EX-99.328 20 exhibit99-328.htm EXHIBIT 99.328 Tenet Fintech Group Inc.: Exhibit 99.328 - Filed by newsfilecorp.com

Tenet Fintech Group Inc.

Condensed Interim Consolidated

Financial Statements (Unaudited)

For the three-month periods

ended March 31, 2022, and 2021

 

 

 

 

Financial Statements  
   
Condensed Interim Consolidated Statements of Comprehensive Loss 2
   
Condensed Interim Consolidated Statements of Changes in Equity 3
   
Condensed Interim Consolidated Statements of Cash Flows 4
   
Condensed Interim Consolidated Statements of Financial Position 5
   
Notes to Condensed Interim Consolidated Financial Statements 6 - 29


2

TENET FINTECH GROUP INC.

Condensed Interim Consolidated Statements of Comprehensive Loss

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars, except weighted average number of outstanding shares)
(Unaudited)


  Note   2022     2021  
      $     $  
               
Revenues     34,741,460     14,239,776  
               
Expenses              
Cost of service     30,024,865     12,347,170  
Salaries and fringe benefits     2,345,268     723,860  
Service fees     102,926     157,651  
Royalty on software     -     30,776  
Board remuneration     191,924     124,527  
Consulting fees     343,738     62,869  
Management fees     11,964     12,818  
Professional fees     1,032,464     331,655  
Public relations and press releases     316,072     121,493  
Office supplies, software and utilities     177,058     30,214  
Lease expenses     60,161     11,570  
Insurance     331,646     14,896  
Finance costs 17.4   446,983     44,833  
Expected credit loss 5   87,618     19,893  
Travel and entertainment     78,485     34,002  
Stock exchange and transfer agent costs     45,032     90,714  
Translation cost and others     26,020     39,310  
Depreciation of property and equipment 7   21,551     22,337  
Depreciation of right-of-use assets 7   109,782     69,157  
Amortization of intangible assets 8   1,502,347     66,484  
Amortization of initial financing costs     6,551     6,651  
(Gain) Loss on foreign exchange     134,424     (35,379 )
      37,396,879     14,327,501  
Loss before income taxes     (2,655,419 )   (87,725 )
Income tax     704,182     301,977  
Net loss     (3,359,601 )   (389,702 )
               
Net profit (loss) attributable to:              
Non-controlling interest     22,670     375,929  
Owners of the parent     (3,382,271 )   (765,631 )
      (3,359,601 )   (389,702 )
Item that will be reclassified subsequently to profit or loss              
Currency translation adjustment     760,601     546,909  
Total comprehensive loss     (4,120,202 )   (936,611 )
               
Total comprehensive profit (loss) attributable to:              
Non-controlling interest     (17,577 )   256,973  
Owners of the parent     (4,102,625 )   (1,193,584 )
      (4,120,202 )   (936,611 )
               
Weighted average number of outstanding shares     75,700,826     61,683,058  
               
Basic and diluted loss per share     (0.045 )   (0.012 )
               

Going concern uncertainty (note 2)

Subsequent events (note 22)

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


3

TENET FINTECH GROUP INC.

Condensed Interim Consolidated Statements of Changes in Equity

For the three-month periods ended March 31, 2022 and 2021
(In Canadian dollars)

(Unaudited)


                        Accumulated           Total              
      Capital stock                 other           attributable     Non     Shareholders'  
      Number of           Equity to     Contributed     comprehensive           to owners     Controlling     equity  
  Note   common shares     Amount     issue     surplus     income     Deficit     of parent     interest     (deficiency)  
      (number of shares                                                  
      see note 14)     $     $     $     $     $     $     $     $  
      #                                                  
Balance as of January 1, 2022     97,167,183     208,219,490     150,000     21,531,185     1,366,752     (79,997,442 )   151,269,985     14,320,381     165,590,366  
Exercise of warrants and broker warrants 14   1,527,500     2,101,894     (150,000 )   (443,144 )               1,508,750           1,508,750  
Exercise of options 14, 15   100,000     391,300           (181,300 )               210,000           210,000  
Share-based compensation 15                     541,599                 541,599           541,599  
Subscription for shares by non-controlling interest                                               164,418     164,418  
Transactions with owners     98,794,683     210,712,684     -     21,448,340     1,366,752     (79,997,442 )   153,530,334     14,484,799     168,015,133  
                                                         
Net profit (loss)                                   (3,382,271 )   (3,382,271 )   22,670     (3,359,601 )
Other comprehensive profit                             (720,354 )         (720,354 )   (40,247 )   (760,601 )
Total comprehensive loss for the period     -     -     -     -     (720,354 )   (3,382,271 )   (4,102,625 )   (17,577 )   (4,120,202 )
Balance as of March 31, 2022     98,794,683     210,712,684     -     21,448,340     646,398     (83,379,713 )   149,427,709     14,467,222     163,894,931  
                                                         
Balance as of January 1, 2021     118,024,189     39,131,010     511,221     11,582,653     (140,782 )   (30,240,372 )   20,843,730     11,770,520     32,614,250  
Issuance of shares and warrants to settle debts owed for services provided 14   27,466     33,900                             33,900           33,900  
Exercise of warrants and broker warrants 14   9,984,631     5,233,340           (1,525,179 )               3,708,161           3,708,161  
Conversion of convertible debentures     50,000     27,483                             27,483           27,483  
Share-based compensation 15                     344,690                 344,690           344,690  
Transactions with owners     128,086,286     44,425,733     511,221     10,402,164     (140,782 )   (30,240,372 )   24,957,964     11,770,520     36,728,484  
Net (loss) profit                                   (765,631 )   (765,631 )   375,929     (389,702 )
Other comprehensive income                             (427,952 )         (427,952 )   (118,957 )   (546,909 )
Total comprehensive profit (loss) for the period     -     -     -     -     (427,952 )   (765,631 )   (1,193,583 )   256,973     (936,611 )
Balance as of March 31, 2021     128,086,286     44,425,733     511,221     10,402,164     (568,734 )   (31,006,003 )   23,764,381     12,027,492     35,791,873  

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


4

TENET FINTECH GROUP INC.

Condensed Interim Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)


  Note   2022     2021  
      $     $  
OPERATING ACTIVITIES              
Net loss     (3,359,601 )   (389,702 )
Non-cash items              
Expected credit loss 5   87,618     19,893  
Depreciation of property and equipment 7   21,551     22,337  
Depreciation of right-of-use assets 7   109,782     69,157  
Amortization of intangible assets 8   1,502,347     66,484  
Amortization of initial financing costs     6,551     6,651  
Accretion of bonds 17   7,614     6,924  
Accretion of lease interest 10, 17.4   37,133     6,435  
Issuance of shares and warrants for settlement of debt 11   -     15,000  
Change in fair value of contingent consideration payable 4   398,031     -  
Share-based compensation 15   541,599     344,690  
Deferred tax liability     (3,623,295 )   -  
               
Loans receivable maturing in more than 12 months 5   820,056     47,575  
Net changes in working capital items              
Restricted cash     10,000     (40 )
Income tax payable     3,711,958     131,670  
Accounts receivable 6   (1,330,948 )   2,621,809  
Deposits made to third parties regarding transactions on platforms 6   5,154,909     -  
Prepayment to third party subcontractors 6   (2,299,695 )   -  
Other debtors 6   1,139,804     (48,295 )
Loans receivable maturing in less than 12 months 5   (706,752 )   (292,755 )
Assets held for resale     69,687     -  
Other prepaid expenses     4,622     (416,506 )
Accounts payable, advances and accrued liabilities 9   (755,692 )   (2,316,749 )
Cash flows from operating activities     1,547,279     (105,422 )
               
INVESTING ACTIVITIES              
Debtors     -     (4,297,435 )
Investment in third party entity     (492,750 )   -  
Property and equipment - additions 7   (16,897 )   (1,596 )
Property and equipment - disposals 7   2,344     5,989  
Intangible asset - additions 8   (1,520,489 )   (325,783 )
Cash flows from investing activities     (2,027,792 )   (4,618,825 )
               
FINANCING ACTIVITIES              
Proceeds (repayments) of advances from third parties     (303,533 )   (89,675 )
Proceeds / (repayment) of advances made from a Director     -     (261,316 )
Repayment /proceeds of advances made from affiliates     -     102,966  
Repayment of lease liabilities 10   (76,667 )   (12,592 )
Proceeds from the exercise of warrants 14   1,508,750     3,708,161  
Proceeds from the exercise of options 15   -     25,000  
Subscriptions for shares from non-controlling interest     164,418     -  
Cash flows from financing activities     1,292,968     3,472,544  
               
IMPACT OF FOREIGN EXCHANGE     (645,104 )   (499,771 )
Net (decrease) increase in cash     167,351     (1,751,474 )
Cash, beginning of period     18,796,914     5,873,877  
Cash, end of period     18,964,265     4,122,403  
               

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


 5

TENET FINTECH GROUP INC.

