETION OF
THE TRANSACTION

E-1

CANADA JETLINES LTD.

PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

E-2

CANADA JETLINES LTD.

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

	JET METAL CORP. AS AT JANUARY 31, 2016			CANADA JETLINES LTD. AS AT MARCH 31, 2016			NOTE			PRO FORMA ADJUSTMENTS			PRO FORMA CONSOLIDATED

ASSETS

Current assets
Cash and cash equivalents	$	2,029,126		$	12,370			3(c	)	$	5,567,945		$
								3(d	)		69,075
								3(e	)		(66,400	)
								3(h	)		(150,000	)		7,462,116
Receivables		11,337			29,137						-			40,474
Prepaid expenses		31,435			26,937						-			58,372
		2,071,898			68,444						5,420,620			7,560,962

Available-for-sale investment		200,000			-						-			200,000
Deposits		100,000			129,870						-			229,870
Exploration and evaluation assets		2,509,791			-			3(b	)		(2,509,791	)		-
Equipment		-			3,184						-			3,184
Reclamation bonds		36,326			-			3(b	)		(36,326	)		-

	$	4,918,015		$	201,498					$	2,874,503		$	7,994,016

LIABILITIES AND EQUITY

Current liabilities
Payables and accrued liabilities	$	214,092		$	506,198			3(f	)	$	(94,702	)	$	625,588
Due to related parties		231,537			-			3(a	)		(100,000	)
								3(f	)		94,702			226,239
Share subscriptions received		-			80,000						-			80,000
Short-term loan		-			66,400			3(e	)		(66,400	)		-
		445,629			652,598						(166,400	)		931,827

Future reclamation provisions		20,807			-						-			20,807
		466,436			652,598						(166,400	)		952,634
Equity
Capital stock		90,663,999			2,544,337			3(a	)		100,000
								3(c	)		5,437,405
								3(d	)		69,075
								3(g	)		(84,920,309	)		13,894,507
Reserves		21,475,351			413,303			3(c	)		130,540
								3(g	)		(19,699,568	)
								3(i	)		629,953			2,949,579
Deficit		(107,687,771	)		(3,408,740	)		3(b	)		(2,546,117	)
								3(g	)		104,619,877
								3(h	)		(150,000	)
								3(i	)		(629,953	)		(9,802,704	)
		4,451,579			(451,100	)					3,040,903			7,041,382

	$	4,918,015		$	201,498					$	2,874,503		$	7,994,016

The accompanying notes are an integral part of the pro forma consolidated statement of financial position.

E-3

CANADA JETLINES LTD.

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

1. BASIS OF PRESENTATION

The accompanying unaudited pro forma consolidated statement of financial position of Canada Jetlines Ltd. ("Jetlines") as at January 31, 2016 has been prepared after giving effect to the proposed transaction (the "Transaction") as described in Note 2. The unaudited pro forma consolidated statement of financial position has been prepared as if the Transaction had been completed on January 31, 2016.

The unaudited pro forma consolidated statement of financial position has been prepared from information derived from and should be read in conjunction with the following:

a.	The unaudited condensed interim consolidated financial statements of Jet Metal Corp. ("Jet Metal") as at and for the period ended January 31, 2016; and

b.	The unaudited condensed interim financial statements of Jetlines as at and for the period ended March 31, 2016.

The unaudited pro forma consolidated statement of financial position has been prepared for inclusion in a Management's Information Circular dated June 17, 2016 in conjunction with the Amalgamation Agreement dated April 12, 2016 whereby Jetlines will amalgamate with a wholly owned subsidiary of Jet Metal and Jet Metal will change its name to "Canada Jetlines Ltd." (the "Resulting Issuer") (Note 2). The Transaction is considered, from an accounting perspective, to be an asset acquisition with Jetlines acquiring the net assets of Jet Metal and continuing as the Resulting Issuer.

It is management's opinion that the unaudited pro forma consolidated statement of financial position presents fairly, in all material respects, the transactions described in Note 2 in accordance with International Financial Reporting Standards ("IFRS"). The accounting policies used in the preparation of the unaudited pro forma consolidated statement of financial position are consistent with the accounting policies of Jet Metal as at January 31, 2016 and Jetlines as at March 31, 2016. The pro forma adjustments, as described in Note 3, are based on available information and certain estimates and assumptions. The unaudited pro forma consolidated statement of financial position is not intended to reflect the financial position of the Resulting Issuer which would have actually resulted had the Transaction been effected on the date indicated. Further, the unaudited pro forma consolidated statement of financial position is not necessarily indicative of the results of operations that may be obtained in the future.

Completion of the Transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

2. PRO FORMA TRANSACTIONS

On April 12, 2016, Jet Metal entered into an Amalgamation Agreement with Jetlines whereby Jetlines will amalgamate with a wholly owned subsidiary of Jet Metal and Jet Metal will change its name to "Canada Jetlines Ltd." Pursuant to the Amalgamation Agreement, one and one-half (1.5) common shares of the Resulting Issuer will be issued in exchange for every one (1) common share held of Jetlines. Outstanding warrants and stock options of Jet Metal and Jetlines will become outstanding warrants and stock options of the Resulting Issuer subject to all necessary adjustments to reflect the terms of the Transaction and subject to the terms governing the warrants and stock options.

Prior to closing the Transaction, Jet Metal is required to complete a consolidation of its common shares on the basis of one (1) post-consolidation common share of Jet Metal for every one and one-half (1.5) pre-consolidation common share of Jet Metal. All numbers presented with respect to common shares, stock options and warrants are post-consolidation.

Concurrent with completing the Transaction, Jet Metal expects to complete a private placement and issue up to 20,000,000 units at a price of $0.30 per common share for gross proceeds of $6,000,000. Each unit will consist of one common share and one-half of one warrant exercisable for 24 months at a price of $0.50.

E-4

CANADA JETLINES LTD.

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

As a condition of the Transaction, Jet Metal is required to settle amounts due to a related party in the amount of $100,000 by issuing 333,333 common shares at a price of $0.30 per common share.

The acquisition of the net assets of Jet Metal by Jetlines is summarized as follows:

Value of equity instruments	$	7,519,473

Value of net assets:
Cash and cash equivalents		2,029,126
Receivables		11,337
Prepaid expenses and deposits		131,435
Available-for-sale investment		200,000
Payables and accrued liabilities		(214,092	)
Due to related parties		(231,537	)
Future reclamation provisions		(20,807	)

		1,905,462

Listing expense	$	5,614,011

The above summary provides an initial allocation which may change upon valuation of the individual assets, liabilities and equity instruments. The fair value of the net assets of Jet Metal to be acquired will ultimately be determined on the closing date of the Transaction. It is likely that the fair values of assets and liabilities acquired will vary from those shown above and the differences may be material.

The listing expense resulting from the Transaction was recorded in accordance with IFRS 2, "Share-based payment", as an equity-settled share-based payment transaction. As the fair value of the public listing status is not reliably estimated, it is measured by reference to the fair value of the equity instruments.

The fair value of the equity instruments valued at $7,519,473 is summarized as follows:

Common shares	$	5,743,690
Warrants		1,775,783

	$	7,519,473

As at January 31, 2016, Jet Metal had 13,333,333 warrants outstanding with an exercise price of $0.38 and expiry date of September 16, 2019. The weighted average fair value of the warrants of Jet Metal outstanding as at January 31, 2016 amounted to $0.13 per warrant and the total fair value of the warrants was $1,775,783. The fair value of warrants outstanding was determined using the Black-Scholes Option Pricing Model and the following weighted average assumptions: risk free rate of 0.63%, expected life of 3.62 years, annualized volatility of 188% and expected dividend yield of nil.

3. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

The unaudited pro forma consolidated statement of financial position has been prepared on the basis that the Transaction occurred on January 31, 2016 using the following assumptions and adjustments:

a.	Jet Metal settled amounts due to a related party in the amount of $100,000 by issuing 333,333 common shares at a price of $0.30 per common share.

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CANADA JETLINES LTD.

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

b.	As a result of the change in business, Jet Metal abandoned or relinquished its exploration and evaluation assets and related reclamation bonds and impaired the related assets to a recoverable amount of $Nil.

Jet Metal completed a private placement for 20,000,000 units at a price of $0.30 per unit for gross proceeds of $6,000,000. Each unit consisted of one common share and one-half of one warrant exercisable for 24 months at a price of $0.50. In connection with the private placement, Jet Metal paid cash finders' fees in the amount of $432,055, issued 1,300,000 broker warrants with a fair value of $130,540 and issued 420,547 common shares to a broker for compensation with a fair value of $126,164 ($0.30 per common share).

The weighted average fair value of the broker warrants amounted to $0.10 per warrant and the total fair value of the warrants was $130,540. The fair value of the broker warrants was determined using the Black-Scholes Option Pricing Model and the following weighted average assumptions: risk free rate of 0.48%, expected life of 2 years, annualized volatility of 183% and expected dividend yield of nil.

d.	Jetlines completed a private placement for 230,250 units at a price of $0.30 per unit for gross proceeds of $69,075. Each unit consisted of one common share and one warrant exercisable for 24 months at a price of $0.38.

e.	Jet Metal provided Jetlines with a short-term loan in the amount of $66,400. All inter-company balances are eliminated on consolidation.

f.	The balance of payables and accrued liabilities included amounts due to key management personnel of Jetlines of $94,702. The balance was reclassified to due to related parties for consistent presentation.

g.	To record, on a consolidated basis, the acquisition of the net assets of Jet Metal and the completion of the Transaction, based on the assumptions that the following material transactions were completed:

Jet Metal issued 14,246,559 common shares to the shareholders of Jetlines in exchange for 9,497,709 common shares of Jetlines.

The Transaction has been accounted for as an acquisition of the net assets of Jet Metal by Jetlines, accompanied by a recapitalization and continuation of the financial statements of Jetlines. The fair value of the net assets of Jet Metal acquired by Jetlines was the same as their historical book value in the amount of $1,905,462. The purchase price discrepancy between consideration paid (equity instruments of $7,519,473) and the fair value of net assets acquired ($1,905,462) in the amount of $5,614,011 is allocated to listing expense.

ii.	The Transaction was accounted for as a recapitalization of Jetlines and the issuance of common shares by Jetlines for the assets and liabilities of Jet Metal.

h.	Jetlines incurred further professional and regulatory fees of $150,000 in relation to the completion of the Transaction.

Jetlines granted 4,600,000 stock options to officers, directors, employees and consultants with an exercise price of $0.30 which expire 5 years from the closing date of the Transaction. The weighted average fair value of the stock options amounted to $0.14 per stock option and the total fair value of the stock options was $629,953. The fair value of stock options granted was determined using the Black-Scholes Option Pricing Model and the following weighted average assumptions: risk free rate of 0.63%, expected life of 5 years, annualized volatility of 166% and expected dividend yield of nil.

4. PRO FORMA EFFECTIVE INCOME TAX RATE

The pro forma effective income tax rate applicable to the operations of Jetlines in Canada is 26%.

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CANADA JETLINES LTD.

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

JANUARY 31, 2016

(Unaudited)

(Expressed in Canadian Dollars)

5. PRO FORMA COMMON STOCK

	Number of common shares			Common stock		Reserves		Total

Authorized:
Unlimited common shares without par value

Issued and outstanding:
Balance as at January 31, 2016, prior to Transaction		28,218,451		$	2,544,337	$	413,303	$	2,957,640
Share consolidation (Note 2)		(9,406,151	)		-		-		-
Common shares issued for debt (Note 3(a))		333,333			100,000		-		100,000
Private placement (Note 3(c))		20,000,000			5,311,241		130,540		5,441,781
Broker shares (Note 3(c))		420,547			126,164		-		126,164
Amalgamation (Note 3(g))		14,246,559			5,812,765		1,775,783		7,588,548
Share-based payments (Note 3(i))		-			-		629,953		629,953

Pro forma common stock after the Transaction		53,812,739		$	13,894,507	$	2,949,579	$	16,844,086

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APPENDIX "F"

SUMMARY OF PROCEDURE TO EXERCISE DISSENT RIGHTS

Following is a summary of the procedure set out in Part 8, Division 2 of the BCBCA ("Dissent Procedures") to be followed by Jet Shareholders who intend to dissent from the Jet Transaction Resolution approving the Continuance described in the accompanying Information Circular and who wish to require Jet to acquire their Jet Shares and pay them the fair value thereof. It is strongly suggested that any Jet Shareholders wishing to dissent seek independent legal advice, as failure to comply strictly with the provisions of the BCBCA may prejudice such Jet Shareholders' rights to dissent.

Each registered holder of a Jet Share is entitled to be paid the fair value of the holder's Jet Shares, provided that the holder duly dissents to the Continuance and the Continuance becomes effective.

Beneficial Shareholders who exercise Dissent Rights must do so through their broker, custodian, nominee or intermediary. The Dissent Rights are those rights pertaining to the right to dissent from the Jet Transaction Resolution that are contained in Sections 237 to 247 of the BCBCA. A Shareholder is not entitled to exercise Dissent Rights in respect of Jet Shares that the holder votes in favour of the Jet Transaction Resolution.

This summary does not purport to provide a comprehensive statement of the procedures to be followed by a dissenting Jet Shareholder who seeks payment of the fair value of the Jet Shares held and is qualified in its entirety by reference to Sections 237 to 247 of the BCBCA. Sections 237 to 247 of the BCBCA are reproduced in Schedule D to this Information Circular. The Dissent Procedures must be strictly adhered to and any failure by a Jet Shareholder to do so may result in the loss of that holder's Dissent Rights.

Accordingly, each Jet Shareholder who wishes to exercise Dissent Rights should carefully consider and comply with the Dissent Procedures and consult such holder's legal advisors.

Written notice of dissent from the Jet Transaction Resolution containing the information required by Section 242(4) of the BCBCA must be sent to Jet by a dissenting Jet Shareholder at least two (2) days before the Meeting or any date to which the Meeting may be postponed or adjourned. A notice of dissent should be delivered by registered mail to Jet at the address for notice described below. After the Jet Transaction Resolution is approved by Jet Shareholders and within one month after Jet notifies the dissenting Jet Shareholder of Jet's intention to act upon the Jet Transaction Resolution pursuant to Section 243 of the BCBCA, the dissenting Jet Shareholder must send to Jet, a written notice that such holder requires the purchase of all of the Jet Shares in respect of which such holder has given notice of dissent, together with the share certificate or certificates representing those Jet Shares (including a written statement prepared in accordance with Section 244(1)(c) of the BCBCA if the dissent is being exercised by the Jet Shareholder on behalf of a Beneficial Shareholder). Dissenting Jet Shareholders who do not strictly comply with the Dissent Procedures will not be entitled to be paid fair value for their Jet Shares in respect of which the Dissent Rights are being exercised.