Condensed Interim Consolidated Statements of Financial Position

As at March 31, 2022 and December 31, 2021

(In Canadian dollars)
(Unaudited)


      As at     As at  
      March 31,     December 31,  
  Note   2022     2021  
      $     $  
ASSETS              
Current              
Cash     18,964,265     18,796,914  
Restricted cash     43,333     53,333  
Loans receivable 5   18,172,492     17,553,358  
Assets held for resale     251,272     320,959  
Debtors 6   53,547,733     56,001,475  
Prepaid expenses and other current assets     1,670,927     1,675,549  
      92,650,022     94,401,588  
               
Loans receivable 6   2,450,277     3,270,333  
Property and equipment 7   1,923,208     2,062,014  
Investments     492,750     -  
Intangible assets 8   32,770,145     32,845,799  
Goodwill 8   62,522,554     62,522,554  
Deferred tax assets     285,586     190,835  
      193,094,542     195,293,123  
               
LIABILITIES              
Current              
Accounts payable, advances and accrued liabilities 9   15,209,070     16,268,296  
Lease liabilities 10   434,995     432,621  
Current tax liabilities     7,337,642     3,625,683  
      22,981,707     20,326,600  
Bonds 12   327,399     313,234  
CEBA Loan 13   100,000     100,000  
Lease liabilities 10   1,273,455     1,315,363  
Foreign deferred tax liability     1,922,556     1,922,556  
Canadian deferred tax liability     275,463     3,804,004  
Contingent consideration payable 4   2,319,031     1,921,000  
      29,199,611     29,702,757  
SHAREHOLDERS' EQUITY              
Capital stock 14   210,712,684     208,219,490  
Shares to be issued 14   -     150,000  
Contributed surplus     21,448,340     21,531,185  
Accumulated other comprehensive income     646,398     1,366,752  
Deficit     (83,379,713 )   (79,997,442 )
Shareholders' equity attributable to owners of the parent     149,427,709     151,269,985  
Non-controlling interest     14,467,222     14,320,381  
Total shareholders' equity     163,894,931     165,590,366  
      193,094,542     195,293,123  
               

Going concern uncertainty (note 2)

Subsequent events (note 22)

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

On behalf of the Board,

 

 

     

/S/ Johnson Joseph

 

/S/ Charles-André Tessier

Director

 

Director



6
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

1 - GOVERNING STATUTES, NATURE OF OPERATIONS AND GENERAL INFORMATION

Tenet Fintech Group Inc. (hereinafter "Tenet'' or the "Company"), was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on May 13, 2008, and continued under the Canada Business Corporations Act on April 4, 2011. Tenet Fintech Group Inc.'s head office is located at 119 Spadina Avenue, Suite 705, Toronto, Ontario,. Its shares are traded on the Canadian Stock Exchange (CSE) under the symbol "PKK". Its shares are quoted in the U.S. on the OTC Market's Groups (OTCQX) under the symbol ''PKKFF''.

Tenet is the parent company of a group of innovative artificial intelligence (AI) and financial technology (Fintech) subsidiaries operating in Canada and China. Tenet's subsidiaries use technology, analytics and artificial intelligence to create an ecosystem of small- and medium- sized enterprises (SMEs) carry out a range of interactions and transactions, including in the commercial lending space, in a rapid, safe, efficient, and transparent manner.

2 - GOING CONCERN UNCERTAINTY AND COVID-19

These condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation and will be able to realize its assets and discharge its liabilities in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to twelve months from the end of the reporting period. The use of these principles may not be appropriate.

The level of revenue currently being generated is not presently sufficient to meet the Company's working capital requirements and business growth initiatives . The Company's ability to continue as a going concern is dependent upon its ability to raise additional financing. Even if the Company has been successful in the past in doing so, including a financing by prospectus that generated a net cash inflow of $47,981,290 in the first quarter of 2021, there is no assurance that it will manage to obtain additional financing in the future. Also, the Company incurred a net loss of $3,359,601, for the three-month period ended March 31, 2022 (year ended December 31, 2021 - $48,561,968), it has an accumulated deficit of $83,379,713 as at March 31, 2022 (year ended December 31, 2021 - $79,997,442) and it has not yet generated positive cash flows from operations on a regular basis. Until that happens, the company will continue to assess its working capital needs and undertake whatever initiatives it deems necessary to ensure that it continues to be in a position to meet its financial obligations. These material uncertainties cast some significant doubt regarding the Company's ability to continue as a going concern.

Since the outbreak of the COVID-19 global pandemic, many businesses around the world have seen their operations negatively impacted by the health and safety measures, including limitations on the movement of goods and individuals, put into place by local governments to help control the spread of the outbreak. Although those measures have been relaxed in recent months, there still remains a great deal of uncertainty as to the extent and duration of the future impact of COVID-19 on global commerce and the Company's business. Moreover, China, in particular, has occasionally taken strong measures to try to curb the spread of the virus and protect its citizens and, in doing so, there has been an impact on the economic activities of many of its regions. Given that the Company has significant operations in China, any such measures may have an adverse impact on the Company's revenues and cash resources, ability to expand its business, access to suppliers, partners, and customers, and ability to carry on its day-to-day operations without interruption.

These consolidated financial statements do not include any adjustments or disclosures that may be necessary should the Company not be able to continue as a going concern. If this were the case, these adjustments could be material.


7
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Statement of compliance with IFRS

These condensed interim consolidated financial statements for the three-month period ended March 31, 2022, have been prepared in accordance with the International Accounting Standard 34, Interim Financial Reporting (''IAS 34''). Since they are condensed financial statements, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (''IFRS'') as issued by the International Accounting Standards Board (''IASB''), have been voluntarily omitted or summarized.

The preparation of financial statements in accordance with IAS 34 requires the use of certain accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements have been set out in note 5 of the Company's consolidated financial statements for the year ended December 31, 2021. There have not been any significant changes in judgments, estimates or assumptions since then. These condensed interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2021.

The same accounting policies and methods of computation were used in the preparation of these condensed interim consolidated financial statements as were followed in the preparation of the consolidated financial statements for the year ended December 31, 2021 except for new standards and interpretations effective January 1, 2022.

These condensed interim consolidated financial statements for the three-month periods ended March 31, 2022 (including comparative figures) were approved by the Board of Directors on May XX, 2022.

3.2 Basis of measurement

These condensed interim consolidated financial statements are prepared on an accrual basis using the historical cost method.

3.3 Basis of Consolidation

These condensed interim consolidated financial statements include the accounts of Peak and all of its subsidiaries. The Company attributes total comprehensive income or loss of the subsidiary between the owners of the parent company and the non-controlling interests based on their respective ownership interests.

The following entities have been consolidated within these condensed interim consolidated financial statements:

 

 

 

% of ownership

Principal activity

Functional

Entities

Registered

 

and voting right

Currency

Tenet Fintech Group Inc.

Canada

 

 

Holding and parent company

Canadian dollar

           

Cubeler Inc. (note 6.3)

Canada

 

100%

Technology based product developer and procurement facilitator

Canadian dollar

           

Asia Synergy Limited

Hong Kong

 

100%

Holding

U.S. $

           

Asia Synergy Holdings

China

 

100%

Holding

Renminbi

           

Asia Synergy Technologies Ltd.

China

 

100%

Technology based product procurement
facilitator

Renminbi

           

Asia Synergy Supply Chain Technologies Ltd (1)

China

 

100%

Technology based product procurement
facilitator

Renminbi

           

Asia Synergy Solar-Gas & Oil Supply Chain Management Co.,Ltd (1)

China

 

100%

Technology based product procurement facilitator

Renminbi

           

Asia Synergy Data Solutions Ltd.

China

 

100%

Fintech

Renminbi

           

Asia Synergy Credit Solutions Ltd

China

 

100%

Credit outsourcing services

Renminbi

           

Asia Synergy Supply Chain Ltd

China

 

51%

Supply chain services

Renminbi

           

Asia Synergy Insurance Services Co.,Ltd (1)

China

 

100%

Fintech

Renminbi

           

Wuxi Aorong Ltd.

China

 

100%

Holding

Renminbi

           

Asia Synergy Financial Capital Ltd

China

 

51%

Financial institution

Renminbi

           

Beijing Huike Internet Technology (note 6.1)

China

 

100%

Technology based product facilitator

Renminbi

           

Wechain (Nanjing) Technology Service Co., Ltd. (note 6.1)

China

 

51%

Fintech

Renminbi

           

Beijing Kailifeng New Energy Technology Co., Ltd. (1)

China

 

51%

Technology based product facilitator

Renminbi

           

Shanghai Xinhuizhi Supply Chain Management Co.,Ltd. (1)

China

 

51%

Technology based product procurement facilitator

Renminbi



8
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.3 Basis of Consolidation (continued)

The Company's subsidiaries each have an annual reporting date of December 31 and are incorporated in either Canada, Hong Kong or China. All intercompany transactions and accounts were eliminated upon consolidation, including unrealized gains or losses on intercompany transactions. Where unrealized losses on intercompany asset sales are reversed upon consolidation, the underlying asset is also tested for impairment from the Company's perspective. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

Profit or loss of subsidiaries acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable.

3.4 Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the parent company.

4 - BUSINESS COMBINATIONS

4.1 Subsequent Accounting

At each balance date, the Company revises its estimation of the fair value of the contingent consideration payable under the Heartbeat Acquisition and records an accretion entry accordingly. The re-evaluation process takes into account the historical performance of the operations of Huike and Heartbeat platform assets compared to agreed targets and discount the resultant estimate of the value of share instalments payable. As at March 31, 2022, the value of contingent consideration payable was estimated as $2,319,031 (December 31, 2021 - $1,921,000) and, consequently, an amount of $398,031 for the three-month period ended March 31, 2022 (three-month period ended March 31, 2021 - $Nil) was recorded as an expense in the condensed interim consolidated statements of comprehensive loss with a corresponding credit recorded in the consolidated statement of financial position to contingent consideration payable.

The intangible assets recorded as part of the Heartbeat and Cubeler purchase price allocations, excluding goodwill, are being amortized to the profit and loss account over their remaining useful lives, estimated to be 8 years. During the three-month period ended March 31, 2022, an amount of $854,391 (three-month period ended March 31, 2021 - $Nil) has been charged to the condensed interim consolidated statement of comprehensive loss in respect of amortization of intangible assets acquired under business combinations in the current year (refer note 8).

5 - LOANS RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

One of the Company's subsidiaries in China, Asia Synergy Financial Capital ("ASFC"), provides various financial services to small- and medium-sized enterprises.

ASFC provides loans that are either guaranteed by a third party and/or collateral assets. The loans secured with collateral are either secured by second-hand vehicles or by the residential property of the borrower. Loans that are not guaranteed by collateral assets are guaranteed by a third party.

Loans guaranteed by second-hand vehicles.

The second-hand vehicles are valued by the company credit department before approving a loan. The loan value at inception represents typically between 50% to 80% of the collateral value with an average of 76% as at March 31, 2022 (76% as at December 31, 2021). The second-hand vehicles collateral value is evaluated at the beginning of the loan and periodically during the life of the loan, based on an industry recognized used car guide which has been validated by company personnel, their knowledge, experience and the inspection process before approval of the loan.


9
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

5 - LOANS RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

Loans guaranteed by second rank mortgage on residential property

Before approving a loan, the Company's credit department will assess the value of any other mortgages taken out on the residential property and put as collateral by the prospective borrower. The loan value at inception typically represents between 25% and 32% of the collateral value exceeding the first rank mortgage taken by the borrower. The value of the residential property is evaluated at the beginning of the loan and periodically during the life of the loan based on a residential broker site, which is validated by the Company personnel, their knowledge, experience and inspection process before approval of the loan.

All the loans secured by collateral assets are registered on the appropriate government regulated system.

Credit Loans guaranteed by a third party

The Company makes loans to small and medium enterprises in the technology sector. Before approving a loan, the Company performs an initial credit evaluation of the borrower. The credit evaluation includes: the borrower company's credit profile, operating performance, financial statements, tax payments/receipt records, shareholders' structure and their individual credit rating. Based on the result of this initial evaluation, the Company will then proceed to sign a loan agreement with the SMEs borrowers. To mitigate the default risk in the case of any overdue situation incurred re these credit loans, a letter of guarantee must also be signed before the loan is finally granted to SMEs borrowers. Accordingly, a 3rd party must accept to provide a full guarantee to cover any overdue principal and interest on behalf of the borrowers. The company will also perform on-going monitoring of SMEs borrowers in the tech industry through visits, phone calls and follow-up on business models development.

For the majority of loans granted, principal and interest are payable by the borrower on a monthly basis.

Loans receivables are described as follows :

    2022-03-31     2021-12-31  
    $     $  
Principal balance loans receivables   20,857,599     20,989,935  
Less expected credit loss (ECL)   (234,831 )   (166,244 )
Loan receivables net   20,622,768     20,823,691  
             
Loans receivables maturing in less than 12 months   18,172,492     17,553,358  
Loans receivables maturing in more than 12 months   2,450,277     3,270,333  
Total loans   20,622,769     20,823,691  

Impaired loans and allowances for credit loss

The Company performed a three-stage forward looking impairment approach to its loan portfolio to measure the expected credit loss as described in detail in note 4.11 of the annual consolidated financial statements for the year ended December 31, 2021.

Credit quality of loans

The following table presents the gross carrying amount of loans receivables as at March 31, 2022 and December 31, 2021, according to credit quality and ECL impairment stages.


10
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

5 - LOANS RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

ECL is calculated on loan value at the period end that are not insured by a third party with an assumption of a credit loss allocation provision applied as follows:

 

 

 

Credit loss

Credit loss

 

 

 

allocation

allocation

 

 

Credit loss

applied -

applied -Credit

 

 

allocation

Residential

and supply chain

 

 

applied - Auto

Property

finance credit

Stage 1 : 1%

 

1.0%

1.0%

2.0%

Stage 2: 30%

 

7.0%

1.0%

2.0%

Stage 3 :100%

 

12.0%

1.0%

2.0%


      Gross Carrying     Allowance for     Net Carrying  
March 31, 2022 %   amount     credit loss     Amount  
      $     $     $  
Stage 1 Not overdue <= 30 Days 87.8%   18,309,258     (3,501 )   18,305,757  
Stage 2 Overdue 30-90 days 1.2%   239,951     (2,186 )   237,765  
Stage 3 Overdue> 90 days 11.1%   2,308,390     (229,143 )   2,079,248  
Total 100.0%   20,857,599     (234,830 )   20,622,770  

      Gross Carrying     Allowance for     Net Carrying  
December 31, 2021 %   amount     credit loss     Amount  
      $     $     $  
Stage 1 Not overdue <= 30 Days 85.2%   17,882,518     (3,362 )   17,879,156  
Stage 2 Overdue 30-90 days 2.6%   540,283     (3,000 )   537,283  
Stage 3 Overdue> 90 days 12.2%   2,567,134     (159,882 )   2,407,252  
Total 100.0%   20,989,935     (166,244 )   20,823,691  

The loss allowance for loans to customers as at March 31, 2022, broken down by product type, reconciles to the opening loss allowance for that provision as follows:

    Product Type - Autos  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
                         
Loss allowance as at December 31, 2021   1     1,618     150,126     151,745  
Originations net of repayments and other derecognitions   (11 )   (53 )   (16,714 )   (16,778 )
Net remeasurement   (2 )   593     171,155     171,746  
Transfers                        
- to lifetime ECL performing   (4 )   4     -     -  
- to lifetime ECL credit-impaired   -     (849 )   849     -  
Write-offs   -     -     (62,818 )   (62,818 )
Foreign exchange and other   20     406     (22,387 )   (21,961 )
                         
Loss allowance as at March 31, 2022   4     1,719     220,211     221,934  


11
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

5 - LOANS RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

    Product Type - Residential property  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
Loss allowance as at December 31, 2021   207     1,382     9,756     11,345  
Originations net of repayments and other derecognitions   (45 )   (628 )   (2,214 )   (2,887 )
Change in model                        
Net remeasurement   (940 )   450     1,720     1,230  
Transfers                        
- to 12-month ECL   950     -     (950 )   -  
- to lifetime ECL performing   (16 )   16     -     -  
- to lifetime ECL credit-impaired   -     (737 )   737     -  
Foreign exchange and other   (2 )   (16 )   (117 )   (135 )
                         
Loss allowance as at March 31, 2022   154     467     8,932     9,553  

    Product Type - Credit & Supply Chain Finance Credit  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
Loss allowance as at December 31, 2021   3,154     -     -     3,154  
Originations net of repayments and other derecognitions   116     -     -     116  
Foreign exchange and other   73     -     -     73  
                         
Loss allowance as at March 31, 2022   3,343     -     -     3,343  

The loss allowance for loans to customers as at December 31, 2021, broken down by product type, reconciles to the opening loss allowance for that provision as follows:

    Product Type - Autos  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
Loss allowance as at December 31, 2020   148     1,880     351,293     353,321  
Originations net of repayments and other derecognitions   (139 )   (1,535 )   (156,264 )   (157,938 )
Net remeasurement   7     894     (33,302 )   (32,401 )
Transfers                        
- to lifetime ECL credit-impaired   (13 )   (144 )   156     (1 )
Write-offs   -     -     (22,147 )   (22,147 )
Foreign exchange and other   (2 )   523     10,390     10,911  
                         
Loss allowance as at December 31, 2021   1     1,618     150,126     151,745  

    Product Type - Residential property  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
Loss allowance as at December 31, 2020   295     1,452     4,994     6,741  
Originations net of repayments and other derecognitions   (79 )   790     90     801  
Net remeasurement   -     -     3,645     3,645  
Transfers                        
- to lifetime ECL credit-impaired   (13 )   (894 )   907     -  
Foreign exchange and other   4     34     120     158  
                         