Any dissenting Jet Shareholder who has duly complied with Section 244(1) of the BCBCA will be entitled to receive the fair value that the Jet Shares had immediately before the passing of the Jet Transaction Resolution.

F-1

APPENDIX "G"

BUSINESS CORPORATION ACT (BRITISH COLUMBIA)

PART 8, DIVISION 2 – DISSENT PROCEEDINGS

237. Definitions and application -

(1) In this Division:

"dissenter" means a shareholder who, being entitled to do so, sends written notice of dissent when and as required by section 242;

"notice shares" means, in relation to a notice of dissent, the shares in respect of which dissent is being exercised under the notice of dissent;

"payout value" means,

(a)

in the case of a dissent in respect of a resolution, the fair value that the notice shares had immediately before the passing of the resolution,

(b)

in the case of a dissent in respect of an arrangement approved by a court order made under section 29l(2)(c) that permits dissent, the fair value that the notice shares had immediately before the passing of the resolution adopting the arrangement, or

(c)

in the case of a dissent in respect of a matter approved or authorized by any other court order that permits dissent, the fair value that the notice shares had at the time specified by the court order,

excluding any appreciation or depreciation in anticipation of the corporate action approved or authorized by the resolution or court order unless exclusion would be inequitable.

(2) This Division applies to any right of dissent exercisable by a shareholder except to the extent that

(a)

the court orders otherwise, or

(b)

in the case of a right of dissent authorized by a resolution referred to in section 238(l)(g), the court orders otherwise or the resolution provides otherwise.

238. Right to dissent -

(1)	A shareholder of a company, whether or not the shareholder's shares carry the right to vote, is entitled to dissent as follows:

(a)

under section 260, in respect of a resolution to alter the articles to alter restrictions on the powers of Jet or on the business it is permitted to carry on;

(b)

under section 272, in respect of a resolution to adopt an amalgamation agreement;

(c)

under section 287, in respect of a resolution to approve an amalgamation under Division 4 of Part 9;

(d)

in respect of a resolution to approve an arrangement, the terms of which arrangement permit dissent;

(e)

under section 301(5), in respect of a resolution to authorize or ratify the sale, lease or other disposition of all or substantially all of Jet's undertaking;

(f)

under section 309, in respect of a resolution to authorize the continuation of Jet into a jurisdiction other than British Columbia;

(g)

in respect of any other resolution, if dissent is authorized by the resolution;

(h)

in respect of any court order that permits dissent.

(2) A shareholder wishing to dissent must

(a)

prepare a separate notice of dissent under section 242 for

(i)

the shareholder, if the shareholder is dissenting on the shareholder's own behalf, and

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(ii)

each other person who beneficially owns shares registered in the shareholder's name and on whose behalf the shareholder is dissenting,

(b)

identify in each notice of dissent, in accordance with section 242(4), the person on whose behalf dissent is being exercised in that notice of dissent, and

(c)

dissent with respect to all of the shares, registered in the shareholder's name, of which the person identified under paragraph (b) of this subsection is the beneficial owner.

(3)	Without limiting subsection (2), a person who wishes to have dissent exercised with respect to shares of which the person is the beneficial owner must

(a)

dissent with respect to all of the shares, if any, of which the person is both the registered owner and the beneficial owner, and

(b)

cause each shareholder who is a registered owner of any other shares of which the person is the beneficial owner to dissent with respect to all of those shares.

239. Waiver of right to dissent -

(1)	A shareholder may not waive generally a right to dissent but may, in writing, waive the right to dissent with respect to a particular corporate action.

(2)	A shareholder wishing to waive a right of dissent with respect to a particular corporate action must

(a)

provide to Jet a separate waiver for

(i)

the shareholder, if the shareholder is providing a waiver on the shareholder's own behalf, and

(ii)

each other person who beneficially owns shares registered in the shareholder's name and on whose behalf the shareholder is providing a waiver, and

(b) identify in each waiver the person on whose behalf the waiver is made.

(3)

If a shareholder waives a right of dissent with respect to a particular corporate action and indicates in the waiver that the right to dissent is being waived on the shareholder's own behalf, the shareholder's right to dissent with respect to the particular corporate action terminates in respect of the shares of which the shareholder is both the registered owner and the beneficial owner, and this Division ceases to apply to

(a)

the shareholder in respect of the shares of which the shareholder is both the registered owner and the beneficial owner, and

(b)

any other shareholders, who are registered owners of shares beneficially owned by the first mentioned shareholder, in respect of the shares that are beneficially owned by the first mentioned shareholder.

(4)

If a shareholder waives a right of dissent with respect to a particular corporate action and indicates in the waiver that the right to dissent is being waived on behalf of a specified person who beneficially owns shares registered in the name of the shareholder, the right of shareholders who are registered owners of shares beneficially owned by that specified person to dissent on behalf of that specified person with respect to the particular corporate action terminates and this Division ceases to apply to those shareholders in respect of the shares that are beneficially owned by that specified person.

240. Notice of resolution -

(1)	If a resolution in respect of which a shareholder is entitled to dissent is to be considered at a meeting of shareholders, Jet must, at least the prescribed number of days before the date of the proposed meeting, send to each of its shareholders, whether or not their shares carry the right to vote,

(a)

a copy of the proposed resolution, and

(b)

a notice of the meeting that specifies the date of the meeting, and contains a statement advising of the right to send a notice of dissent.

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(2)

If a resolution in respect of which a shareholder is entitled to dissent is to be passed as a consent resolution of shareholders or as a resolution of directors and the earliest date on which that resolution can be passed is specified in the resolution or in the statement referred to in paragraph (b), Jet may, at least 21 days before that specified date, send to each of its shareholders, whether or not their shares carry the right to vote,

(a)

a copy of the proposed resolution, and

(b)

a statement advising of the right to send a notice of dissent.

(3)

If a resolution in respect of which a shareholder is entitled to dissent was or is to be passed as a resolution of shareholders without Jet complying with subsection (1) or (2), or was or is to be passed as a directors' resolution without Jet complying with subsection (2), Jet must, before or within 14 days after the passing of the resolution, send to each of its shareholders who has not, on behalf of every person who beneficially owns shares registered in the name of the shareholder, consented to the resolution or voted in favour of the resolution, whether or not their shares carry the right to vote,

(a)

a copy of the resolution,

(b)

a statement advising of the right to send a notice of dissent, and

(c)

if the resolution has passed, notification of that fact and the date on which it was passed.

(4)	Nothing in subsection (1), (2) or (3) gives a shareholder a right to vote in a meeting at which, or on a resolution on which, the shareholder would not otherwise be entitled to vote.

241. Notice of court orders - If a court order provides for a right of dissent, Jet must, not later than 14 days after the date on which Jet receives a copy of the entered order, send to each shareholder who is entitled to exercise that right of dissent

(a) a copy of the entered order, and

(b) a statement advising of the right to send a notice of dissent.

242. Notice of dissent -

(1)	A shareholder intending to dissent in respect of a resolution referred to in section 238(l)(a), (b), (c), (d), (e) or (f) must,

(a)

if Jet has complied with section 240(1) or (2), send written notice of dissent to Jet at least 2 days before the date on which the resolution is to be passed or can be passed, as the case may be,

(b)

if Jet has complied with section 240(3), send written notice of dissent to Jet not more than 14 days after receiving the records referred to in that section, or

(c)

if Jet has not complied with section 240(1), (2) or (3), send written notice of dissent to Jet not more than 14 days after the later of

(i)

the date on which the shareholder learns that the resolution was passed, and

(ii)

the date on which the shareholder learns that the shareholder is entitled to dissent.

(2)	A shareholder intending to dissent in respect of a resolution referred to in section 238(1)(g) must send written notice of dissent to Jet

(a)

on or before the date specified by the resolution or in the statement referred to in section 240(2)(b) or (3)(b) as the last date by which notice of dissent must be sent, or

(b)

if the resolution or statement does not specify a date, in accordance with subsection (1) of this section.

(3)	A shareholder intending to dissent under section 238(l)(h) in respect of a court order that permits dissent must send written notice of dissent to Jet

(a)

within the number of days, specified by the court order, after the shareholder receives the records referred to in section 241, or

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(b)

if the court order does not specify the number of days referred to in paragraph (a) of this subsection, within 14 days after the shareholder receives the records referred to in section 241.

(4) A notice of dissent sent under this section must set out the number, and the class and series, if

applicable, of the notice shares, and must set out whichever of the following is applicable:

(a)

if the notice shares constitute all of the shares of which the shareholder is both the registered owner and beneficial owner and the shareholder owns no other shares of Jet as beneficial owner, a statement to that effect;

(b)

if the notice shares constitute all of the shares of which the shareholder is both the registered owner and beneficial owner but the shareholder owns other shares of Jet as beneficial owner, a statement to that effect and

(i)

the names of the registered owners of those other shares,

(ii)

the number, and the class and series, if applicable, of those other shares that are held by each of those registered owners, and

(iii)

a statement that notices of dissent are being, or have been, sent in respect of all of those other shares;

(c)

if dissent is being exercised by the shareholder on behalf of a beneficial owner who is not the dissenting shareholder, a statement to that effect and

(i)

the name and address of the beneficial owner, and

(ii)

a statement that the shareholder is dissenting in relation to all of the shares beneficially owned by the beneficial owner that are registered in the shareholder's name.

(5)

The right of a shareholder to dissent on behalf of a beneficial owner of shares, including the shareholder, terminates and this Division ceases to apply to the shareholder in respect of that beneficial owner if subsections (1) to (4) of this section, as those subsections pertain to that beneficial owner, are not complied with.

243. Notice of intention to proceed -

(1) A company that receives a notice of dissent under section 242 from a dissenter must,

(a)

if Jet intends to act on the authority of the resolution or court order in respect of which the notice of dissent was sent, send a notice to the dissenter promptly after the later of

(i)

the date on which Jet forms the intention to proceed, and

(ii)

the date on which the notice of dissent was received, or

(b)

if Jet has acted on the authority of that resolution or court order, promptly send a notice to the dissenter.

(2) A notice sent under subsection (1)(a) or (b) of this section must

(a)

be dated not earlier than the date on which the notice is sent,

(b)

state that Jet intends to act, or has acted, as the case may be, on the authority of the resolution or court order, and

(c)

advise the dissenter of the manner in which dissent is to be completed under section 244.

244. Completion of dissent -

(1)	A dissenter who receives a notice under section 243 must, if the dissenter wishes to proceed with the dissent, send to Jet or its transfer agent for the notice shares, within one month after the date of the notice,

(a)

a written statement that the dissenter requires Jet to purchase all of the notice shares,

(b)

the certificates, if any, representing the notice shares, and

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(c)

if section 242(4)(c) applies, a written statement that complies with subsection (2) of this section.

(2) The written statement referred to in subsection (1)(c) must

(a)

be signed by the beneficial owner on whose behalf dissent is being exercised, and

(b)

set out whether or not the beneficial owner is the beneficial owner of other shares of Jet and, if so, set out

(i)

the names of the registered owners of those other shares,

(ii)

the number, and the class and series, if applicable, of those other shares that are held by each of those registered owners, and

(iii)

that dissent is being exercised in respect of all of those other shares.

(3) After the dissenter has complied with subsection (1),

(a) the dissenter is deemed to have sold to Jet the notice shares, and

(b)

Jet is deemed to have purchased those shares, and must comply with section 245, whether or not it is authorized to do so by, and despite any restriction in, its memorandum or articles.

(4)

Unless the court orders otherwise, if the dissenter fails to comply with subsection (1) of this section in relation to notice shares, the right of the dissenter to dissent with respect to those notice shares terminates and this Division, other than section 247, ceases to apply to the dissenter with respect to those notice shares.

(5)

Unless the court orders otherwise, if a person on whose behalf dissent is being exercised in relation to a particular corporate action fails to ensure that every shareholder who is a registered owner of any of the shares beneficially owned by that person complies with subsection (1) of this section, the right of shareholders who are registered owners of shares beneficially owned by that person to dissent on behalf of that person with respect to that corporate action terminates and this Division, other than section 247, ceases to apply to those shareholders in respect of the shares that are beneficially owned by that person.

(6)	A dissenter who has complied with subsection (1) of this section may not vote, or exercise or assert any rights of a shareholder, in respect of the notice shares, other than under this Division.

245. Payment for notice shares -

(1)	A company and a dissenter who has complied with section 244(1) may agree on the amount of the payout value of the notice shares and, in that event, Jet must

(a)

promptly pay that amount to the dissenter, or

(b)

if subsection (5) of this section applies, promptly send a notice to the dissenter that Jet is unable lawfully to pay dissenters for their shares,

(2)	A dissenter who has not entered into an agreement with Jet under subsection (1) or Jet may apply to the court and the court may

(a)

determine the payout value of the notice shares of those dissenters who have not entered into an agreement with Jet under subsection (1), or order that the payout value of those notice shares be established by arbitration or by reference to the registrar, or a referee, of the court,

(b)

join in the application each dissenter, other than a dissenter who has entered into an agreement with Jet under subsection (1), who has complied with section 244(1), and

(c)

make consequential orders and give directions it considers appropriate.

(3)	Promptly after a determination of the payout value for notice shares has been made under subsection (2)(a) of this section, Jet must

(a)

pay to each dissenter who has complied with section 244(1) in relation to those notice shares, other than a dissenter who has entered into an agreement with Jet under subsection (1) of this section, the payout value applicable to that dissenter's notice shares, or

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(b)

if subsection (5) applies, promptly send a notice to the dissenter that Jet is unable lawfully to pay dissenters for their shares.

(4) If a dissenter receives a notice under subsection (1)(b) or (3)(b),

(a)

the dissenter may, within 30 days after receipt, withdraw the dissenter's notice of dissent, in which case Jet is deemed to consent to the withdrawal and this Division, other than section 247, ceases to apply to the dissenter with respect to the notice shares, or

(b)

if the dissenter does not withdraw the notice of dissent in accordance with paragraph (a) of this subsection, the dissenter retains a status as a claimant against Jet, to be paid as soon as Jet is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of Jet but in priority to its shareholders.

(5)	A company must not make a payment to a dissenter under this section if there are reasonable grounds for believing that

(a)

Jet is insolvent, or

(b)

the payment would render Jet insolvent.

246. Loss of right to dissent - The right of a dissenter to dissent with respect to notice shares terminates and this Division, other than section 247, ceases to apply to the dissenter with respect to those notice shares, if, before payment is made to the dissenter of the full amount of money to which the dissenter is entitled under section 245 in relation to those notice shares, any of the following events occur:

(a)

the corporate action approved or authorized, or to be approved or authorized, by the resolution or court order in respect of which the notice of dissent was sent is abandoned;

(b)

the resolution in respect of which the notice of dissent was sent does not pass;

(c)

the resolution in respect of which the notice of dissent was sent is revoked before the corporate action approved or authorized by that resolution is taken;

(d)

the notice of dissent was sent in respect of a resolution adopting an amalgamation agreement and the amalgamation is abandoned or, by the terms of the agreement, will not proceed;

(e)

the arrangement in respect of which the notice of dissent was sent is abandoned or by its terms will not proceed;

(f)

a court permanently enjoins or sets aside the corporate action approved or authorized by the resolution or court order in respect of which the notice of dissent was sent;

(g)

with respect to the notice shares, the dissenter consents to, or votes in favour of, the resolution in respect of which the notice of dissent was sent;

(h)

the notice of dissent is withdrawn with the written consent of Jet;

(i)

the court determines that the dissenter is not entitled to dissent under this Division or that the dissenter is not entitled to dissent with respect to the notice shares under this Division.

247. Shareholders entitled to return of shares and rights - If under section 244(4) or (5), 245(4)(a) or 246, this Division, other than this section, ceases to apply to a dissenter with respect to notice shares,

(a)

Jet must return to the dissenter each of the applicable share certificates, if any, sent under section 244(l)(b) or, if those share certificates are unavailable, replacements for those share certificates,

(b)

the dissenter regains any ability lost under section 244(6) to vote, or exercise or assert any rights of a shareholder, in respect of the notice shares, and

(c)

the dissenter must return any money that Jet paid to the dissenter in respect of the notice shares under, or in purported compliance with, this Division.

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APPENDIX "H"

SUMMARY OF DIFFERENCES BETWEEN THE BCBCA AND THE CBCA

The following is a summary only of certain differences between the Canada Business Corporations Act (the "CBCA"), the statute that will govern the corporate affairs of Jet upon the Continuance, and the British Columbia Business Corporations Act (the "BCBCA"), the statute which currently governs the corporate affairs of Jet.

In approving the Continuance, Jet Shareholders will be agreeing to hold securities in Jet as governed by the CBCA. This Information Circular summarizes some of the differences that could materially affect the rights and obligations of Jet Shareholders after giving effect to the Continuance. In exercising their vote, Jet Shareholders should consider the distinctions between the CBCA and the BCBCA, only some of which are outlined below.

Notwithstanding the alteration of Jet Shareholders' rights and obligations under the CBCA and the proposed Continuance, Jet will still be bound by the rules and policies of the Exchange and the British Columbia, Alberta Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador Securities Commissions, as well as any other applicable securities legislation.

The following is a summary comparison of certain provisions and the highlights of the BCBCA and the CBCA which pertain to rights of Jet Shareholders. This summary is not intended to be exhaustive.

The following summary should not be construed as legal advice to any particular Jet Shareholder, all of whom are advised to consult their own legal advisors respecting all of the implications of the Continuance.

Corporate Governance Differences

In general terms, the CBCA provides to Shareholders substantively the same rights as are available to Shareholders under the BCBCA, including rights of dissent and appraisal and rights to bring derivative actions and oppression actions, and is consistent with corporate legislation in most other Canadian jurisdictions. There are, however, important differences concerning the qualifications of directors, location of Shareholder meetings and certain Shareholder remedies.

Charter Documents

Under the BCBCA, the charter documents consist of a corporation's "certificate of incorporation", "notice of articles" (which sets forth the name of the corporation and the amount and type of authorized capital) and "articles" (which govern the management of the corporation). The "certificate of incorporation" might also be in the form of a "certificate of conversion", "certificate of amalgamation" or "certificate of continuation". The "notice of articles" is filed with the BCBCA Registrar of Companies and the "articles" are kept at the corporation's records office.

Under the CBCA, the charter documents consist of a corporation's "certificate of incorporation", "articles of incorporation" (which set forth, among other things, the name of the corporation and the amount and type of authorized capital) and "by-laws" (which govern the management of the corporation). The "certificate of incorporation" might also be in the form of a "certificate of amalgamation" or "certificate of continuance", and the "articles of incorporation" might also be in the form of "articles of amalgamation" or "articles of continuance". The "articles of incorporation" are filed with Corporations Canada and the "by-laws" are maintained at the corporation's records office.

Amendments to Charter Documents

Any substantive change to the charter documents of a corporation under the BCBCA, such as an alteration of the restrictions, if any, on the business carried on by a corporation, a change in the name of a corporation, an increase, reduction or elimination of the maximum number of shares that the corporation is authorized to issue out of any class or series of shares, an alteration of the special rights and restrictions attached to issued shares, or continuance of a corporation out of the jurisdiction requires a resolution of the type specified in its articles. If the articles do not specify the type of resolution, a special resolution passed by the majority of votes that the articles of the corporation specify is required, if that specified majority is at least two-thirds and not more than three-quarters of the votes cast on the resolution or, if the articles do not contain such a provision, a special resolution passed by at least two-thirds of the votes cast on the resolution. Other fundamental changes such as a proposed amalgamation or arrangement require a similar special resolution passed by holders of shares of each class entitled to vote at a general meeting of the corporation and the holders of all classes of shares adversely affected by such changes.

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Under the CBCA, certain fundamental changes require a special resolution passed by not less than two-thirds of the votes cast by the Shareholders voting on the resolution authorizing the alteration at a special meeting of Shareholders and, in certain instances, where the rights of the holders of a class or series of shares are affected differently by the alteration than those of the holders of other classes or series of shares, a special resolution passed by not less than two-thirds of the votes cast by the holders of shares of each class or series so affected, whether or not they are otherwise entitled to vote. Authorization to amalgamate a CBCA corporation requires that a special resolution in respect of the amalgamation be passed by the holders of each class or series of shares entitled to vote thereon. The holders of a class or series of shares of an amalgamating corporation, whether or not they are otherwise entitled to vote, are entitled to vote separately as a class or series in respect of an amalgamation if the amalgamation agreement contains a provision that, if contained in a proposed amendment to the articles, would entitle such holders to vote separately as a class or series under section 176 of the CBCA.

Sale of Undertaking or Property

Under the BCBCA, a corporation may sell, lease or otherwise dispose of all or substantially all of the undertaking of the corporation if it does so in the ordinary course of its business or if it has been authorized to do so by a special resolution passed by the majority of votes that the articles of the corporation specify is required, if that specified majority is at least two thirds and not more than three quarters of the votes cast on the resolution or, if the articles do not contain such a provision, a special resolution passed by at least two thirds of the votes cast on the resolution.

The CBCA requires approval of the holders of shares of each class or series of a corporation represented at a duly called meeting, whether or not they are otherwise entitled to vote, by not less than two-thirds of the votes cast upon a special resolution for a sale, lease or exchange of all or substantially all of the property (as opposed to the "undertaking") of the corporation other than in the ordinary course of business of the corporation, and the holders of shares of a class or series are entitled to vote separately only if the sale, lease or exchange would affect such class or series in a manner different from the shares of another class or series entitled to vote. While the Shareholder approval thresholds will be the same under the BCBCA as under the CBCA, there are differences in the nature of the sale which requires such approval (i.e., a sale of all or substantially all of the "property" under the CBCA and of all or substantially all of the "undertaking" under the BCBCA).

Rights of Dissent

Under the BCBCA, Shareholders who dissent to certain actions being taken by the corporationmay exercise a right of dissent and require the corporation to purchase the shares held by such Shareholder at the fair value of such shares. The dissent right may be exercised by a holder of shares of any class of the corporation if ordered by the court or in certain other circumstances, including when the corporation proposes to:

(a)	alter its articles to alter restrictions on the powers of the corporation or the business that the corporation is permitted to carry on;

(b)	adopt an amalgamation agreement;

(c)	adopt a resolution to approve an amalgamation into a foreign jurisdiction;

(d)	adopt a resolution to approve an arrangement, the terms of which arrangement permit dissent;

(e)	sell, lease or otherwise dispose of all or substantially all of the corporation's undertaking;

(f)	continue out of the jurisdiction; or

(g)	adopt any other resolution, if dissent is authorized by the resolution.

Although the procedure under CBCA for exercising rights of dissent differs from the procedure under the BCBCA, the CBCA still provides that Shareholders who dissent to certain actions being taken by the corporation may exercise a right of dissent and require the corporation to purchase the shares held by such Shareholder at the fair value of such shares. The dissent right is applicable where the corporation proposes to:

(a)	amend its articles to add, change or remove any provision restricting or constraining the issue or transfer of shares of that class;

(b)	amend its articles to add, change or remove any restrictions on the business or businesses that the corporation may carry on;

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(c)	amalgamate other than by way of vertical or horizontal short form amalgamation;

(d)	continue out of the jurisdiction;

(e)	sell, lease or exchange all or substantially all of its property, other than in the ordinary course of business;

(f)	carry out a going private transaction or squeeze out transaction; or

(g)	amend its articles to alter the rights or privileges attaching to shares of any class where such alteration triggers a class vote.

See "The Jet Meeting – Continuance – Dissent Rights" and Appendix "F" to the Information Circular.

Oppression Remedies

Under the BCBCA, a Shareholder of a corporation has the right to apply to a court on the ground that:

(a)	the affairs of the corporation are being or have been conducted, or that the powers of the directors are being or have been exercised, in a manner oppressive to one or more of the Shareholders, including the applicant; or

(b)	some act of the corporation has been done or is threatened, or that some resolution of the Shareholders or of the Shareholders holding shares of a class or series of shares has been passed or is proposed, that is unfairly prejudicial to one or more of the Shareholders, including the applicant.

On such an application, the court may make such order as it sees fit, including an order to prohibit any act proposed by the corporation.

The CBCA contains rights that are substantially broader in that they are available to a larger class of complainants. Under the CBCA, a registered holder or beneficial owner, and a former registered holder or beneficial owner of a security of the corporation or any of its affiliates, directors, former directors, officers or former officers of a corporation or any of its affiliates, the director appointed under the CBCA or any other person who, in the discretion of a court, is a proper person to seek an oppression remedy, may apply to a court for an order to rectify the matters complained of where, in respect of a corporation or any of its affiliates, (i) any act or omission of the corporation or its affiliates effects a result, (ii) the business or affairs of the corporation or its affiliates are, have been carried on or conducted in a manner, or (iii) the powers of the directors of the corporation or any of its affiliates are, have been exercised in a manner, that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, any security holder, creditor, director or officer.

Shareholder Derivative Actions

Under the BCBCA, a Shareholder or director of a corporation may, with leave of the court, bring an action in the name and on behalf of the corporation to enforce a right, duty or obligation owed to the corporation that could be enforced by the corporation itself or to obtain damages for any breach of such a right, duty or obligation.

A broader right to bring a derivative action is contained in the CBCA, and this right extends to a registered holder or beneficial owner, and a former registered holder or beneficial owner of a security of the corporation or any of its affiliates, director, former director, officer or former officer of a corporation or any of its affiliates, the Director appointed under the CBCA or any other person who, in the discretion of a court, is a proper person to make an application to court to bring a derivative action. In addition, the CBCA permits derivative actions to be commenced in the name and on behalf of a corporation or any of its subsidiaries. No leave may be granted under the CBCA unless the court is satisfied that:

(a)	(the complainant has given at least fourteen days' notice to the directors of the corporation or its subsidiary of the complainant's intention to apply to the court if the directors of the corporation or its subsidiary do not bring, diligently prosecute, defend or discontinue the action;

(b)	the complainant is acting in good faith; and

(c)	it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

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Place of Meetings

Under the BCBCA, general meetings of Shareholders are to be held in British Columbia or may be held, at a location outside of British Columbia if:

(a)	the location is provided for in the articles;

(b)

the articles do not restrict the corporation from approving a location outside of British Columbia, the location is approved by the resolution required by the articles for that purpose (in the case of the Company, may be approved by directors' resolution), or if no resolution is specified then approved by ordinary resolution before the meeting is held; or

(c)	the location is approved in writing by the Registrar of Companies before the meeting is held.

Subject to certain exceptions, the CBCA provides that meetings of Shareholders shall be held at the place within Canada provided in the by-laws or, in the absence of such provision, at the place within Canada that the directors determine.

Directors

The BCBCA provides that the corporation, as a public company, must have a minimum of three directors and does not impose any residency requirements on the directors. The CBCA requires that the corporation, as a distributing corporation whose shares are held by more than one person, have a minimum of three directors, at least two of whom are not officers or employees of the corporation or its affiliate, but it also requires that at least one-quarter of the directors (or, if the corporation has less than four directors, at least one) be resident Canadians.

Requisition of Meetings

Both the BCBCA and the CBCA provide that one or more Shareholders of the corporation holding not less than 5% of the issued voting shares may give notice to the directors requiring them to call and hold a general meeting of the corporation.

Indemnification

Under the BCBCA, a corporation may:

(a)	indemnify an individual against all judgments, penalties or fines awarded or imposed in, or an amount paid in settlement of, a proceeding to which the individual is or may be liable; or

(b)	after the final disposition of a proceeding, pay the expenses actually and reasonably incurred by the individual in respect of a proceeding after the final disposition of any said proceeding.

The individual to be indemnified must:

(a)	be, or have been, a director or officer of the corporation;

(b)	be, or have been, a director or officer of another corporation (an "associated corporation") at a time when the associated corporation is or was an affiliate of the corporation, or at the request of the corporation; or

(c)	at the request of the corporation, be or have been, or hold or have held, a position equivalent to that of a director or officer of a partnership, trust, joint venture or other unincorporated entity,

and the proceeding must be a legal proceeding or investigative action, whether current, threatened, pending or completed, in which the individual (or any of his or her heirs and personal or other legal representatives) by reason of said individual being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the corporation or an associated corporation is or may be joined as a party or liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.

Additionally, in such cases where the individual was wholly successful, on the merits or otherwise, in the outcome of the proceeding or was substantially successful on the merits of his or her defence of the action or proceeding against him or her, the BCBCA requires the corporation to pay the eligible party's expenses actually and reasonably incurred in respect of the proceeding.