Loss allowance as at December 31, 2021   207     1,382     9,756     11,345  

    Product Type - Credit & Supply Chain Finance Credit  
    Stage 1     Stage 2     Stage 3     Total ECL  
    $     $     $     $  
Loss allowance as at December 31, 2020   224,355     -     -     224,355  
Originations net of repayments and other derecognitions   33,328     -     -     33,328  
Net remeasurement   (259,815 )   -     -     (259,815 )
Foreign exchange and other   5,286     -     -     5,286  
                         
Loss allowance as at December 31, 2021   3,154     -     -     3,154  


12
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

6 - DEBTORS

    2022-03-31     2021-12-31  
    $     $  
Sales tax receivable   343,968     271,514  
Advances to a company   47,538     141,184  
Deposit on investment (1)   281,879     498,750  
Deposits made for transactions on platforms with guarantee (2)   26,005,412     31,142,201  
Deposits made for transactions on platforms (3)   1,488,105     1,506,225  
Accounts receivable   10,963,599     9,632,651  
Safety deposits with guarantor (4)   591,300     712,412  
Subscriptions receivable from non-controlling interests   261,683     98,239  
Promissory note (5)   113,522     113,193  
Other subscriptions receivable   210,000     -  
Prepayments to third party subcontractors (6)   13,240,727     11,885,106  
    53,547,733     56,001,475  

(1) At March 31, 2022, as per agreement signed with third parties, AST, a subsidiary of the Company, agreed to participate in a future partnership agreement with a deposit of $281,879. At December 31, 2021, as per agreement signed with third parties, ASDS, a subsidiary of the Company, agreed to participate in a future partnership agreement. ASDS provided 25% of the deposit representing $498,750.

(2) As per agreements signed with third parties, subsidiaries of the Company have provided deposits in order to facilitate capital support from financial institutions such as banks and lenders in mainland China. As collateral, the Company kept 10 to 20% of the merchandise in guarantee.

(3) As per agreements signed with third parties, subsidiaries of the Company have provided deposits in order to facilitate capital support from financial institutions such as banks and lenders in mainland China. As collateral, the Company kept 5 to 8% of the merchandise in guarantee.

(4) As per an agreement with a loan insurance provider, ASCS, a subsidiary of the Company, agreed to maintain a deposit with the loan insurance provider, representing 10% of the value of loans serviced by ASCS, on behalf of certain commercial bank guarantees by loan insurer providers. ASCS's third party financial partners and the Company's ASFC subsidiary have a three-way agreement in place with ASCS under which third party financial partners and ASFC are jointly responsible for providing and maintaining the 10% safety deposit with the loan insurance provider on behalf of ASCS in exchange for a service fee representing a percentage of the amount of the safety deposit provided. The agreement indicates that in case of default by the borrowers, ASCS will retrieve all the rights to realize the collateral.

(5) On December 15, 2021, loans were issued to two board members of the Company in the amounts of $72,793 and $40,000. Each loan is due on December 15, 2022. Each loans bears interest at an annual rate of 1%, which was the prescribed rate at the date of issuance. As of December 31, 2021, the aggregate outstanding principal amount due for said loans is $113,193.

(6) Subsidiaries of the Company active in supply chain activity made prepayments to suppliers to support operational supply chain processes. These prepayments will be reverted to Company's subsidiaries when services or merchandise transactions are executed.

Debtors amounts are presented on the consolidated statements of financial position net of the allowance for doubtful accounts. In measuring the expected credit losses, the accounts receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due. The expected loss rates are based on the payment profile for sales based on historical credit losses. Accounts receivables are written off by taking in consideration third party guarantee on payment of debtors and if there is no reasonable expectation of recovery.

When measuring the expected credit losses of other debtors, Advances to a company, Deposits made for transaction on platforms with guarantees, Deposits made for transaction on platforms, Accounts receivable, Service deposits, Subscriptions receivable from non- controlling interests, Promissory note, Other subscriptions receivable and Prepayment to third party subcontractors are assessed individually due to the low number of accounts. The expected loss rates are based on the payment profile of debtor, assessed by the company's lending hub system.

Debtors are written off (i.e. de-recognized) when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Issuer on alternative payment arrangements, amongst other things, are considered indicators of no reasonable expectation of recovery. As at March 31, 2022 an amount of $326,297 (2021 - $317,778) was registered for expected credit loss for debtors.


13
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

7 - PROPERTY AND EQUIPMENT

                Vehicles and        
    Right-of-use     IT and office     other        
    assets     equipment     equipment     Total  
    $     $     $     $  
Gross carrying amount                        
Balance as at January 1, 2022   3,067,626     201,858     191,393     3,460,877  
Additions   -     16,897     -     16,897  
Disposals   (2,344 )   -     -     (2,344 )
Balance as at March 31, 2022   3,065,282     218,755     191,393     3,475,429  
                         
Accumulated amortization                        
Balance as at January 1, 2022   1,186,255     110,873     101,736     1,398,864  
Amortization   109,782     9,661     11,890     131,333  
Exchange differences   19,605     1,342     1,078     22,024  
Balance as at March 31, 2022   1,315,642     121,876     114,704     1,552,221  
Net carrying amount as at March 31, 2022   1,749,640     96,879     76,689     1,923,208  
                         
Gross carrying amount                        
Balance as at January 1, 2021   1,136,485     122,336     205,358     1,464,179  
Amounts acquired in a business combination   179,812     25,312     -     205,124  
Additions   1,808,761     54,210     -     1,862,971  
Disposals   (57,432 )   -     (13,965 )   (71,397 )
Balance as at December 31, 2021   3,067,626     201,858     191,393     3,460,877  
                         
Accumulated amortization                        
Balance as at January 1, 2021   800,068     70,353     64,391     934,812  
Amortization   286,850     41,726     48,413     376,989  
Other adjustments   99,715     -     -     99,715  
Revaluation of Right-of-use assets   9,978     -     -     9,978  
Disposals   -     21     (7,739 )   (7,718 )
Exchange differences   (10,356 )   (1,227 )   (3,329 )   (14,912 )
Balance as at December 31, 2021   1,186,255     110,873     101,736     1,398,863  
Net carrying amount as at December 31, 2021   1,881,371     90,985     89,657     2,062,014  


14
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

8- INTANGIBLE ASSETS

                Gold River Supply-                                            
    Loan servicing           chain services                 Other ERP                          
    agreement     Gold River     platforms     Cubeler Interface     Cubeler Platform     platforms     Heartbeat Platform     Tradenames     Total     Goodwill  
  # $     $     $     $     $     $     $     $     $     $  
Gross carrying amount                                                            
Balance as at January 1, 2022   1,430,000     2,461,348     4,254,973     2,084,893     23,862,000     2,438,060     8,368,063     5,287,000     50,186,337     103,908,976  
Addition   -     -     683,825     54,991     -     555,922     225,750     -     1,520,489     -  
Balance as at March 31, 2022   1,430,000     2,461,348     4,938,798     2,139,884     23,862,000     2,993,982     8,593,813     5,287,000     51,706,826     103,908,976  
                                                             
Accumulated amortization   429,000     2,461,348     231,217     643,496     10,228,688     81,731     410,966     2,854,095     17,340,541     41,386,422  
Balance as at January 1, 2022
Amortization   35,750     -     333,214     111,820     463,389     167,172     307,325     83,677     1,502,347     -  
Exchange differences   -     -     48,406     7,447     -     28,347     9,593     -     93,793     -  
Balance as at March 31, 2022   464,750     2,461,348     612,837     762,764     10,692,077     277,250     727,883     2,937,772     18,936,681     41,386,422  
                                                             
Net carrying amount as at March 31, 2022   965,250     -     4,325,962     1,377,119     13,169,923     2,716,732     7,865,930     2,349,228     32,770,145     62,522,554  
                                                             
Gross carrying amount                                                            
Balance as at January 1, 2021   1,430,000     2,461,348     -     2,413,059     -     -     -     -     6,304,407     -  
Amounts arising from business combinations   -     -     -     -     23,862,000     -     7,471,000     5,287,000     36,620,000     103,908,976  
Addition   -     -     3,926,807     -     -     2,438,061     897,063     -     7,261,931     -  
Transferred in   -     -     3,006,491     1,942,735     -     234,381     -     -     5,183,607     -  
Transferred out   -     -     (2,678,325 )   (2,270,901 )   -     (234,381 )   -     -     (5,183,607 )   -  
Balance as at December 31, 2021   1,430,000     2,461,348     4,254,973     2,084,893     23,862,000     2,438,061     8,368,063     5,287,000     50,186,338     103,908,976  
                                                             
Accumulated amortization                                                            
Balance as at January 1, 2021   286,000     2,461,348     -     393,182     -     -     -     -     3,140,530     -  
Amortization   143,000     193,717     231,217     295,868     745,688     81,731     410,966     165,095     2,267,281     -  
Impairment loss on intangible   -     (193,717 )   -     -     9,483,000     -     -     2,689,000     11,978,283     41,386,422  
Exchange differences   -     -     -     (45,554 )   -     -     -     -     (45,554 )   -  
Balance as at December 31, 2021   429,000     2,461,348     231,217     643,496     10,228,688     81,731     410,966     2,854,095     17,340,540     41,386,422  
Net carrying amount as at December 31, 2021   1,001,000     -     4,023,756     1,441,397     13,633,312     2,356,331     7,957,097     2,432,905     32,845,798     62,522,554  

9 - ACCOUNTS PAYABLE, ADVANCES AND ACCRUED LIABILITIES

    2022-03-31     2021-12-31  
    $     $  
Trade accounts payable and accruals   4,468,431     5,224,124  
Advance from third party customers, no interest (1)   10,740,639     11,044,172  
    15,209,070     16,268,296  

(1) Advance from downstream corportative clients for supply chain bundle service fee.

10 - LEASE LIABILITIES

    2022-03-31     2021-12-31  
    $     $  
Balance - beginning of perod   1,747,984     239,507  
Additions   -     1,977,352  
Accretion interest   37,133     65,908  
Lease payments   (76,667 )   (565,880 )
Effect of exchange rate change on obligation   -     31,097  
Balance - end of period   1,708,450     1,747,984  
Current Portion   434,995     432,621  
    1,273,455     1,315,363  


15
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

10 - LEASE LIABILITIES (CONTINUED)

Following is a summary of the Company's obligations regarding lease payments:

44,741   Payment due by period              
    1 year     2-5 years     Beyond 5 years     Total  
    $     $     $     $  
As at March 31, 2022                        
Lease payments   552,479     879,986     720,516     2,152,981  
                         
As at December 31, 2021                        
Lease payments   561,677     951,334     729,289     2,242,301  

11 - DEBENTURES

Debenture issuance of April 24, 2019

The movement during the three-month period ended March 31, 2021 and the year ended 2021, relating to this debenture can be summarised as follows:

    2021-03-31     2021-12-31  
    $     $  
Balance at the beginning   -     23,311  
Accretion of debentures   -     683  
Conversion of debentures   -     (23,994 )
Balance at the end   -     -  

12 - BONDS

On May 29, 2020, the Company has placed 400 units of secured corporate bonds at $1,000 per unit. Each unit sold was comprised of $1,000 face value bonds, redeemable on June 10, 2023, bearing interest at a nominal rate of 10% payable monthly, plus 20 purchase warrants exercisable into Company common share at $2.00 per share for a period of 36 months from the date of issuance.

The Bonds will be redeemable after 36 months from the date of issuance (the "Initial Maturity Date"). Each holder has a right (the "Initial Extension Right") at the end of the Initial Maturity Date to extend the Bond for another 12 months (the "Initial Extension Period") by giving written notice to that effect to the Company no later than sixty (60) days prior to the Initial Maturity Date. Any holder that has elected to exercise its Initial Extension Right will also have a further right at the end of the Initial Extension Period to extend its Bond for another 12 months (the "Second Extension Period") under the same notice conditions as stated in the Initial Extension.

If a holder elects to extend its Bonds, the Company may redeem such holder's Bonds at any time on payment of a 5% premium to redeem the Bonds ("Penalty").

The Company has set aside an amount equal to two years of interest in a separate bank account, which will be used to pay interest payable on the Bonds. Any interest accrued on such sum will be in favour of the Company. The set aside amount at March 31, 2022, is $43,333 (2021 - $53,333) and is presented under Restricted Cash in the Consolidated statements Financial Position.

Bonds are secured by a pledge on the aggregate assets of the Company, maturing on May 29, 2023. The Company used the residual value method to allocate the principal amount of the bond between the liability and the contributed surplus. Under this method, an amount of $64,896 (net of transaction costs) related to the warrants issued was applied to the contributed surplus. The fair value of the liability component was $227,569 computed as the present value of future principal and interest payments discounted at a rate of 22%.


16
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

12 - BONDS (CONTINUED)

The movement during the three-month period ended March 31, 2021 the year ended 2021, relating to these bonds can be summarised as follows:

    2022-03-31     2021-12-31  
    $     $  
Balance at the beginning   313,234     258,933  
Addition   -     -  
Accretion of bonds   7,614     27,327  
Amortization of initial costs   6,551     26,974  
Balance at the end   327,399     313,234  

(1) The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.

13 - CEBA LOAN (Canada Emergency Business Account)

On April 20, 2020, the Company applied for and received $40,000 under the Canada Emergency Business Account (CEBA). Further, on September 1, 2021, through its acquisition of Cubeler, the Company acquired an additional CEBA loan totalling $60,000. Under this program providing interest-free loans, repaying the balance of the loan on or before December 31, 2023, will result in loan forgiveness of 33% ($33,000), which is the intention of the Company. Subsequent to year-end, the Government of Canada announced that the deadline to repay loans under the Canada Emergency Business Account program would be extended by one year (that is from December 31, 2022 to December 31, 2023). As of January 1, 2024, the loan balance will bear interest at 5% and will be repayable on maturity on December 31, 2025.

14 - SHAREHOLDERS' EQUITY

14.1 Authorized share capital

The share capital of the Company consists of an unlimited number of common shares without par value.

Share Consolidation

Effective July 27, 2021, the Company consolidated its issued and outstanding common shares on the basis of one post-consolidation share for two pre-consolidation shares. Unless otherwise stated, all share amounts have been restated retrospectively to reflect this share consolidation.

14.2 Description of the shareholders' equity operations during the three-month period ended March 31, 2022

a) During the three-month period ended March 31, 2022, the Company issued 1,527,500 common shares at an average exercise price of $1.09 per share for total proceeds of $1,658,750 upon the exercise of share purchase warrants, and $443,144 related to exercised warrants were transferred from contributed surplus to share capital in the consolidated statements of changes in equity (note 14.4).

b) During the three-month period ended March 31, 2022, the Company issued 100,000 common shares at an average exercise price of $2.10 per share for total proceeds of $210,000 upon the exercise of stock options included in debtors in the consolidated statement of financial position, and $181,300 related to exercised stock options were transferred from contributed surplus to share capital in the consolidated statements of changes in equity (note 15).

14.3 Description of the shareholders' equity operations during the three-month period ended March 31, 2021

a) During the three-month period ended March 31, 2021, $25,000 of secured debentures with a conversion price of $0.50 per share were converted into common shares of the Company. At the date of conversion these debentures had an amortized cost totalling $23,994. The Company therefore issued 50,000 common shares to the debenture holders and recorded $23,994 in share capital. In addition, amounts of $3,489 related to these debenture conversions, were transferred to capital stock from conversion options in the consolidated statement of financial position.

b) During the three-month period ended March 31, 2021, the Company issued 27,466 common shares at an average price of $1.23 per share to settle $33,900 of debts related to services received by the Company, of which $15,000 was recorded in public relations fees in the consolidated statements of comprehensive loss, $18,900 was recorded against accounts payable and accruals in the consolidated statement of financial position.

c) During the three-month period ended March 31, 2021, the Company issued 9,984,631 common shares at an average exercise price of $0.37 per share for total proceeds of $3,708,161 upon the exercise of share purchase warrants, and $1,525,179 related to exercised warrants were transferred from contributed surplus to share capital (note 14.4).


17
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

14 - SHAREHOLDERS' EQUITY (CONTINUED)

14.4 Warrants

The outstanding warrants as at March 31, 2022 and December 31, 2021 and the respective changes during the three-month period and the year then ended, are summarized as follows:

          2022-03-31           2021-12-31  
          Weighted           Weighted  
    Number of     average     Number of     average  
    warrants     exercise price     warrants     exercise price  
          $           $  
Outstanding, beginning of period   17,332,504     3.057     14,662,750     0.966  
Granted   -           14,990,999     3.500  
Expired   -           (15,000 )   1.333  
Exercised   (1,527,500 )   1.086     (12,306,245 )   1.107  
Outstanding and exercisable, end of period   15,805,004     3.248     17,332,504     3.057  

As of March 31, 2022 and December 31, 2021, the number of outstanding warrants which could be exercised for an equivalent number of common shares is as follows:

          2022-03-31           2021-12-31  
    Number     Exercise price     Number     Exercise price  
          $           $  
Expiration date                        
February 2022               360,000     2.00  
July 2022   585,000     0.50     585,000     0.50  
August 2022   731,190     0.50     1,298,690     0.50  
October 2022   -     0.80     350,000     0.80  
October 2022   -     1.50     250,000     1.50  
May 2023   13,328     1.00     13,328     1.00  
May 2023   3,500     2.00     3,500     2.00  
July 7, 2023   12,870,149     3.50     12,870,149     3.50  
July 7, 2023   1,601,837     3.50     1,601,837     3.50  
    15,805,004           17,332,504        


18
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

15 - SHARE-BASED PAYMENTS

The Company has adopted an incentive stock option plan which provides that the Board of Directors of the Company may, from time to time, at its discretion and in accordance with the Exchange regulations, grant to directors, officers, employees and others providing similar services to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares exercisable for a period of up to 5 years from the date of grant. The options reserved for issuance to any individual director, officer or employee will not exceed 5% of the issued and outstanding common shares and the number of common shares reserved for issuance to others providing services will not exceed 2% of the issued and outstanding common shares. Options may be exercised as of the grant date for a period determined by the Board, but shall not be greater than 5 years from the date of the grant and 90 days following cessation of the optionee's position with the Company. Provided that the cessation of office, directorships or employment or other similar service arrangement was by reason of death (in the case of an individual), the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option.