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

SCHEDULE 1

CLASSES OF SHARES

The authorized capital of the Corporation consists of the following:

A.	An unlimited number of Variable Voting Shares, which class of shares shall have attached thereto the rights, privileges, restrictions and conditions set forth below;

B.	An unlimited number of Common Voting Shares, which class of shares shall have attached thereto the rights, privileges, restrictions and conditions set forth below;

ARTICLE 1

INTERPRETATION

1.1 Definitions

For purposes of the Articles, the following terms have the following meanings:

a)	"Aggregate Votes" means the aggregate of the votes attached to all Voting Shares of the Corporation that may ordinarily be cast to elect directors of the Corporation;

b)	"Canadian" shall have the meaning set forth in Subsection 55(1) of the CTA or as specified in any regulation made thereunder, as the same may be amended, supplemented or replaced, from time to time;

c)	"CBCA" means the Canada Business Corporations Act, S.C. 1996, c.10;

d)	"CBCA Regulations" means any regulations promulgated from time to time under the CBCA;

e)	"Common Voting Share" means the common voting shares of the share capital of the Corporation;

f)	"corporation" includes a body corporate, partnership and unincorporated organization;

g)	"CTA" means the Canada Transportation Act, S.C. 1996, Ch. 10;

h)	"person" includes an individual, corporation, association, entity, government or agency thereof, trustee, executor, administrator and other legal representative;

i)	"Transfer Agent" means the transfer agent and the registrar of the Voting Shares of the Corporation;

j)	"Variable Voting Share" means the variable voting shares of the share capital of the Corporation; and

k)	"Voting Share" means the Variable Voting Shares and the Common Voting Shares of the share capital of the Corporation and includes a security currently convertible into such a share and currently exercisable options and rights to acquire such shares or such a convertible security

1.2 Control

For purposes of these Articles,

1.2.1 a body corporate is controlled by a person if:

a)	securities of the body corporate to which are attached more than fifty percent (50%) of the votes that may be cast to elect directors of the body corporate are held, otherwise than by way of security only, by or for the benefit of that person; and

b)	the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

1.2.2 a partnership or unincorporated organization is controlled by a person if an ownership interest therein representing more than fifty percent (50%) of the assets of the partnership or organization is held, otherwise than by way of security only, by or for the benefit of that person.

1.3 Undefined Terms

All terms used herein that are not defined herein shall have the meanings ascribed thereto in the CBCA. Any provision herein shall be read so as to be consistent with the CBCA.

ARTICLE 2

VARIABLE VOTING SHARES

Subject to the rights, privileges, restrictions and conditions which attach to any other class of shares, the Variable Voting Shares shall, as a class, have the following rights, privileges, restrictions and conditions:

2.1 Voting

The holders of the Variable Voting Shares shall be entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of the Corporation, except where the holders of a specified class are entitled to vote separately as a class as provided in the CBCA.

The Variable Voting Shares shall carry one vote per Variable Voting Share, unless:

2.1.1

the number of issued and outstanding Variable Voting Shares exceeds twenty-five percent (25%) of the total number of all issued and outstanding Voting Shares (or any higher percentage that the Governor in Council may specify pursuant to the CTA); or

2.1.2

the total number of votes cast by or on behalf of holders of Variable Voting Shares at any meeting exceeds twenty-five percent (25%) (or any higher percentage that the Governor in Council may specify pursuant to the CTA) of the total number of votes that may be cast at such meeting.

If either of the above-noted thresholds is surpassed at any time, the vote attached to each Variable Voting Share will decrease automatically and without further act or formality to equal the maximum permitted vote per Variable Voting Share. Under the circumstance described in subparagraph 2.1.1 above, the Variable Voting Shares as a class cannot carry more than twenty-five percent (25%) or any higher percentage that the Governor in Council may specify - pursuant to the CTA, of the Aggregate Votes attached to all issued and outstanding Voting Shares of the Corporation. Under the circumstance described in subparagraph 2.1.2 above, the Variable Voting Shares as a class cannot, for a given shareholders meeting, carry more than twenty-five percent (25%) (or any higher percentage that the Governor in Council may specify pursuant to the CTA) of the total number of votes that can be exercised at the meeting.

2.2 Dividends

Subject to the rights, privileges, restrictions and conditions attached to any other class of shares of the Corporation ranking prior to the Variable Voting Shares, the holders of Variable Voting Shares shall be entitled to receive any dividend declared by the directors of the Corporation at the times and for the amounts that the Board of Directors may, from time to time, determine. The Variable Voting Shares and the Common Voting Shares shall rank equally as to dividends on a share-for-share basis, and all dividends declared in any fiscal year of the Corporation shall be declared in equal or equivalent amounts per share on all Variable Voting Shares and Common Voting Shares then outstanding, without preference or distinction.

2.3 Subdivision or Consolidation

No subdivision or consolidation of the Variable Voting Shares shall occur unless, simultaneously, the Variable Voting Shares, the Common Voting Shares and the Non-Voting Shares are subdivided or consolidated in the

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

same manner, so as to maintain and preserve the relative rights of the holders of the shares of each of the said classes.

2.4 Liquidation, Dissolution or Winding-up

Subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation ranking prior to the Variable Voting Shares, in the case of liquidation, dissolution or winding-up of the Corporation or other distribution of the Corporation's assets among its shareholders for the purpose of winding-up its affairs, the holders of Variable Voting Shares and Common Voting Shares shall be entitled to receive the remaining property of the Corporation and shall be entitled to share equally, share for share, in all distributions of such assets.

2.5 Conversion

2.5.1 Automatic

Each issued and outstanding Variable Voting Share shall be automatically converted into one Common Voting Share without any further act on the part of the Corporation or of the holder, if:

a)	such Variable Voting Share is or becomes beneficially owned and controlled, directly or indirectly, by a Canadian; or

b)	the provisions contained in the CTA relating to foreign ownership restrictions are repealed and not replaced with other similar provisions.

2.5.2 Upon an Offer

In the event that an offer is made to purchase Common Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Common Voting Shares are then listed, to be made to all or substantially all the holders of Common Voting Shares in a province of Canada to which the requirement applies, each Variable Voting Share shall become convertible at the option of the holder into one Common Voting Share at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Variable Voting Shares for the purpose of depositing the resulting Common Voting Shares pursuant to the offer, and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to section 2.1, immediately above, notwithstanding their conversion. The Transfer Agent shall deposit the resulting Common Voting Shares on behalf of the holder.

To exercise such conversion right, the holder or his attorney duly authorized in writing shall:

a)	give written notice to the Transfer Agent of the exercise of such right and of the number of Variable Voting Shares in respect of which the right is being exercised;

b)	deliver to the Transfer Agent the share certificate or certificates representing the Variable Voting Shares in respect of which the right is being exercised; and

c)	pay any applicable stamp tax or similar duty on or in respect of such conversion.

No share certificates representing the Common Voting Shares resulting from the conversion of the Variable Voting Shares shall be delivered to the holders on whose behalf such deposit is being made.

If Common Voting Shares resulting from the conversion and deposited pursuant to the offer are withdrawn by the holder or are not taken up by the Offeror; or the offer is abandoned or withdrawn by the Offeror or the offer otherwise expires without such Common Voting Shares being taken up and paid for, the Common Voting Shares resulting from the conversion will be reconverted into Variable Voting Shares and a share

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

certificate representing the Variable Voting Shares will be sent to the holder by the Transfer Agent. Common Voting Shares resulting from the conversion and taken up and paid for by the Offeror shall be re-converted into Variable Voting Shares at the time the Offeror is required under the applicable securities legislation to take up and pay for such shares if the Offeror is not a Canadian.

In the event that the Offeror takes up and pays for the Common Voting Shares resulting from conversion, the Transfer Agent shall deliver to the holders thereof the consideration paid for such shares by the Offeror.

There will be no right to convert the Variable Voting Shares into Common Voting Shares in the following cases:

the offer to purchase Common Voting Shares is not required under applicable securities legislation or the rules of a stock exchange on which the Common Voting Shares are then listed to be made to all or substantially all of the holders of Common Voting Shares in a province of Canada to which the requirement applies, that is, the offer is an "exempt take-over bid" within the meaning of the foregoing securities legislation; or

an offer to purchase Variable Voting Shares is made concurrently with the offer to purchase Common Voting Shares and the two offers are identical in respect of price per share, percentage of outstanding shares for which the offer is made, and in all other material respects, including in respect of the conditions attaching thereto. The offer to purchase the Variable Voting Shares must be unconditional, subject to the exception that the offer for the Variable Voting Shares may contain a condition to the effect that the Offeror is not required to take up and pay for Variable Voting Shares deposited to the offer if no shares are purchased pursuant to the contemporaneous offer for the Common Voting Shares.

ARTICLE 3

COMMON VOTING SHARES

Subject to the rights, privileges, restrictions and conditions which attach to the shares of any other class, the Common Voting Shares, as a class, shall have attached thereto the following rights, privileges, restrictions and conditions.

3.1 Voting

The holders of Common Voting Shares shall be entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of the Corporation, except where the holders of a specified class are entitled to vote separately as a class as provided in the CBCA. Each Voting Share shall confer the right to one vote at all meetings of shareholders of the Corporation.

3.2 Dividends and Distributions

Subject to the rights, privileges, restrictions and conditions attached to any class of shares of the Corporation ranking prior to the Common Voting Shares, holders of Common Voting Shares shall be entitled to receive the dividends declared by the directors of the Corporation at the times and for the amounts that the Board of Directors may, from time to time, determine. The Common Voting Shares and Variable Voting Shares shall rank equally as to dividends on a share for share basis and all dividends declared in any fiscal year of the Corporation shall be declared in equal or equivalent amounts per share on all Common Voting Shares and Variable Voting Shares then outstanding, without preference or distinction.

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

3.3 Subdivision or Consolidation

No subdivision or consolidation of the Common Voting Shares shall occur unless, simultaneously, the Common Voting Shares and the Variable Voting Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the respective rights of the holders of the shares of each of the said classes.

3.4 Liquidation, Dissolution or Winding-up

Subject to the rights, privileges, restrictions and conditions attaching to any class of shares ranking prior to the Common Voting Shares, in the case of liquidation, dissolution or winding-up of the Corporation or other distribution of the Corporation's assets among its shareholders for the purposes of winding-up its affairs, the holders of Common Voting Shares and Variable Voting Shares shall be entitled to receive the remaining property of the Corporation and shall be entitled to share equally, share for share, in all distributions of such assets.

3.5 Conversion

3.5.1 Automatic

Subject to the foreign ownership restrictions of the CTA, an issued and outstanding Common Voting Share shall be converted into one Variable Voting Share, automatically and without any further act of the Corporation or the holder, if such Common Voting Share is or becomes beneficially owned or controlled, directly or indirectly, by a person who is not a Canadian.

3.5.2 Upon an Offer

In the event that an offer is made to purchase Variable Voting Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Variable Voting Shares, are then listed, to be made to all or substantially all the holders of Variable Voting Shares, each Common Voting Share shall become convertible at the option of the holder into one Variable Voting Share, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the Offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Common Voting Shares for the purpose of depositing the resulting Variable Voting Shares, pursuant to the offer, and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to paragraph 3.1, immediately above, notwithstanding their conversion. The Transfer Agent shall deposit the resulting Variable Voting Shares, on behalf of the holder.

To exercise such conversion right, the holder or his attorney duly authorized in writing shall:

a)	give written notice to the Transfer Agent of the exercise of such right and of the number of Variable Voting Shares, in respect of which the right is being exercised;

b)	deliver to the Transfer Agent the share certificate or certificates representing the Variable Voting Shares, in respect of which the right is being exercised; and

c)	pay any applicable stamp tax or similar duty on or in respect of such conversion.

No share certificates representing the Variable Voting Shares, resulting from the conversion of the Common Voting Shares will be delivered to the holders on whose behalf such deposit is being made.

If Variable Voting Shares, resulting from the conversion and deposited pursuant to the offer are withdrawn by the holder or are not taken up by the Offeror; or the offer is abandoned or withdrawn by the Offeror or the offer otherwise expires without such Variable Voting Shares, being taken up and paid for, the Variable Voting Shares, resulting from the conversion will be re-converted into Common Voting Shares and a share certificate representing the Common Voting Shares will be sent to the holder by the Transfer Agent. Variable

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

Voting Shares, resulting from the conversion and taken up and paid for by the Offeror shall be re-converted into Common Voting Shares at the time the Offeror is required under the applicable securities legislation to take up and pay for such shares if the Offeror is Canadian.

In the event that the Offeror takes up and pays for the Variable Voting Shares, resulting from conversion, the Transfer Agent shall deliver to the holders thereof the consideration paid for such shares by the Offeror.

There will be no right to convert the Common Voting Shares into Variable Voting Shares, in the following cases:

the offer to purchase Variable Voting Shares, is not required under applicable securities legislation or the rules of a stock exchange on which the Variable Voting Shares, are then listed to be made to all or substantially all of the holders of Variable Voting Shares, that is, the offer is an "exempt take- over bid" within the meaning of the foregoing securities legislation; or

an offer to purchase Common Voting Shares is made concurrently with the offer to purchase Variable Voting Shares, and the offers are identical in respect of price per share, percentage of outstanding shares for which the offer is made, and in all other material respects, including in respect of the conditions attaching thereto. The offer to purchase the Common Voting Shares must be unconditional, subject to the exception that the offer for the Common Voting Shares may contain a condition to the effect that the Offeror is not required to take up and pay for Common Voting Shares deposited to the offer if no shares are purchased pursuant to the contemporaneous offer for the Variable Voting Shares.

SCHEDULE 2

RESTRICTIONS ON SHARE TRANSFERS

CONSTRAINTS ON OWNERSHIP OF SHARES

Variable Voting Shares

The Variable Voting Shares may only be beneficially owned or controlled, directly or indirectly, by persons who are not Canadians.

Common Voting Shares

The Common Voting Shares may only be beneficially owned and controlled, directly or indirectly, by Canadians.

CBCA Constraints

In the event that any Canadian federal or provincial legislation applicable to the Corporation should become prescribed for the purposes of subsections 174(1)(b)(c)(d) or (e) of the CBCA or any other similar provision in the CBCA or CBCA Regulations, these provisions shall be read as if they included additional constraints that assist the Corporation or any of its affiliates or associates (within the meaning of the CBCA) to qualify under such prescribed law to receive licenses, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership and control and such specified level of Canadian ownership and control shall be the level, of Canadian ownership and control designated by such prescribed law of Canada or a province.

Joint Ownership

Where Voting Shares of the Corporation are beneficially owned or controlled by several persons jointly, the number of Voting Shares beneficially owned or controlled by any one such person shall include the number of Voting Shares beneficially owned or controlled jointly with such other persons. Where the Voting Shares

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Canada Jetlines Ltd. Articles of Continuance

Schedule 1 and Schedule 2

are beneficially owned or controlled jointly by a person who is not Canadian and another person or persons, the Voting Shares shall be deemed to be owned or controlled by such person who is not a Canadian.

Exceptions

a)	Nothing in these provisions shall be construed to apply in respect of Voting Shares of the Corporation that:

I.	are held by one or more underwriters solely for the purpose of distributing the shares to the public; or

II.	are held by any person that is acting in relation to the shares solely in its capacity as an intermediary in the payment of funds or the delivery of securities, or both, in connection with trades in securities and that provides centralized facilities for the clearing of trades in securities.

The constraints imposed herein do not apply to the extent that a person who is not a Canadian holds Voting Shares by way of security only and such holding by way of security only is evidenced in such form as may be prescribed by the by-laws or resolutions adopted by the shareholders or directors of the Corporation and filed by such holder with the Corporation.

Powers of Directors

In the administration of these provisions, the directors of the Corporation shall enjoy, in addition to the powers set forth herein, all of the powers necessary or desirable, in their opinion, to carry out the intent and purpose hereof, including but not limited to all powers contemplated by the provisions relating to constrained share corporations in the CBCA and the CBCA Regulations.

Neither any shareholder of the Corporation nor any other interested person shall have any claim or action against the Corporation or against any director or officer of the Corporation nor shall the Corporation have any claim or action against any director or officer of the Corporation arising out of any act (including any omission to act) performed pursuant to or in intended pursuance of these provisions or any breach or alleged breach of such provisions.

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GENERAL BY-LAW

BY-LAW NO. I

A BY-LAW RELATING GENERALLY TO THE CONDUCT OF THE AFFAIRS OF

CANADA JETLINES LTD.

(hereinafter called the "Corporation")

IT IS HEREBY ENACTED as a by-law of the Corporation as follows:

ARTICLE 1

INTERPRETATION

1.1	Definitions

In the by-laws of the Corporation, unless the context otherwise specifies or requires:

a)	"Act" means the Canada Business Corporations Act;

b)	"appoint" includes "elect" and vice versa;

c)	"articles" means the articles of incorporation of the Corporation, as from time to time amended or restated;

d)	"board" means the board of directors of the Corporation;

e)	"business day" means a day which is not a non-business day;

f)	"by-laws" means this by-law and all other by-laws of the Corporation from time to time in force and effect;

g)	"Canadian" has the meaning given such term in the Canada Transportation Act;

h)	"electronic means" means in an electronic form, accessible so as to be useable for subsequent reference, and capable of being retained;

i)	"meeting of shareholders" includes an annual and a special meeting of shareholders;

j)	"non-business day" means Saturday, Sunday and any other day that is a holiday as from time to time defined in The Interpretation Act of British Columbia;

k)	"Regulations" means the regulations under the Act as published or from time to time;

l)	"signing officer" means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by Section 3 of this by-law or by a resolution passed pursuant thereto; and

m)	"special meeting of shareholders" means a meeting of any particular class or classes of shareholders and a meeting of all shareholders entitled to vote at any annual meeting of shareholders at which special business is to be transacted.

Save as aforesaid, all terms which are contained in the by-laws of the Corporation and which are defined in the Act or the Regulations shall, unless the context otherwise specifies or requires, have the meanings given to such terms in the Act or the Regulations. Words importing the singular number include the plural and vice versa; the masculine shall include the feminine; and the word "person" shall include an individual, partnership, association, body corporate, body politic, trustee, executor, administrator and legal representative.

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1.2	Amendments to Legislation and Regulations

Any reference to legislation or regulations of a government herein includes such legislation or regulation as from time to time amended and every enactment that may be substituted therefore and, in the case of such substitution, any references in the by-laws of the Corporation to provisions of an act or regulation shall be read as references to the substituted provisions therefore in the new act or regulation.

1.3	Headings and Sections

Headings used in the by-laws are inserted for reference purposes only and are not to be considered or taken into account in construing the terms or provisions thereof or to be deemed in any way to clarify, modify or explain the effect of any such terms or provisions. "Section" followed by a number means a reference to a specified section of this by-law.

1.4	Conflict with Act or Articles

This by-law is subject to and read in conjunction with the Act and the articles. If there is any conflict or inconsistency between any provision of the Act or articles and this by-law, the provisions of the Act or the articles, as the case may be, shall govern.

ARTICLE 2

BANKING AND SECURITIES

2.1 Banking Arrangements

The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefore, shall be transacted with such banks, trust companies or other bodies corporate or organizations or any other persons as may from time to time be designated by or under the authority of the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of power as the board may from time to time prescribe or authorize.

2.2 Voting Rights in Other Bodies Corporate

The signing officers of the Corporation may execute and deliver instruments of proxy and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights attaching to any securities held by the Corporation. Such instruments, certificates or other evidence shall be in favour of such person or persons as may be determined by the officers executing such proxies or arranging for the issuance of such voting certificates or evidence of the right to exercise such voting rights. In addition, the board, or failing the board, the signing officers of the Corporation, may direct the manner in which and the person or persons by whom any particular voting rights or class of voting rights may or shall be exercised.

ARTICLE 3

EXECUTION OF INSTRUMENTS

3.1 Authorized Signing Officers

Unless otherwise authorized by the board, deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any one of the chief executive officer, president, chairman of the board, any vice-president, any director or any other officer

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created by by-law or by the board. In addition, the board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal, if any, to any instrument requiring the same, but no instrument is invalid merely because the corporate seal is not affixed thereto.

3.2 Cheques, Drafts and Notes

All cheques, drafts or orders for the payment of money and all notes and acceptances and bills of exchange shall be signed by such officer or person or persons, whether or not officers of the Corporation and in such manner as the board may from time to time designate by resolution.

ARTICLE 4

DIRECTORS

4.1 Number

The board shall consist of such number of directors as is fixed by the articles, or where the articles specify a variable number, shall consist of such number of directors as is not less than the minimum nor more than the maximum number of directors provided in the articles and as shall be fixed from time to time by resolution of the shareholders.

4.2 Canadian Status

A majority of directors of the Corporation shall be resident Canadians.

4.3 Election and Term

Subject to the articles or a unanimous shareholder agreement, the election of directors shall take place at each annual meeting of shareholders and all of the directors then in office shall retire but, if qualified, shall be eligible for re-election. The number of directors to be elected at any such meeting, subject to the articles, shall be the number of directors then in office, or the number of directors whose terms of office expire at the meeting, as the case may be. Where the shareholders adopt an amendment to the articles to increase the number or minimum number of directors, the shareholders may, at the meeting at which they adopt the amendment, elect the additional number of directors authorized by the amendment. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected.

4.4 Removal of Directors

Subject to the Act and the articles, the shareholders may by ordinary resolution passed at a special meeting remove any director from office and the vacancy created by such removal may be filled at the same meeting, failing which it may be filled by the board.

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4.5 Consent

A person who is elected or appointed a director is not a director unless:

a)	he was present at the meeting when he was elected or appointed and did not refuse to act as a director, or

b)	if he was not present at the meeting when he was elected or appointed:

I.	he consented in writing to act as a director before his election or appointment or within ten (10) days after it, or

II.	he has acted as a director pursuant to the election or appointment.

4.6 Vacation of Office

A director of the Corporation ceases to hold office when:

a)	he dies or resigns;

b)	he is removed in accordance with section 109 of the Act; or

c)	he becomes disqualified under subsection 105(1) of the Act.

4.7 Committee of Directors

The directors may appoint from among their number a committee of directors, however designated, of which at least one-half of the members must be resident Canadians, and subject to section 115 of the Act, may delegate to such committee any of the powers of the directors. A committee may be comprised of one director.

4.8 Transaction of Business of Committee

Subject to the provisions of this by-law with respect to participation in a meeting, the powers of a committee of directors may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all of the members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of such committee may be held at any place in or outside British Columbia and may be called by any one member of the committee giving notice in accordance with the by-laws governing the calling of meetings of the board.

4.9 Procedure

Unless otherwise determined herein or by the board, each committee shall have the power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure.

4.10 Remuneration and Expenses

The directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the board or any committee thereof. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor.

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4.11 Vacancies

Subject to the Act, a quorum of the board may fill a vacancy among the directors. If there is not a quorum of directors, or if there has been a failure to elect the minimum number of directors required by the articles, the directors then in office shall forthwith call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any shareholder.

4.12 Action by the Board

The board shall manage or supervise the management of the business and affairs of the Corporation. Notwithstanding a vacancy among the directors, a quorum of directors may exercise all the powers of the directors. If the Corporation has only one director, that director may constitute a meeting.

ARTICLE 5

MEETING OF DIRECTORS

5.1 Place of Meeting

Meetings of the board may be held at any place within or outside British Columbia.

5.2 Notice of Meeting

Unless the board has made regulations otherwise, meetings of the board may be summoned on twenty-four (24) hours' notice, given verbally or in writing, and whether by means of telephone or telegraph, electronic means, or any other means of communication. A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting except where the Act requires such purpose or business to be specified, including any proposal to:

a)	submit to the shareholders any question or matter requiring approval of the shareholders;

b)	fill a vacancy among the directors or in the office of auditor;

c)	appoint additional directors;

d)	issue securities, except in the manner and on the terms authorized by the board;

e)	declare dividends;

f)	purchase, redeem or otherwise acquire shares issued by the Corporation, except in the manner and on the terms authorized by the board;

g)	pay a commission for the sale of shares;

h)	approve a management proxy circular;

i)	approve any financial statements to be placed before the shareholders at an annual meeting; or

j)	adopt, amend or repeal by-laws.

Provided, however, that a director may in any manner, and either before or after the meeting, waive notice of a meeting and attendance of a director at a meeting of the board shall constitute a waiver of notice of the meeting except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

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For the first meeting of the board to be held immediately following an election of directors no notice of such meeting shall be necessary, and for a meeting of the board at which a director is to be appointed to fill a vacancy in the board, no notice of such meeting shall be necessary to the newly elected or appointed director or directors in order to legally constitute the meeting, provided, in each case, that a quorum of the directors is present.

5.3 Adjourned Meeting

Notice of an adjourned meeting of the board is not required if the time and place of the adjourned meeting is announced at the original meeting.

5.4 Calling of the Meetings

Meetings of the board shall be held from time to time at such time and at such place as the board, the chairman of the board, the lead director, the chief executive officer or any two directors may determine. Should more than one of the above-named call a meeting at or for substantially the same time, there shall be only one meeting held and such meeting shall occur at the time and place determined by, in order of priority, the board, any two directors, the chairman, or the chief executive officer.

5.5 Regular Meetings

The board may, from time to time, appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meetings shall be sent to each director forthwith after being passed, and forthwith to each director subsequently elected or appointed, but no other notice shall be required for any such regular meeting except where the Act or this by-law requires the purpose thereof or the business to be transacted thereat to be specified.

5.6 Chairman

The chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairman of the board, lead director or chief executive officer. If no such person is present, the directors present shall choose one of their numbers to be chairman.

5.7 Quorum

Subject to Section 5.8, the quorum for the transaction of business at any meeting of the board shall consist of a majority of the directors holding office or such greater number of directors as the board may from time to time determine.

5.8 One-Half Canadian Representation at Meetings

Other than to fill a vacancy on the Board, directors shall not transact business at a meeting of directors unless a majority of the directors present are resident Canadians. Notwithstanding the foregoing, directors may transact business at a meeting of directors when less than a majority of the directors present are resident Canadians if:

a)	a resident Canadian director who is unable to be present approves in writing or by electronic means, telephone or other communications facilities the business transacted at the meeting; and

b)	the number of resident Canadian directors present at the meeting, together with any resident Canadian director who gives his approval under clause a), totals at least a majority of the directors present at the meeting.

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5.9 Voting

Questions arising at any meeting of the board shall be decided by a majority of votes, and in the event of any equality of votes, the chairman of the meeting shall not have a second or casting vote.

5.10 Participation in Meeting

A director may participate in a meeting of the board or a committee of the board by electronic means, telephone, or other communication facilities as permit all persons participating in the meeting to hear or otherwise communicate with each other, and a director participating in such meeting by such means is deemed to be present at the meeting.

5.11 Resolution in Lieu of Meeting

Notwithstanding any of the foregoing provisions of this by-law, a resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board or a committee of directors is as valid as if it had been passed at a meeting of the board or committee of directors, as the case may be. A copy of every such resolution shall be kept with the minutes of the proceedings of the directors or committee of directors. Any such resolution in writing is effective for all purposes at such time as the resolution states regardless of when the resolution is signed and may be signed in counterpart.

5.12 Amendments to the Act

It is hereby affirmed that the intention of Sections 5.8, as it relates to Canadian representation, is to comply with the minimum requirements of the Act, the Canada Transportation Act, and the Canada Transportation Agency and in the event that such minimum requirements shall be amended, deleted or replaced such that no, or lesser, requirements with respect to Canadian representation are then in force, such sections shall be deemed to be correspondingly amended, deleted or replaced without any further act of the directors or shareholders of the Corporation.

ARTICLE 6

PROTECTION OF DIRECTORS AND OFFICERS

6.1 Conflict of Interest

A director or officer shall not be disqualified from his office, or be required to vacate his office, by reason only that he is a party to, or is a director or officer or has a material interest in any person who is a party to, a material contract or material transaction or proposed material contract or proposed material transaction with the Corporation- or a subsidiary thereof. Such a director or officer shall, however, disclose the nature and extent of his interest in the contract or transaction or proposed contract or transaction at the time and in the manner provided by the Act. Subject to the provisions of the Act, a director or officer shall not by reason only of his office be accountable to the Corporation or to its shareholders for any profit or gain realized from such a contract or transaction, and such contract or transaction shall not be void or voidable by reason only of the director's interest therein, provided that the required declaration and disclosure of interest is properly made, the contract or transaction is approved by the directors or shareholders, if necessary, and it was fair and reasonable to the Corporation at the time it was approved and, if required by the Act, the director refrains from voting as a director on the contract or transaction.

Even if the above conditions are not met, a director or officer acting honestly and in good faith shall not be accountable to the Corporation or to its shareholders for any profit realized from a material contract or material transaction for which disclosure is required by the Act, and such contract or transaction shall not be void or voidable by reason only of the director or officer's interest therein, provided that the material

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contract or material transaction was approved or confirmed by special resolution at a meeting of the shareholders, disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before such contract or transaction was approved or confirmed, and such contract or transaction was reasonable and fair to the Corporation at the time it was approved or confirmed.

6.2 Limitation of Liability

No director or officer, for the time being of the Corporation, shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee or for joining in any act for conformity, or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the Corporation or for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or upon which any of the moneys of or belonging to the Corporation shall be placed out or invested or for any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any monies, securities or other assets belonging to the Corporation or for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person, corporation or other entity with whom any of the monies, securities or effects of the Corporation shall be deposited, or for any other loss, conversion, misapplication, misappropriation of or any damage resulting from dealings with any money, securities or other assets of or belonging to the Corporation or for any damage or misfortune whatever which may happen in the execution of the duties of his respective office or trust or in relation thereto; provided that nothing herein shall relieve any director or officer from the duty to act in accordance with the express requirements of the Act and the Regulations thereunder or from liability for any breach thereof. The directors, for the time being of the Corporation, shall not be under any duty or responsibility in respect of any contract, act or transaction whether or not made, done or entered into in the name or on behalf of the Corporation, except such as shall have been submitted to and authorized or approved by the board.