The outstanding options as at March 31, 2022 and December 31,2021 and the respective changes during the three-month period and the year then ended, are summarized as follows:

          2022-03-31           2021-12-31  
          Weighted           Weighted  
    Number of     average     Number of     average  
    options     exercise price     options     exercise price  
          $           $  
Outstanding, beginning of period   4,689,250     1.929     4,351,750     1.336  
Granted   78,547     6.335     945,000     4.448  
Exercised (1)   (100,000 )   2.100     (607,500 )   1.594  
Outstanding end of period   4,667,797     2.000     4,689,250     1.929  
                         
Exercisable end of period   3,026,050     1.570     2,488,550     1.390  

   (1) Market value of the shares was $3.96 on the exercise date of these options

The table below summarizes the information related to outstanding share options as at March 31, 2022.

    Range of     Number of     Weighted average remaining  
Maturity date   exercise price     options     contractual life (years)  
    $              
June 1, 2022   2.100     290,000     2 months  
November 27, 2022   1.100     18,750     7 months  
December 15, 2022   1.600     171,250     8 months  
April 16, 2023   1.000     5,000     1 year  
June 5, 2023   1.000     288,750     1 year and 2 months  
November 28, 2023   1.000     37,500     1 year and 7 months  
May 1, 2024   1.000     50,000     2 years and 1 month  
May 27, 2024   1.000     447,500     2 years and 1 month  
September 5, 2024   1.000     10,000     2 years and 5 months  
November 1, 2024   1.100     50,000     2 years and 7 months  
November 12, 2024   1.000     5,000     2 years and 7 months  
June 11, 2025   1.000     745,500     3 years and 2 months  
August 7, 2025   0.450     250,000     3 years and 4 months  
October 28, 2025   1.500     1,225,000     3 years and 6 months  
November 6, 2025   2.700     50,000     3 years and 7 months  
January 28, 2026   5.700     25,000     3 years and 9 months  
March 22, 2026   5.500     55,000     3 years and 11 months  
May 13, 2026   4.800     10,000     4 years and 1 month  
July 7, 2026   4.100     825,000     4 years and 3 months  
August 10, 2026   8.000     5,000     4 years and 4 months  
October 28, 2026   11.500     25,000     4 years and 6 months  
January 1, 2027   7.500     32,725     4 years and 9 months  
February 1, 2027   5.600     42,881     4 years and 10 months  
March 1, 2027   4.100     2,941     4 years and 11 months  
          4,667,797        


19
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

 

15 - SHARE-BASED PAYMENTS (CONTINUED)

The table below summarizes the information related to outstanding share options as at December 31, 2021.

    Range of     Number of     Weighted average remaining  
Maturity date   exercise price     options     contractual life (years)  
    $              
June 1, 2022   2.100     390,000     5 months  
November 27, 2022   1.100     18,750     10 months  
December 15, 2022   1.600     171,250     11 months  
April 16, 2023   1.000     5,000     1 year and 3 months  
June 5, 2023   1.000     288,750     1 year and 5 months  
November 28, 2023   1.000     37,500     1 year and 10 months  
May 1, 2024   1.000     50,000     2 years and 4 months  
May 27, 2024   1.000     447,500     2 years and 4 months  
September 5, 2024   1.000     10,000     2 years and 8 months  
November 1, 2024   1.100     50,000     2 years and 10 months  
November 12, 2024   1.000     5,000     2 years and 10 months  
June 11, 2025   1.000     745,500     3 years and 5 months  
August 7, 2025   0.450     250,000     3 years and 7 months  
October 28, 2025   1.500     1,225,000     3 years and 9 months  
November 6, 2025   2.700     50,000     3 years and 10 months  
January 28, 2026   5.700     25,000     4 years and 0 months  
March 22, 2026   5.500     55,000     4 years and 2 months  
May 13, 2026   4.800     10,000     4 years and 4 months  
July 7, 2026   4.100     825,000     4 years and 6 months  
August 10, 2026   8.000     5,000     4 years and 7 months  
October 28, 2026   11.500     25,000     4 years and 9 months  
          4,689,250        

During the three-month period ended March 31, 2022 the Company recorded an expense of $541,599 related to share-based payments (2021- $344,690). The offset was credited to contributed surplus.

15.1 Share-based payments granted to directors and employees during the three-month period ended March 31, 2022

a) On January 1, 2022 the Company granted options to acquire 32,725 common shares of the Company at an average exercise price of $7.50 to employees.

The options vest over a two-year period and are exercisable over a period of five years .

The fair value of the options granted, amounting to $179,183, was calculated using the Black & Scholes option pricing model using the following assumptions:

Share price at the date of grant

7.15

Expected life

5 years

Risk-free interest rate

1.25%

Volatility (1)

106%

Exercise price at the date of grant

7.50

The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.

b) On February 1, 2022 the Company granted options to acquire 42,881 common shares of the Company at an average exercise price of $5.60 to employees.

The options vest over a two-year period and are exercisable over a period of five years .

The fair value of the options granted, amounting to $173,796, was calculated using the Black & Scholes option pricing model using the following assumptions:

Share price at the date of grant

5.28

Expected life

5 years

Risk-free interest rate

1.63%

Volatility (1)

106%

Exercise price at the date of grant

5.60

The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.


20
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

 

15 - SHARE-BASED PAYMENTS (CONTINUED)

c) On March 1, 2022 the Company granted options to acquire 2,941 common shares of the Company at an average exercise price of $4.10 to employees.

The options vest over a two-year period and are exercisable over a period of five years .

The fair value of the options granted, amounting to $8,455, was calculated using the Black & Scholes option pricing model using the following assumptions:

Share price at the date of grant

3.80

Expected life

5 years

Risk-free interest rate

1.61%

Volatility (1)

104%

Exercise price at the date of grant

4.10

The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.

15.2 Share-based payments granted to directors and employees during the three-month period ended March 31, 2021

a) During the three-month period ended March 31, 2021 the Company granted options to acquire 25,000 common shares of the Company at an average exercise price of $5.70 to a director.

The options vest over a two-year period and are exercisable over a period of five years .

The fair value of the options granted, amounting to $103,780, was calculated using the Black & Scholes option pricing model using the following assumptions:

Share price at the date of grant

$5.32

Expected life

5 years

Risk-free interest rate

0.46%

Volatility (1)

111%

Dividend

0%

Exercise price at the date of grant

$5.70

The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.

15.3 Options granted to consultants during the three-month period ended March 31, 2021

a) During the three-month period ended March 31, 2021 the Company granted options to acquire 55,000 common shares of the Company at an average exercise price of $5.50 to one of its service providers as part of an investors relations agreement.

The options vest over a period of nine months and are exercisable over a period of five years .

The fair value of the options granted, amounting to $235,434, was calculated using the Black & Scholes option pricing model using the following assumptions:

Share price at the date of grant

$5.48

Expected life

5 years

Risk-free interest rate

0.92%

Volatility (1)

109%

Dividend

0%

Exercise price at the date of grant

$5.50

The volatility was determined by using the Company's own historical volatility over a period corresponding to expected life of the share options.

16 - CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company's capital management objectives are as follows:

- To ensure the Company's ability to continue its development;

- To provide an adequate return to shareholders.

The Company monitors capital on the basis of the carrying amount of equity which represents $163,894,931 as at March 31, 2022 (December 31, 2021 - $165,590,366).

The Company manages its capital structure and makes adjustments to it to ensure it has sufficient liquidity and raises capital through stock markets to continue its development.

The Company is not subject to any externally imposed capital requirements.


21
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

17 - FINANCIAL INSTRUMENTS

17.1 Classification of financial instruments

As at March 31, 2022, the carrying amount of financial assets and financial liabilities were as follows:

                2022-03-31  
    Assets and     Assets and        
    liabilities     liabilities        
    carried at     carried at     Total  
    fair value     amortized cost     carrying value  
    $     $     $  
Financial assets                  
Financial assets measured at amortized cost                  
Cash         18,964,265     18,964,265  
Restricted Cash         43,333     43,333  
Debtors         53,203,765     53,203,765  
Loans receivable         20,622,769     20,622,769  
    -     92,834,132     92,834,132  
Financial liabilities                  
Financial liabilities measured at amortized cost                  
Accounts payable and accrued liabilities         14,858,149     14,858,149  
Bonds         327,399     327,399  
CEBA Loan         100,000     100,000  
Contingent consideration payable   2,319,031           2,319,031  
    2,319,031     15,285,548     17,604,579  

As at December 31, 2021, the carrying amount of financial assets and financial liabilities were as follows:

                2021-12-31  
    Assets and     Assets and        
    liabilities     liabilities        
    carried at     carried at     Total  
    fair value     amortized cost     carrying value  
    $     $     $  
Financial assets                  
Financial assets measured at amortized cost                  
Cash         18,796,914     18,796,914  
Restricted Cash         53,333     53,333  
Debtors         55,729,961     55,729,961  
Loans receivable         20,823,691     20,823,691  
    -     95,403,898     95,403,899  
Financial liabilities                  
Financial liabilities measured at amortized cost                  
Accounts payable and accrued liabilities         15,903,158     15,903,158  
Bonds         313,234     313,234  
CEBA Loan         100,000     100,000  
Contingent consideration payable   1,921,000           1,921,000  
    1,921,000     16,316,392     18,237,392  


22
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

17 - FINANCIAL INSTRUMENTS (CONTINUED)

17.2 Financial risk management objectives and policies

The Company is exposed to various risks in relation to financial instruments. The main risks the Company is exposed to are credit risk (see note 5), market risk and liquidity risk.

The Company does not actively engage in the trading of financial instruments for speculative purposes.

No changes were made in the objectives, policies and processes related to financial instrument risk management during the reporting periods.

The most significant financial risks to which the Company is exposed are described below.

17.3 Financial risks

17.3.1 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk management serves to maintain a sufficient amount of cash and to ensure that the Company has financing sources for a sufficient amount. The Company's objective is to maintain a cash position sufficient to cover the next twelve-month obligations (note 2).

The Company's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarized below:

                2022-03-31  
    Current     Long-term  
    Within           More  
    6 months     6 to 12 months     than 12 months  
    $     $     $  
Accounts payable and accrued liabilities   14,858,149     -     -  
Bonds   -     -     400,000  
Contingent considerable payable   -     1,017,031     1,302,000  
CEBA loan   -     -     100,000  
    14,858,149     1,017,031     1,802,000  

                2021-12-31  
    Current     Long-term  
    Within           More  
    6 months     6 to 12 months     than 12 months  
    $     $     $  
Accounts payable and accrued liabilities   15,903,158     -     -  
Debentures   -     -     400,000  
Bonds   -     1,303,588     617,412  
CEBA loan   -     -     100,000  
    15,903,158     1,303,588     1,117,412  


23
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

 17 - FINANCIAL INSTRUMENTS (CONTINUED)

17.4 Finance costs

The breakdown in Finance costs during the three-month periods ended March 31, 2022 and 2021 is as follows:

    2022-03-31     2021-03-31  
Interest on debentures   -     333  
Interest on lease liabilities (note 10)   37,133     6,436  
Interest on security deposit and advances   4,327     28,233  
Interest on bonds   10,000     10,000  
Interest income   (15,166 )   (9,157 )
Accretion on debentures and bonds   7,614     6,924  
Accretion of contingent payable   398,031     -  
Total interest expense   441,939     42,769  
Miscellaneous   5,044     2,064  
    446,983     44,833  

17.5 Fair value

The following methods and assumptions were used to determine the estimated fair value for each class of financial instruments:

- The fair value of cash, restricted cash, loans receivables on short and long term and debtors (except sales tax receivables), accounts payable, advances, option conversions and accrued liabilities approximate their carrying amount, given the short-term maturity;

- The fair value of the debentures and the bonds is estimated using a discounted cash flow approach and approximate their carrying amount. CEBA loan is recognized as it cost which is close from its fair value;

- The fair value of contingent compensation payable related to the acquisition of certain assets and personnel from Heartbeat. (note 4) is estimated by probability-weighted cash outflows and reflect management's estimate of a 85% probability that the contract's target level will be achieved and the expected Company's share price.

The Company categorized its financial instruments based on the following three levels of inputs used for fair value measurements:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the assets and liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Bonds are level 3 under the fair value hierarchy.

Contingent consideration payable CEBA loan, loans receivable on short and long term and the option conversion are level 3 under the fair value hierarchy.


24
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

18 - RELATED PARTY TRANSACTIONS

The Company's related party transactions do not include, unless otherwise stated, special terms and conditions. No guarantees were given or received. Outstanding balances are usually settled in cash.

Transactions with key management personnel, officers and directors

The Company's key management personnel are, the CEO, the CFO , the China CEO and the members of the Board. Their remuneration includes the following expenses:

    2022-03-31     2021-03-31  
    $     $  
Salaries and fringe benefits   379,823     141,420  
Share-based payments   413,050     312,158  
Royalty- Cubeler   -     30,776  
Total   792,873     484,354  

These transactions occurred in the normal course of operations and have been measured at fair value.

As at March 31, 2022 and December 31, 2021 the condensed interim consolidated statement of financial position includes the following amounts with related parties:

    2022-03-31     2021-12-31  
    $     $  
Loans, with interest (1)   113,522     113,193  
    113,522     113,193  

(1) On December 15, 2021, loans were issued to two board members of the Company in the amounts of $72,793 and $40,000. Each loan is due on December 15, 2022. Each loans bears interest at an annual rate of 1%, which was the prescribed rate at the date of issuance. As of March 31, 2022, the aggregate outstanding principal amount due for said loans is $113,522 (December 31, 2021 - $113,193).

On October 1, 2021, the Company aquired 100% of the issued and the outstanding shares of Cubeler from Cubeler's shareholders in exchange for $1,000,000 in cash and 11,133,326 common shares of Tenet representing $106,654,255 (note 4).

19 - SEGMENT REPORTING

The Company has determined that it has two operating segments, which are defined below. For presentation purposes, other activities are grouped in the 'Other' heading. Each operating segment is distinguished by the type of products and services it offers and is managed separately as each requires different business processes, marketing approaches and resources. All inter-segment transfers are carried out at arm's length prices based on prices charged to unrelated customers in stand-alone sales of identical goods and services.

The operating segments are detailed as follows:

Fintech Platform

The Fintech Platform segment comprises the procurement and distribution of products within supply chain or facilitating transactions in the commercial lending industry through technology platforms.


25
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

19 - SEGMENT REPORTING (CONTINUED)

Financial Services

The Financial Services segment encompasses providing commercial loans to entrepreneurs and SMEs and the activity of providing turn-key credit outsourcing services to banks and other lending institutions.

The Fintech Platform segment operates in North America and China, the Financial Services segment operates in China.

Other

The "other" category includes the activity and unallocated portion of the Canadian parent company's services and all non-operating holdings registered in Hong Kong and China.

The segment information for the three-month periods ended March 31, 2022, and 2021 are as follows:

 

    Three months ended 2022-03-31  
    Fintech     Financial     Other     Elimination     Total  
    Platform     Services                    
          $     $     $     $  
Revenues (1)                              
Financial service revenue from external customers   -     587,760     -     -     587,760  
Fees/sales from external customers   1,042,988     180,267     -     -     1,223,255  
Supply chain services   32,982,642     -     (52,197 )   -     32,930,445  
Inter-segment   949,972     115,178     598,274     (1,663,424 )   -  
Total revenues   34,975,603     883,204     546,078     (1,663,424 )   34,741,460  
                               
Expenses                              
Depreciation and amortization   1,346,263     49,888     1,979     -     1,398,130  
Interest expense   31,329     8,645     (451 )   -     39,524  
Write down of accounts receivable   40     -     -     -     40  
All other expenses   32,587,109     410,555     4,624,944     (1,663,424 )   35,959,184  
Total expenses   33,964,742     469,089     4,626,472     (1,663,424 )   37,396,879  
                               
Profit (loss) before tax   1,010,861     414,115     (4,080,394 )   -     (2,655,419 )
Income tax   588,212     115,970     -     -     704,182  
Net profit (loss)   422,649     298,145     (4,080,394 )   -     (3,359,601 )
                               
Non-controlling interest   (147,808 )   170,478     -     -     22,670  
Net profit (loss) attributable to owners of the parent   570,457     127,668     (4,080,394 )   -     (3,382,271 )
                               
Segmented assets   152,539,181     25,435,971     15,959,446     (840,056 )   193,094,542  


26
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

19 - SEGMENT REPORTING (CONTINUED)

    Three months ended 2021-03-31   
    Fintech     Financial     Other     Elimination     Total  
    Platform     Services                    
          $     $     $     $  
Revenues (1)                              
Financial service revenue from external customers   -     592,815     -     -     592,815  
Fees/sales from external customers   804,080     231,067     -     -     1,035,147  
Supply chain services   12,578,180     -     33,634     -     12,611,814  
Inter-segment   89,165     11,034     79,162     (179,361 )   -  
Total revenues   13,471,425     834,916     112,796     (179,361 )   14,239,776  
                               
Expenses                              
Depreciation and amortization   79,768     72,717     5,493     -     157,978  
Interest expense   26,111     1,636     17,086     -     44,833  
All other expenses   12,791,220     405,551     1,107,280     (179,361 )   14,124,690  
Total expenses   12,897,099     479,904     1,129,859     (179,361 )   14,327,501  
                               
Profit (loss) before tax   574,326     355,012     (1,017,063 )   -     (87,725 )
Income tax   199,521     95,337     7,119           301,977  
Net profit (loss)   374,805     259,675     (1,024,182 )   -     (389,702 )
                               
Non-controlling interest   235,783     140,146     -     -     375,929  
Net profit (loss) attributable to owners of the parent   139,022     119,529     (1,024,182 )   -     (765,631 )
                               
Segmented assets   36,019,104     24,002,263     28,860,091     (26,734,172 )   62,147,286  

(1): Revenues from external customers have been identified on the basis of the customer's geographical location, which is China.