No act or proceeding of any director or officer or the board shall be deemed invalid or ineffective by reason of the subsequent ascertainment of any irregularity in regard to such act or proceeding or the election, appointment or qualification of such director or officer or board.

6.3 Indemnity

To the maximum extent permitted by the Act, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or a person who acts or acted at the Corporation's request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or such body corporate.

Nothing herein contained shall limit the right of any person entitled to indemnity to claim indemnity apart from the provisions of this Section.

6.4 Insurance

The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 6.0 against any liability incurred by him:

a)	in his capacity as a director or officer of the Corporation, except where the liability relates to his failure to act honestly and in good faith with a view to the best interests of the Corporation; or

b)	in his capacity as a director or officer of the another body corporate where he acts or acted in that capacity at the Corporation's request, except where the liability relates to his failure to act honestly and in good faith with a view to the best interests of the body corporate.

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6.5 Advance of Funds

The Corporation may advance funds to a director or officer in order to defray the costs, charges and expenses of proceedings for which the Act permits indemnification, provided that if the director or officer does not meet the conditions required for indemnity under the Act; namely (a) was substantially successful on the merits in the defence of the action or proceeding; (b) acted honestly and in good faith, with a view to the best interests of the Corporation, and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the director or officer had reasonable grounds for believing that the director's or officer's conduct was lawful; and (c) is fairly and reasonably entitled to indemnity; he or she shall repay the funds advanced.

ARTICLE 7

OFFICERS

7.1 Election or Appointment

The board may, from time to time, appoint a chairman of the board, a chief executive officer, a president, one or more vice-presidents, a secretary, a treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. The board may specify the duties of and, in accordance with this by-law and subject to the provisions of the Act, delegate to such officers powers to manage the business and affairs of the Corporation. Except for the chairman of the board who must be a director, an officer may, but need not be, a director and one person may hold more than one office.

7.2 Chairman of the Board

The chairman of the board shall, when present, preside at all meetings of the board and at all meetings of shareholders. The board may assign to the chairman of the board any of the powers and duties that, by any provision of this by-law, are assigned to the chief executive officer; and he shall, subject to the provisions of the Act, have such other powers and duties as the board may specify. During the absence or disability of the chairman of the board, his duties shall be performed and his powers exercised by the president, if a director.

7.3 Chief Executive Officer

The chief executive officer shall, subject to the authority of the board have general supervision of the business and affairs of the Corporation. The chief executive officer shall also have such other powers and duties as the board may specify of that office; provided, however, that unless he is a director he shall not preside as chairman at any meeting of the board.

7.4 President

During the absence or disability of the chief executive officer, his duties shall be performed and his powers exercised by the president or by a vice-president designated from time to time by the board or the chief executive officer; provided, however, that a vice-president who is not a director shall not preside as chairman at any meeting of the board. The president or a vice-president shall have such other powers and duties as the board or the president may specify.

7.5 Secretary

The secretary shall attend and be the secretary of all meetings of the board, shareholders and committees of directors and shall enter or cause to be entered in records kept for that purpose minutes of all

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proceedings thereat; he shall give or cause to be given, as and when instructed, all notices to shareholders, directors, officers, auditors and members of committees of the board; he shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation, if any, and of all books, papers, records, documents and instruments belonging to the Corporation, except when some other officer or agent has been appointed for that purpose; and he shall have such other powers and duties as the board or the chief executive officer may specify.

7.6 Treasurer

The treasurer shall keep proper accounting records in compliance with the Act and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; he shall render to the board whenever required an account of all his transactions and he shall have such other powers and duties as the board or the chief executive officer may specify.

7.7 Powers and Duties of Other Officers

The powers and duties of all other officers shall be such as the terms of their engagement call for or as the board or the chief executive officer may specify. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board or the chief executive officer otherwise directs.

7.8 Variation of Powers and Duties

The board may from time to time and subject to the provisions of the Act, vary, add to or limit the powers and duties of any officer.

7.9 Vacancies

If the office of any officer of the Corporation shall be or become vacant by reason of death, resignation, and disqualification or otherwise, the board, by resolution, may appoint a person to fill such vacancy.

7.10 Remuneration and Removal

The remuneration of all officers appointed by the board shall be determined from time to time by resolution of the board. The fact that any officer or employee is a director or shareholder of the Corporation shall not disqualify him from receiving such remuneration as may be determined. All officers shall be subject to removal by resolution of the board at any time, with or without cause, notwithstanding any agreement to the contrary, provided however that this right of removal shall not limit in any way such officer's right to damages by virtue of such agreement or any other rights resulting from such removal in law or equity.

7.11 Agents and Attorneys

The Corporation, by or under the authority of the board, shall have power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers (including the power to sub-delegate) of management, administration or otherwise as may be thought fit.

7.12 Conflict of Interest

An officer shall disclose his interest in any material contract or material transaction or proposed material contract or proposed material transaction with the Corporation in accordance with Section 6.1.

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7.13 Fidelity Bonds

The board may require such officers, employees and agent of the Corporation, as the board deems advisable, to furnish bonds for the faithful discharge of their powers and duties, in such forms and with such surety as the board may from time to time determine.

ARTICLE 8

SHAREHOLDERS' MEETINGS

8.1 Annual Meetings

Subject to the Act, the annual meeting of shareholders shall be held at such time and on such day in each year and at such place or places as the board may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors if required by the Act or the articles, and for the transaction of such other business as may properly be brought before the meeting.

8.2 Special Meetings

The board shall have the power to call a special meeting of shareholders at any time.

8.3 Place of Meetings

Meetings of shareholders shall be held as provided for in the articles, or failing any reference in the articles, at such place in Canada as the board may determine.

Subject to the Act and Regulations, if the directors or the shareholders of the Corporation call a meeting of shareholders, the directors or the shareholders, as the case may be, may determine that the meeting shall be held entirely by electronic means, telephone or other communication facility that permits all participants to communicate adequately with each other during the meeting. Any meeting of shareholders will be subject to procedures, if any, established by the directors.

8.4 Record Date for Notice

The board may fix in advance a date, preceding the date of any meeting of shareholders by not more than sixty (60) days and not less than twenty-one (21) days, as a record date for the determination of shareholders entitled to notice of or to vote at the meeting. If no record date is fixed, the record date for the determination of the shareholders entitled to receive notice of or to vote at the meeting shall be the close of business on the date immediately preceding the day on which the notice is given or, if no notice is given, the day on which the meeting is held.

8.5 Notice of Meeting

Notice of the time and place of each meeting of shareholders shall:

a)	if the Corporation is not a distributing corporation, be sent not less than ten (10) days before the meeting; or

b)	if the Corporation is a distributing corporation, be sent not less than twenty-one (21) days and not more than sixty (60) days before the meeting,

to each shareholder entitled to vote at the meeting, each director and the auditor of the Corporation.

Such notice may be sent by electronic means, or by mail addressed to, or may be delivered personally to, the shareholder, at his latest address as shown in the records of the Corporation or its transfer agent, to each director, at his latest address as shown in the records of the Corporation or in the last notice filed

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pursuant to section 106 or 113 of the Act, and to the auditor, at his most recent address as shown in the records of the Corporation. A notice of meeting of shareholders sent by mail to a shareholder, director or auditor in accordance with the above is deemed to be served on the day on which it was deposited in the mail. A notice of a meeting is not required to be sent to shareholders who are not registered on the records of the Corporation or its transfer agent on the record date as determined according to Section 8 hereof. Notice of a meeting of shareholders at which special business is to be transacted shall state the nature of such business in sufficient detail to permit the shareholder to form a reasoned judgment thereon and shall state the text of any special resolution to be submitted to the meeting. A special meeting and an annual meeting may be convened by one and the same notice and it shall not be an objection to the notice that it only convenes the second meeting contingently on any resolution being passed by the requisite majority at the first meeting.

8.6 Right to Vote

Subject to the provisions of the Act as to authorized representatives of any other body corporate, at any meeting of shareholders in respect of which the Corporation has prepared the list referred to in 8.5 hereof, every person who is named in such list shall be entitled to vote the shares shown thereon opposite his name except to the extent that such person has transferred any of his shares after the record date set pursuant to Section 8.5 hereof, or, if no record date is fixed, after the date on which the list referred to in Section 8.5 is prepared, and the transferee, upon producing properly endorsed certificates evidencing such shares or otherwise establishing that he owns such shares, demands not later than ten (10) days before the meeting that his name be included to vote the transferred shares at the meeting. In the absence of a list prepared as aforesaid in respect of a meeting of shareholders, every person shall be entitled to vote at the meeting who at the close of business on the record date, or if no record date is set, at the close of business on the date preceding the date notice is sent, is entered in the securities register as the holder of one or more shares carrying the right to vote at such meeting.

8.7 List of Shareholders Entitled to Notice

The Corporation shall prepare a list of shareholders entitled to receive notice of a meeting, arranged in alphabetical order, and showing the number of shares held by each shareholder in accordance with section 138 of the Act. If a record date for the meeting is fixed pursuant to Section 8.1 hereof by the board, the shareholders listed shall be those registered at the close of business on the record date. If no record date is fixed by the board, the shareholders listed shall be those listed at the close of business on the last business day immediately preceding the day on which notice of a meeting is given, or where no such notice is given, the day on which the meeting is held. The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where its central securities register is maintained and at the place where the meeting is held.

8.8 Meetings Without Notice

A meeting of shareholders may be held without notice at any time and place permitted by the Act:

if all the shareholders entitled to vote thereat are present in person or represented by proxy or if those not present or represented by proxy waive notice of or otherwise consent to such meeting being held; and

if the auditors and the directors are present or waive notice of or otherwise consent to such meeting being held.

At such meetings any business may be transacted which the Corporation at a meeting of shareholders may transact. If the meeting is held at a place outside Canada, shareholders not present or represented by proxy, but who have waived notice of or otherwise consented to such meeting, shall also be deemed to have consented to a meeting being held at such place.

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8.9 Waiver of Notice

A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders and attendance of any such person at a meeting of shareholders shall constitute a waiver of notice of the meeting except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

8.10 Chairman, Secretary and Scrutineers

The chairman of the board or, in his absence, the chief executive officer, if such an officer has been elected or appointed and is present, or otherwise the president or a vice-president (in order of seniority of service with the Corporation), shall be chairman of any meeting of shareholders. If no such officer is present within fifteen (15) minutes from the time fixed for holding the meeting, or declines to be chairman of the meeting, the persons present and entitled to vote shall choose one of their numbers to be chairman. If the secretary of the Corporation is absent, the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting.

8.11 Persons Entitled to be Present

The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and auditors of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting.

8.12 Quorum

A quorum at any meeting of shareholders (unless a greater number of persons are required to be present or a greater number of shares are required to be represented by the Act or by the articles or by any other by-law) shall be two (2) persons, present in person or represented by proxy, in number, one of whom shall be, or be representing, a Canadian, and holding or representing not less than five (5%) per cent of the shares entitled to be voted at the meeting. If a quorum is present at the opening of any meeting of shareholders, the shareholders present or represented may precede with the business of the meeting notwithstanding that a quorum is not present throughout the meeting; provided that at least one Canadian shall be present in person or represented by proxy. If a quorum is not present at the opening of the meeting of shareholders, the shareholders present or represented may adjourn the meeting to a fixed time and place but may not transact any other business.

8.13 Participation in Meeting

A shareholder or any other person entitled to attend a meeting may participate in a meeting of shareholders by electronic means, telephone or other communication facilities as permit all persons participating in the meeting to hear or otherwise communicate with each other if the Corporation makes such communication's facility available, and a person participating in such a meeting by such means is deemed to be present at the meeting. Any such meeting will be subject to the provisions of the Act, Regulations and procedures, if any, established by the directors.

8.14 Proxyholders and Representatives

Votes at meetings of the shareholders may be given either personally or by proxy; or, in the case of a shareholder, who is a body corporate or association, by an individual authorized by a resolution of the board or governing body of the body corporate or association to represent it at a meeting of shareholders

I-22

of the Corporation, upon producing a certified copy of such resolution or otherwise establishing his authority to vote to the satisfaction of the secretary or the chairman.

A proxy shall be executed by the shareholder or his attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized, and is valid only at the meeting- in respect of which it is given or any adjournment of that meeting. A person appointed by proxy need not be a shareholder.

8.15 Time for Deposit of Proxies

The board may specify in a notice calling a meeting of shareholders a time, preceding the time of such meeting by not more than forty-eight (48) hours exclusive of Saturdays, Sundays and holidays, before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time having been specified in such notice, it has been received by the secretary of the Corporation or by the chairman of the meeting or any adjournment thereof prior to the time of voting.

8.16 Joint Shareholders

If two or more persons hold shares jointly, any one of them present in person or duly represented by proxy at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present in person or represented by proxy and vote, they shall vote as one the shares jointly held by them.

8.17 Votes to Govern

Except as otherwise required by the Act, all questions proposed for the consideration of shareholders at a meeting of shareholders shall be determined by a majority of the votes cast and in the event of an equality of votes at any meeting of shareholders, the chairman shall not have a second or casting vote.

8.18 Conduct of Vote

Subject to the Act, voting at a meeting of shareholders shall be by a show of hands, unless a ballot is required or demanded as hereinafter provided, and may be held, subject to the Act, entirely by electronic means, telephone or other communication facility, if the corporation makes such a communication facility available. Every person who is present or otherwise participating in the meeting pursuant to Section 8 hereof and entitled to vote shall have one vote. Whenever a vote shall have been taken upon a question, unless a ballot thereon is so required or demanded, a declaration by the chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or defeated and an entry to that effect in the minutes of the meeting shall be prima facie evidence of the fact without proof of the number of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the vote so taken shall be the decision of shareholders upon the said question.

8.19 Ballots

On any question proposed for consideration at a meeting of shareholders, a shareholder, proxyholder or other person entitled to vote may demand and the chairman may require that a ballot be taken either before or upon the declaration of the result of any vote.

If a ballot is demanded on the election of a chairman or on the question of an adjournment it shall be taken forthwith without an adjournment. A ballot demanded or required on any other question shall be

I-23

taken in such manner as the chairman shall direct. A demand or requirement for a ballot may be withdrawn at any time prior to the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares that he is entitled to vote at the meeting upon the question, to the number of votes as provided for by the articles or, in the absence of such provision in the articles, to one vote for each share he is entitled to vote. The result of the ballot so taken shall be the decision of the shareholders upon the question. The demand or requirement for a ballot shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the ballot has been demanded or required.

8.20 Adjournment

The chairman at a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting may decide, adjourn the meeting from time to time and from place to place. If a meeting of shareholders is adjourned for less than thirty (30) days, it shall not be necessary to give notice of the adjourned meeting, other than by announcement at the time of the adjournment. Subject to the Act, if a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty (30) days or more, notice of the adjourned meeting shall be given in the same manner as notice for an original meeting but, unless the meeting is adjourned by one or more adjournments for an aggregate of more than ninety (90) day, subsection 149(1) of the Act does not apply.

8.21 Resolution in Lieu of a Meeting

A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and a resolution in writing dealing with all matters required to be dealt with at a meeting of shareholders and signed by all the shareholders entitled to vote at such meeting, satisfies all the requirements of the Act relating to meetings of shareholders. A copy of every such resolution in writing shall be kept with minutes of the meetings of shareholders. Any such resolution in writing is effective for all purposes at such time as the resolution states regardless of when the resolution is signed and may be signed in counterpart.

8.22 Only One Shareholder

Where the Corporation has only one shareholder or only one holder of any class or series of shares, the shareholder present in person or duly represented constitutes a meeting.

ARTICLE 9

9.1 Non-Recognition of Trusts

Subject to the Act, the Corporation may treat the registered holder of any share as the person exclusively entitled to vote, to receive notices, to receive any dividend or other payment in respect of the share, and otherwise to exercise all the rights and powers of an owner of the share.

9.2 Certificates

The shareholder is entitled at his option to a share certificate that complies with the Act or a non-transferable written acknowledgement of his right to obtain a share certificate from the Corporation in respect of the securities of the Corporation held by him. Share certificates and acknowledgements of a shareholder's right to a share certificate, respectively, shall be in such form as described by the Act and as the board shall from time to time approve. A share certificate shall be signed manually by at least one director or officer of the Corporation or by or on behalf of a registrar, transfer agent or branch transfer agent of the Corporation, or by a trustee who certifies it in accordance with a trust indenture, and any

I-24

additional signatures required on the share certificate may be printed or otherwise mechanically reproduced on it.

9.3 Replacement of Share Certificates

The board or any officer or agent designated by the board may in its or his discretion direct the issuance of a new share certificate or other such certificate in lieu of and upon cancellation of a certificate that has been mutilated or in substitution for a certificate claimed to have been lost, destroyed or wrongfully taken on payment of such reasonable fee and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case.

9.4 Joint Holders

The Corporation is not required to issue more than one share certificate in respect of a share held jointly by several persons, and delivery of a certificate to one of several joint holders is sufficient delivery to all. Any one of such holders may give effectual receipts for the certificate issued in respect thereof or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of such certificate.

Where shares are owned or controlled jointly by one or more persons who are non- Canadian, the shares shall be deemed to be owned or controlled, as the case may be, by non-Canadians.

ARTICLE 10

TRANSFER OF SECURITIES

10.1 Registration of Transfer

If a share in registered form is presented for registration of transfer, the Corporation shall register the transfer if:

a)	the share is endorsed by an appropriate person, as defined in section 65 of the Act;

b)	reasonable assurance is given that the endorsement is genuine and effective;

c)	the Corporation has no duty to enquire into adverse claims or has discharged any such duty;

d)	any applicable law has been complied with;

e)	the transfer is rightful or is to a bona fide purchaser;

f)	the transfer fee, if any, has been paid; and

g)	the parties to the transfer have complied with all by-laws, regulations and policies of the Corporation.

10.2 Transfer Agents and Registrar

The board may from time to time by resolution appoint or remove one or more trust companies registered under the Trust Companies Act as its agent or agents to maintain a central securities register or registers, and an agent or agents to maintain a branch securities register or registers. Agents so appointed may be designated as transfer agent or registrar according to their functions, and a person may be appointed and designated with functions as both registrar and transfer or branch transfer agent. Registration of the issuance or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.

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10.3 Securities Registers

A central securities register of the Corporation shall be kept at its registered office or at any other place in British Columbia designated by the board to record the shares and other securities issued by the Corporation in registered form, showing with respect to each class or series of shares and other securities:

a)	the names, alphabetically arranged, and the latest known address of each person who is or has been a holder;

b)	the number of shares or other securities held by each holder; and

c)	the date and particulars of the issuance and transfer of each share or other security.

A branch securities register or registers may be kept either in or outside British Columbia at such place or places as the board may determine. A branch securities register shall only contain particulars of securities issued or transferred at that branch. Particulars of each issue or transfer of a security registered in a branch securities register shall also be kept in the corresponding central securities register.

10.4 Deceased Shareholders

In the event of the death of a holder, or of one of the joint holders, of any share, the Corporation shall not be required to make any entry in the securities register in respect thereof or to make any dividend or other payments in respect thereof except upon production of all such documents as may be required by law and upon compliance with the reasonable requirements of the Corporation and its transfer agents.

ARTICLE 11

DIVIDENDS AND RIGHTS

11.1 Dividends

Subject to the Act, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interest in the Corporation. Dividends may be paid in money or property or by issuing fully-paid shares of the Corporation.

11.2 Dividend Cheques

A dividend payable in money shall be paid by cheque to the order of each registered holder of shares of the class or series in respect of which it has been declared and shall be mailed by prepaid ordinary mail to such registered holder at his address recorded in the Corporation's securities register or registers or such address as such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold.

11.3 Non-Receipt of Cheques

In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case.

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11.4 Unclaimed Dividends

No dividend shall bear interest against the Corporation. Any dividend unclaimed after a period of six (6) years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation.

ARTICLE 12

INFORMATION AVAILABLE TO SHAREHOLDERS

12.1 Confidential Information

Except as provided by the Act, no shareholders shall be entitled to obtain information respecting any details or conduct of the Corporation's business which, in the opinion of the directors, it would be inexpedient in the interests of the Corporation to communicate to the public.

12.2 Conditions of Access to Information

The directors may from time to time, subject to rights conferred by the Act, determine whether and to what extent and at what time and place and under what conditions or regulations the documents, books and registers and accounting records of the Corporation or any of them shall be open to the inspection of shareholders and no shareholders shall have any right to inspect any document or book or register or account record of the Corporation except as conferred by statute or authorized by the board or by a resolution of the shareholders.

12.3 Registered Office and Separate Records Office

The registered office of the Corporation shall be at a place within British Columbia and at such location therein as the board may from time to time determine. The records office will be at the registered office or at such location, if any, within British Columbia, as the board may from time to time determine.

ARTICLE 13

NOTICES

13.1 Method of Giving Notices

A notice or document required by the Act, the Regulations, the articles or the by-laws to be sent to a shareholder or director of the Corporation may be sent by electronic means or by prepaid mail addressed to, or may be delivered personally to:

the shareholder at his latest address as shown in the records of the Corporation or its transfer agent; and

the director at his latest address as shown in the records of the Corporation or in the last notice filed under section 106 or 113.

A notice or document sent by mail in accordance with the foregoing to a shareholders or director of the Corporation is deemed to be received by him at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the shareholders or director did not receive the notice or document at the time or at all.

13.2 Notices to Joint Shareholders

If two or more persons are registered as joint holders of any share, any notice may be addressed to all of such joint holders but notice addressed to one of such persons shall be sufficient notice to all of them.

I-27

13.3 Persons Entitled by Death or Operation of Law

Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholders from whom he derives his title to such share prior to his name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which he became so entitled) and prior to his furnishing to the Corporation the proof of authority or evidence of his entitlement prescribed by the Act.

13.4 Non-Receipt of Notices

If a notice or document is sent to a shareholder in accordance with Section 13 and the notice or document is returned on two (2) consecutive occasions because the shareholder cannot be found, the Corporation is not required to send any further notice or documents to the shareholder until the shareholder informs the Corporation in writing of his new address; provided always, that in the event of the return of a notice of a shareholders meeting mailed to a shareholder in accordance with Section 13 the notice shall be deemed to be received by the shareholder on the date deposited in the mail notwithstanding its return.

13.5 Omissions and Errors

Subject to the Act, the accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon.

13.6 Signature on Notices

Unless otherwise specifically provided, the signature of any director or officer of the Corporation to any notice or document to be given by the Corporation may be written, stamped, typewritten or printed or partly written, stamped, typewritten or printed.

13.7 Waiver of Notice

If a notice or document is required by the Act or the Regulations, the articles, the by-laws or otherwise to be sent, the sending of the notice or document may be waived or the time for the notice or document may be waived or abridged at any time with the consent in writing of the person entitled to receive it.

ARTICLE 14

MISCELLANEOUS

14.1 Severability

The invalidity or unenforceability of any provision of this by-law shall not affect the validity or enforceability of the remaining provisions of this by-law.

14.2 Effective Date

This by-law shall come into force when approved by the board in accordance with the Act.

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	FISCAL YEAR ENDED APRIL 30, 2015		FISCAL YEAR ENDED APRIL 30, 2014		FISCAL YEAR ENDED APRIL 30, 2013
Total expenses	$	540,021	$	3,896,928	$	11,890,352
Amounts deferred in connection with the Transaction	$	0	$	0	$	0

	NINE MONTHS ENDED JANUARY 31, 2016
Total expenses	$	301,274
Amounts deferred in connection with the Transaction	$	0

PERIOD	HIGH	LOW	TRADING VOLUME
June 1 – 17, 2016	halted	halted	halted
May 2016	halted	halted	halted
April 2016	halted	halted	halted
March 2016	halted	halted	halted
February 17-29, 2016	halted	halted	halted
February 1-16, 2016	$0.10	$0.075	6,835
January 31, 2016	$0.105	$0.07	103,022
December 31, 2015	$0.12	$0.07	231,907
November 30, 2015	$0.145	$0.07	119,957
Quarter ended October 31, 2015	$0.15	$0.04	261,929
Quarter ended July 31, 2015	$0.16	$0.08	482,023
Quarter ended April 30, 2015	$0.16	$0.10	1,026,240
Quarter ended January 31, 2014	$0.25	$0.12	556,668
Quarter ended October 31, 2014	$0.31	$0.15	228,214
Quarter ended July 31, 2014	$0.37	$0.21	162,125
Quarter ended April 30, 2014	$0.60	$0.27	617,636

Committee Member	Relevant Skills and Experience
Ken Brophy	Mr. Brophy is the President of Accession Management and Consulting Ltd., a private entity owned and controlled by him, which provides operational and sustainable development services, for mining companies predominately based in North America. Mr. Brophy also serves on the board of directors and audit committee of Golden Raven Resources Ltd. He is currently Vice President, Sustainable Development for Ram River Coal Corp., a private entity based in Vancouver.
Stewart Wallis	Mr. Wallis is a consulting geologist with over 30 years' experience in the mineral exploration industry. He served as Jet's Chief Executive Officer and President from 2009 until April 30, 2012. He is the President of Sundance Geological Ltd. which provides geological consulting services to junior resource companies. Mr. Wallis is also a director of a number of other junior resource companies.
Mark Lotz	Mr. Lotz is a Chartered Professional Accountant with over 18 years' experience, primarily in the minerals industry and related securities business. He has held CFO positions with several publically traded mineral resource companies and also serves as a director of a number of other junior resource companies. He also has served as senior executive officer for two securities firms and as a compliance officer for the Vancouver Stock Exchange (now the TSX Venture Exchange).

Name and principal position	Year	Salary ($)	Share-based awards ($)	Option-based awards ($)⁽⁴⁾	Non-equity incentive plan compensation ($)		Pension value ($)	All other compen-sation ($)	Total compen- sation ($)
Name and principal position	Year	Salary ($)	Share-based awards ($)	Option-based awards ($)⁽⁴⁾	Annual incentive plans	Long-term incentive plans	Pension value ($)	All other compen-sation ($)	Total compen- sation ($)
Mark J. Morabito⁽¹⁾ Chief Executive Officer & President	2016 2015 2014 2013	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	25,000 Nil 100,000 150,000	25,000 Nil 100,000 150,000
Jim Crawford ⁽²⁾ Former Chief Executive Officer & President	2016 2015 2014 2013	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	13,960 5,902 24,750 Nil	13,960 5,902 24,750 Nil
Kate-Lynn Genzel ⁽³⁾ Chief Financial Officer	2016 2015 2014 2013	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	Nil Nil Nil Nil	9,936 12,439 4,613 Nil	9,936 12,439 4,613 Nil

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($)⁽¹⁾	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)
Mark J. Morabito Chief Executive Officer & President	Nil	N/A	N/A	Nil	Nil	Nil
Jim Crawford Former Chief Executive Officer & President	Nil	N/A	N/A	Nil	Nil	Nil
Kate-Lynn Genzel Chief Financial Officer	Nil	N/A	N/A	Nil	Nil	Nil

Name	Option-based awards – Value vested during the year ($)⁽¹⁾	Share-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Mark J. Morabito Chief Executive Officer & President	Nil⁽²⁾	Nil	Nil
Jim Crawford Former Chief Executive Officer & President	Nil⁽²⁾	Nil	Nil
Kate-Lynn Genzel Chief Financial Officer	Nil⁽²⁾	Nil	Nil

Name	Fees earned ($)⁽¹⁾	Share-based awards ($)	Option-based awards ($)⁽²⁾	Non-equity incentive plan compensation ($)	Pension value ($)	All other compen-sation ($)	Total ($)
Stewart Wallis	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Ken Brophy	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Mark Lotz	Nil	Nil	Nil	Nil	Nil	Nil	Nil

Figure 7 – Peer ULCCs and Average of Major Legacy Carriers CASM	Figure 8 – Peer ULCCs and Average Major Legacy Carriers EBITDA Margin

Source: Company reports, based on 2014 data sourced from publicly filed financial statements prior to the date hereof. Notes: Presented in Canadian dollars for comparison, using Bloomberg reported average exchange rates for periods relied upon. Non-stage length adjusted.

Figure 16 – MCDAs versus Peer ULCCs RASM	Figure 17 – MCDAs versus Peer ULCCs Ancillary Revenue

Source: Company reports, based on 2014 data sourced from publicly filed financial statements prior to the date hereof.