The Company's non-current assets are located in the following geographic regions:

    2022-03-31     2021-12-31  
    Non-current     Non-current  
    Assets     Assets  
    $     $  
China   12,015,535     10,900,348  
Canada   88,428,985     89,991,187  
Total   100,444,520     100,891,535  


27
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

20 - NON-CONTROLLING INTERESTS

The Company controls the following subsidiaries that have significant non-controlling interests (NCIs). 

    2022-03-31      2021-12-31  
    % ownership     % ownership  
    and voting rights     and voting rights  
Entities   held the by NCIs     held the by NCIs  
             
Asia Synergy Supply Chain Ltd ("ASSC")   49%     49%  
Asia Synergy Financial Capital Ltd ("ASFC")   49%     49%  
Wechain (Nanjing) Technology Service Co., Ltd   49%     49%  
Beijing Kailifeng New Energy Technology Co., Ltd   49%     49%  
Shanghai Xinhuizhi Supply Chain ManagementCo.,Ltd   49%     49%  

    Total comprehensive loss allocated              
    to NCI     Accumulated NCI  
    Three-month     Three-month              
    period ended     period ended     As at     As at  
    2022-03-31     2021-03-31     2022-03-31     2021-12-31  
                         
Asia Synergy Supply Chain Ltd   (39,080 )   234,977     1,876,634     1,951,538  
Asia Synergy Financial Capital Ltd   125,963     21,996     11,682,645     11,520,859  
Wechain (Nanjing) Technology Service Co., Ltd   (80,716 )   -     702,566     783,281  
Beijing Kailifeng New Energy Technology Co., Ltd   (23,740 )   -     204,407     64,703  
Shanghai Xinhuizhi Supply Chain ManagementCo.,Ltd   -     -     975     -  
    (17,574 )   256,973     14,467,227     14,320,381  

No dividends were paid to NCIs during the three-month periods ended March 31, 2022 and 2021.


28
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

20 - NON-CONTROLLING INTERESTS (CONTINUED)

Summarised financial information for subsidiaries with NCIs, before intragroup eliminations are as follows:

    ASSC     ASFC     Wechain     Kailifeng     ASAC     Total  
    2022-03-31     2021-12-31     2022-03-31     2021-12-31     2022-03-31     2021-12-31     2022-03-31     2021-12-31     2022-03-31     2021-12-31     2022-03-31     2021-12-31  
    $     $     $     $     $     $     $     $     $     $              
Current assets   6,193,966     8,454,526     23,248,677     23,223,244     612,364     446,330     359,531     130,545     1,972     -     30,416,510     32,254,645  
Non-current assets   267     391     2,579,155     3,421,288     947,418     1,283,169     85,625     59,760     -     -     3,612,465     4,764,607  
    6,194,233     8,454,917     25,827,832     26,644,532     1,559,782     1,729,498     445,157     190,305     1,972     -     34,028,975     37,019,252  
                                                                         
Current liabilities   2,122,672     4,238,109     1,716,159     2,584,145     126,380     67,363     29,577     56,091     -     -     3,994,788     6,945,708  
Non-current liabilities   -     -     65,817     69,209     66,101     66,128     -     -     -     -     131,918     135,337  
Total liabilities   2,122,672     4,238,109     1,781,976     2,653,354     192,481     133,491     29,577     56,091     -     -     4,126,706     7,081,045  
                                                                         
Equity attributable to owners of the parent   1,953,232     2,031,193     12,159,488     11,991,098     731,242     815,252     212,750     67,344     1,014     -     15,057,725     14,904,886  
                                                                         
Non-controlling interests   1,876,634     1,951,538     11,682,645     11,520,859     702,566     783,281     204,407     64,703     975     -     14,467,226     14,320,381  

    ASSC     ASFC     Wechain     Kailifeng     ASAC     Total  
    Three-month period ending     Three-month period ending     Three-month period ending     Three-month period ending     Three-month period ending     Three-month period ending  
    2022-03-31     2021-03-31     2022-03-31     2021-03-31     2022-03-31     2021-03-31     2022-03-31     2021-03-31     2022-03-31     2021-03-31     2022-03-31     2021-03-31  
    $     $     $     $     $     $     $     $     $     $     $     $  
Revenue   798,392     13,082,260     702,938     592,815     190,660     -     -     -     -     -     1,691,989     13,675,075  
                                                                         
Profit for the year attributable to owners of the parent   (51,789 )   245,407     177,436     145,866     (76,677 )   -     (25,375 )   -     -     -     23,595     391,273  
Profit for the year attributable to NCIs   (49,758 )   235,783     170,478     140,146     (73,670 )   -     (24,380 )   -     -     -     22,670     375,929  
Profit for the year   (101,548 )   481,190     347,914     286,012     (150,347 )   -     (49,754 )   -     -     -     46,265     767,202  
                                                                         
Other comprehensive income ("OCI") for the year                                                                        
OCI attributable to the owners of the parent   11,114     (840 )   (46,331 )   (122,972 )   (7,333 )   -     665     -     -     -     (41,885 )   (123,812 )
OCI attributable to NCIs   10,678     (807 )   (44,514 )   (118,150 )   (7,046 )   -     639     -     -     -     (40,243 )   (118,957 )
OCI for the year   21,792     (1,647 )   (90,846 )   (241,122 )   (14,379 )   -     1,304     -     -     -     (82,128 )   (242,769 )
Total comprehensive income for the year attributable to the owners of the parent   (40,675 )   244,566     131,105     22,894     (84,010 )   -     (24,709 )   -     -     -     (18,290 )   267,460  
Total comprehensive income for the year attributable to NCIs   (39,080 )   234,977     125,963     21,996     (80,716 )   -     (23,740 )   -     -     -     (17,573 )   256,973  
                                                                         
Total comprehensive income for the year   (79,755 )   479,543     257,068     44,890     (164,726 )   -     (48,450 )   -     -     -     (35,863 )   524,433  
                                                                         
Net cash used in operating activities   1,809,593     2,465,438     2,127,652     (540,182 )   (66,973 )   -     (295,053 )   -     -     -     3,575,219     1,925,257  
Net cash used in investing activities   3     -     110,989     (926,739 )   20,714     -     (25,273 )   -     -     -     106,433     (926,739 )
Net cash from financing activities   (1,796,478 )   (2,537,190 )   (913,382 )   7,929     (1,047 )   -     335,832     -     -     -     (2,375,075 )   (2,529,261 )
Foreign exchange differences   (43,700 )   -     (293,236 )   -     (12,259 )   -     (2,439 )   -     -     -     (351,634 )   -  
                                                                         
Net cash (outflow) inflow for the year   (30,582 )   (71,752 )   1,032,023     (1,458,991 )   (59,565 )   -     13,067     -     -     -     954,943     (1,530,743 )


29
 

TENET FINTECH GROUP INC.
(Formerly Peak Fintech Group Inc.)

Notes to Consolidated Financial Statements

For the three-month periods ended March 31, 2022 and 2021

(In Canadian dollars)
(Unaudited)

 

20 - NON-CONTROLLING INTERESTS (CONTINUED)

During the three-month period ended March 31, 2022, the Company's subsidiary, ASDS along with the non-controlling interests of Kalifeng subscribed for additional share capital in the ratio of their relevant ownership percentages. The total value of capital injected by NCIs in Kalifeng totalled $163,444 (three-months ended March 31, 2021 - $Nil). As at March 31, 2022 the amount of the NCI's portion of the capital injection agreed for Kailifeng that was outstanding was $261,683 (December 31, 2021 - $98,239) (refer note 6).

21 - CONTINGENCIES

Through the normal course of operations, the Company may be exposed to a number of lawsuits, claims and contingencies. Provisions are recognized as liabilities in instances when there are present obligations and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and where such liabilities can be reliably estimated. No provision has been recognized in these consolidated financial statements. Although it is possible that liabilities may be incurred in instances where no provision has been made, the Company has no reason to believe that the ultimate resolution of such matters will have a material impact on its financial position.

22 - SUBSEQUENT EVENTS

During the period from April 1, 2022, and May 30, 2022, the Company issued 15,627 share purchase options to new employees and consultant with a strike price of $4.16. Stock options are vested between a period of 12 to 24 months and mature 5 years after the issuance date.