Business Objectives	Target Dates
Phase One Milestones
Go Public Event	· August 2016
Plan & Execute Phase 1 Marketing Strategy	· September 2016
Launch website for merchandising and destination content	· September 2016
Execute Human Resource Plan	· September 2016
Execute Phase 1 of Reservation System procurement	· September 2016
Complete the Canadian Transportation Agency licensing process, including achieving a 705 Air Operator Certificate	· February 2017
Phase 1 Aircraft Launch activities including acquisition of initial two aircraft	· October 2016
Launch Phase 1 Air Crew and Cabin Crew recruiting and equipping	· December 2016
Execute operations systems acquisition project	· February 2017
Phase Two Milestones
Execute Phase 2 marketing strategy	· January 2017
Launch website for reservations	· January 2017
Start-up route network operations	· January 2017
Phase 2 Aircraft Launch activities	· January 2017
Execute Phase 2 of aircrew and cabin crew project activities - training for the initial aircraft	· January 2017
Obtain Canadian Transportation Agency domestic 705 licence.	· February 2017

Flexibility	Certainty	Physical
Form of payment alternatives	Seat selection	In-flight meals, snacks and beverages
Flight changes	Carry-on baggage	Fees for non-standard seating (i.e. exit row seats)
Call center services	Checked baggage	Pre-ordered quality meals
Name changes	Priority boarding and baggage	On-board Wi-Fi
Paid for discount program	Green emission credits	Destination activity and services
Travel and trip flexibility insurance	Unaccompanied minor service	Hotel, car, tour and cruise packages
Trip convenience services	Baggage delivery	Co-branded credit card

	3 months ended March 31, 2016 (unaudited)	Year ended December 31, 2015 (audited)	Year ended December 31, 2014 (audited)	Year ended December 31, 2013 (audited)
Revenue	Nil	Nil	Nil	Nil
Net loss and total comprehensive loss	$245,643	$1,524,067	$968,162	$643,789
Basic and diluted loss per share	$0.03	$0.19	$0.22	$0.41
Net cash used in operating activities	$86,038	$1,063,657	$791,544	$473,526
Total assets	$201,498	$199,610	$131,390	$75,171
Total liabilities	$652,598	$521,003	$159,802	$60,327

Holder (Separated by Group)	Number of CJL Options	Exercise Price	Expiry Date
Directors and past directors who are not also executive officers (Total number of persons: 4)	450,000	$0.50	July 22, 2020
Executive officers and past executive officers (Total number of persons: 0)	Nil	N/A	N/A
Other employees and past employees (Total number of persons:0)	Nil	N/A	N/A
Consultants (Total number of persons: 0)	Nil	N/A	N/A
Total	450,000

Number of CJL Warrants	Expiry Date	Exercise Price
997,883	July 30, 2016	$0.50
82,408	July 30, 2016	$0.50
14,933	August 29, 2016	$0.50
379,267	August 29, 2016	$0.50
638,000	January 16, 2017	$0.75
32,000	January 16, 2017	$1.50
285,000	March 23, 2017	$0.75
160,000	May 22, 2017	$0.75
16,000	May 22, 2017	$1.50
30,000	July 9, 2017	$0.75
4,800	July 9, 2017	$1.50
6,000	August 18, 2017	$0.75
2,500	August 27, 2017	$0.75
200,000	September 30, 2017	$0.50
17,000	October 26, 2017	$0.75
2,720	October 26, 2017	$1.50
200,000	February 11, 2018	$0.50
42,222	March 17, 2018	$0.5625
11,000	April 7, 2018	$0.5625
142,500	June 9, 2018	$0.5625

Name of Shareholder and Municipality of Residence	Type of Ownership	Number of CJL Shares	Percentage of CJL Shares Owned Prior to Giving Effect to the Offering and the Transaction	Number of Resulting Issuer Shares Owned After Giving Effect to the Offering and the Transaction⁽¹⁾⁽²⁾	Percentage of Resulting Issuer Shares Owned After Giving Effect to the Offering and the Transaction⁽¹⁾⁽²⁾
Daniel James Scott Surrey, BC	Direct	1,266,668	13.54%	1,900,002	3.53%

DESIGNATION OF SECURITY	AMOUNT AUTHORIZED OR TO BE AUTHORIZED	AMOUNT OUTSTANDING AS AT DECEMBER 31, 2015⁽¹⁾	AMOUNT OUTSTANDING AS AT MARCH 31, 2016⁽¹⁾
CJL Common Voting Shares	Unlimited	9,059,487	9,201,709
CJL Variable Voting Shares	Unlimited	142,500	142,500

Type of Securities	Date of Issue	Number of Securities	Price per Security
CJL Shares	May 22, 2015	320,000	$0.50
	July 9, 2015	60,000	$0.50
	August 18, 2015	12,000	$0.50
	August 27, 2015	5,000	$0.50
	October 26, 2015	34,000	$0.50
	December 1, 2015	725,000⁽¹⁾	$0.001
	December 1, 2015	15,000⁽²⁾	$0.50
	February 11, 2016	100,000⁽³⁾	$0.001
	March 17, 2016	42,222	$0.45
	April 7, 2016	11,000	$0.45
	June 9, 2016	142,500	$0.45
CJL Options	July 22, 2015	600,000⁽⁴⁾	N/A
CJL Warrants	July 9, 2015	30,000⁽⁵⁾	N/A
	August 18, 2015	6,000⁽⁶⁾	N/A
	August 27, 2015	2,500⁽⁷⁾	N/A
	September 30, 2015	200,000⁽⁸⁾	N/A
	October 26, 2015	17,000⁽⁹⁾	N/A
	February 11, 2016	200,000⁽¹⁰⁾	N/A
	March 17, 2016	42,222⁽¹¹⁾	N/A
	April 7, 2016	11,000⁽¹²⁾	N/A
	June 9, 2016	142,500⁽¹³⁾	N/A

Committee Member	Relevant Skills and Experience
Don Sorochan	Don Sorochan was called to the Bar of British Columbia in 1972 and joined Swinton & Company, the predecessor of Miller Thomson, Vancouver, as an articled student the previous year. As one of the firm's senior partners, his practice encompasses the areas of securities, criminal defence work, commercial andconstruction litigation, administrative law, and criminal prosecution for both the federal and provincial governments.
Mike Harris	Mr. Harris served the Province of Ontario as Premier from 1995-2002. After leaving politics, Mr. Harris formed his own consulting firm and began serving numerous corporate entities in an advisory capacity. Currently, he is a Senior Business Advisor at Fasken Martineau DuMoulin LLP, serves as a Director on a number of public and private boards, and sits on a number of corporate Advisory Boards including Private Equity Funds such as EnerTech Capital, Beringer Capital and Sterling Financial Group.

Name	Fees earned ($)	Share-based awards ($)	Option-based awards ($)⁽⁷⁾	Non-equity incentive plan compensation ($)	Pension value ($)	All other compen-sation ($)	Total ($)
Sid Fattedad⁽¹⁾	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Claude Morin⁽²⁾	1,000	Nil	Nil	Nil	Nil	Nil	1,000
Stan Gadek⁽³⁾	1,000	Nil	46,305	Nil	Nil	Nil	47,305
Don Sorochan	1,000	Nil	46,305	Nil	Nil	Nil	47,305
Mike Harris⁽⁴⁾	1,000	Nil	46,305	Nil	Nil	Nil	47,305
Rejean Bourque⁽⁵⁾	1,000	Nil	46,305	Nil	Nil	Nil	47,305

DESIGNATION OF SECURITY	AMOUNT AUTHORIZED OR TO BE AUTHORIZED	AMOUNT OUTSTANDING AFTER GIVING EFFECT TO THE CONSOLIDATION, THE TRANSACTION AND THE OFFERING⁽¹⁾
Resulting Issuer Shares	Unlimited	53,812,739

	JET SHARES OUTSTANDING (FULLY DILUTED)
	Number	Percentage %

Current Holders of Jet Shares	18,812,300	21.23%
Resulting Issuer Shares issued in Offering	20,000,000⁽¹⁾	22.57%
Resulting Issuer Shares issued for the Debt Settlement	333,333	0.38%
Resulting Issuer Shares issued to CJL Shareholders	14,246,559	16.08%
Resulting Issuer Shares issued to Cambrian	420,547	0.47%
Resulting Issuer Shares issued upon exercise of Resulting Issuer Warrants	29,529,681	33.32%
Resulting Issuer Shares issued upon exercise of Resulting Issuer Options	5,275,000⁽²⁾	5.95%
Total	88,617,420	100%

Activity
Plan & Execute Phase 1 Marketing Strategy	$500,000
Launch website for merchandising and destination content	$350,000
Execute Human Resource Plan	$200,000
Execute Phase 1 of Reservation System procurement	$400,000
Complete the Canadian Transportation Agency licensing process, including achieving a 705 Air Operator Certificate	$100,000
Phase 1 Aircraft Launch activities including acquisition of initial two aircraft	$2,000,000
Launch Phase 1 Air Crew and Cabin Crew recruiting and equipping	$250,000
Execute operations systems acquisition project	$250,000
Transaction Costs	$150,000
Estimated 12-month General & Administrative Expenses	$1,800,000⁽¹⁾
Working Capital	$392,358
TOTAL	$6,392,357⁽²⁾

NAME AND PROVINCE/STATE AND COUNTRY OF RESIDENCE	POSITION(S) TO BE HELD WITH THE RESULTING ISSUER FOLLOWING COMPLETING OF THE TRANSACTION	PRINCIPAL OCCUPATION DURING PAST FIVE YEARS	PRIOR DIRECTORSHIP TERM WITH JET OR CJL	RESULTING ISSUER SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) AFTER GIVING EFFECT TO THE CONSOLIDATION AND THE TRANSACTION⁽¹⁾⁽²⁾
Mark J. Morabito British Columbia, Canada	Director, Executive Chairman	Founder & Chief Executive Officer of King & Bay West Management Corp. since December 2009.	Director of Jet December 10, 2015; President & CEO of Jet since November 27, 2015; previously Director of Jet from November 1998 to August 2013; previously Executive Chairman of Jet from March 2010 to August 2013	2,319,980⁽³⁾ (4.31%)
Daniel James Scott British Columbia, Canada C	Director, Chief Executive Officer	CEO of CJL since August 2013; Airline Pilot, Aviation Consultant and Police Officer from September 1985 to July 2013.	Director and Chairman of CJL from August 2012; CEO from August 2013	1,900,002 (3.53%)
Rejean Bourque Quebec, Canada	Director	Senior Vice President of Marsh Canada Limited since 2006	Director of CJL from June 8, 2015.	Nil (0%)
Donald Sorochan British Columbia, Canada	Director	Practicing lawyer at the law firm, Miller Thomson LLP since1972	Director of CJL from September 24, 2014	90,000 (0.17%)

NAME AND PROVINCE/STATE AND COUNTRY OF RESIDENCE	POSITION(S) TO BE HELD WITH THE RESULTING ISSUER FOLLOWING COMPLETING OF THE TRANSACTION	PRINCIPAL OCCUPATION DURING PAST FIVE YEARS	PRIOR DIRECTORSHIP TERM WITH JET OR CJL	RESULTING ISSUER SHARES BENEFICIALLY OWNED, EITHER DIRECTLY OR INDIRECTLY (OR OVER WHICH CONTROL IS EXERCISED) AFTER GIVING EFFECT TO THE CONSOLIDATION AND THE TRANSACTION⁽¹⁾⁽²⁾
Deborah Robinson Ontario, Canada	Director	Managing Director and Founder, Bay Street HR since 2001.	None	Nil (0%)
Mark Lotz British Columbia, Canada	Director	Self-employed Chartered Accountant since 1998.	Director of Jet from April 2014	Nil (0%)
Dixon Lawson British Columbia Canada	Vice President Strategic Planning and Cost Control	Chief Administrative Officer of CJL since August 2013; President, DW Lawson Consulting Ltd. from August 2004 to July 2013	Director of CJL from May 2013; Chief Administrative Officer from August 1, 2013	1,227,501⁽⁴⁾ (2.28%)
Rick Lang British Columbia Canada	Chief Operating Officer	Chief Operating Officer of CJL since October 2014; Retired from January 2009 to September 2014; VP Service Delivery, Air Astana 2007-2008	Chief Operating Officer of CJL from October 10, 2014	150,000 (0.28%)
John Korenic British Columbia Canada	Vice President, Commercial and IT	Chief Commercial Officer of CJL since January 2015; Director of Aviation Marking, Vancouver International Airport Authority from January 1999 to November 2014	Chief Commercial Officer of CJL from January 2015	112,500 (0.21%)
John Sutherland British Columbia Canada	Director	CFO and Vice President, Human Resources since July 2015, Director of CJL since November 2014, CFO of Grande West Transport from March 2013 to April 2015; VP and CFO of Goldgroup Mining Inc. from February 2007 to November 2012.	Director from November 2014 Chief Financial Officer and Vice President, Human Resources and Director of CJL from July 2015.	142,500 (0.26%)

Canada Jetlines Ltd.
Statements of Changes in Shareholders' Deficiency
(Expressed in Canadian Dollars)

	Share Capital
	Number of Shares		Amount			Reserves		Deficit			Total
				$			$		$			$
Balance as at December 31, 2013		2,998,337		597,100			88,612		(670,868	)		14,844
Issuance of common voting shares for cash		2,704,633		811,390			-		-			811,390
Issuance of common voting shares for services		243,017		72,905			-		-			72,905
Issuance of common voting shares in settlement of shareholder loan		235,000		70,500			-		-			70,500
Share issuance costs		-		(68,696	)		-		-			(68,696	)
Broker warrants issued as share issuance cost		-		-			11,760		-			11,760
Common voting shares issued as share issuance cost		4,000		1,200			-		-			1,200
Share-based compensation		-		-			25,847		-			25,847
Loss for the year		-		-			-		(968,162	)		(968,162	)
Balance as at December 31, 2014		6,184,987		1,484,399			126,219		(1,639,030	)		(28,412	)
Issuance of common voting shares for cash (note 6 (a))		3,002,000		1,139,226			-		-			1,139,226
Issuance of common voting shares for services (note 6 (a))		15,000		7,500			-		-			7,500
Share issuance costs (note 6 (a))		-		(96,911	)		-		-			(96,911	)
Broker warrants issued as share issuance cost (note 6 (c))		-		(7,457	)		7,457		-			-
Warrants issued for Inovent settlement (notes 6 (c) and 13)		-		-			52,304		-			52,304
Share-based compensation for stock options (note 6 (b))		-		-			97,788		-			97,788
Share-based compensation for performance shares (note 6 (a))		-		-			31,179		-			31,179
Loss for the year		-		-			-		(1,524,067	)		(1,524,067	)
Balance as at December 31, 2015		9,201,987		2,526,757			314,947		(3,163,097	)		(321,393	)

	Number of Warrants	Weighted Average Exercise Price $
Outstanding - December 31, 2013	-	-
Share purchase warrants issued	1,377,150	0.50
Broker warrants issued	97,341	0.50
Outstanding - December 31, 2014	1,474,491	0.50
Share purchase warrants issued	1,338,500	0.71
Broker warrants issued	55,520	1.50
Outstanding - December 31, 2015	2,868,511	0.62

	2015		2014
Deferred tax assets
Share issue costs	$	30,000	$	13,000
Property and equipment		2,000		1,000
Non-capital losses		773,000		398,000
Net deferred tax asset	$	805,000	$	412,000