Total assets		$	1,453,652			$	5,979,686			$	13,274,708			$	14,755,112			$	15,140,842
Net assets		$	1,063,223			$	5,028,288			$	11,677,766			$	13,073,486			$	12,820,201
Share Capital		$	31,305,247			$	31,305,247			$	31,946,732			$	32,401,440			$	32,713,370
Long-term debt			NIL				NIL				NIL				NIL				NIL
Cash dividends declared per common share			NIL				NIL				NIL				NIL				NIL
Weighted average common shares outstanding basic and diluted			Basic: 2,802,412 Diluted: 2,802,412				Basic: 2,820,647 Diluted: 2,820,647				Basic: 2,880,882 Diluted: 2,880,882				Basic: 2,922,684 Diluted: 3,192,963				Basic: 2,929,722 Diluted: 3,246,223

Exchange Rates

Exchange Rate – May 1, 2018: 1.2867

Exchange rates for the previous six months: US$1 equivalent to the following in Canadian dollars:

Average exchange rates for each of the five most recent fiscal years:US$1equivalent to the following in Canadian dollars:

B.

Capitalization and indebtedness.

This item is not applicable for an Annual Report.

C.

Reasons for the offer and use of proceeds.

This item is not applicable for an Annual Report.

D.

Risk factors.

Risks Related To Our Business

include very large corporations with significantly greater financial, marketing and product development resources than we have. A relatively small number of titles account for a significant portion of net revenues, and an even greater portion of net profit, in the game entertainment industry, and the availability of significant financial resources is a “shell company” as definedmajor competitive factor in Rule12b-2the production of high-quality products and in the Exchange Act.

Following the salemarketing of products that are ultimately well-received. Our larger competitorsmay be able to deliver greater innovation, respond more quickly to new or emerging technologies and disposition of the Company’s water brand and remaining beverage assets by virtue of the disposition of the shares of its subsidiaries, including Leading Brands of Canada, Inc. (“LBCI”) on September 15, 2017, the Company became a shell company. As a shell company, the Company’s common shares are not eligible to be sold pursuant to Rule 144 promulgated pursuantchanges in market demand, devote more resources to the Securities Act. In addition,development, marketing and sale of their products, successfully expand into emerging and other international markets, or price their products more aggressively than we can. If our competitors are more successful than we are in developing products, or in attracting and retaining customers, our financial condition and operating results could be adversely affected.

Our growth relies on market acceptance.

While we believe that there will be significant customer demand for our game, tv, and film offerings and services, there is no assurance that there will be broad market acceptance of our offerings. There also may not be broad market acceptance of our offerings if our competitors offer products or services that are preferred by prospective customers. Customers consider many factors when evaluating our products relative to those of our competitors, including innovation, ease of use, price, feature sets, functionality, reliability, performance, reputation, and training and support, and we may not compare favorably against our competitors in all respects. There can be no assurance that our efforts will be successful in the near future, or at all, or that our competitors will not take significant market share in similar efforts. If we fail to develop new products and to manage new product introductions and transitions properly, or if our offerings do not receive market acceptance, our financial condition and operating results could be harmed.

We process, store and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business.

We receive, store and process personal information and other player data, and we enable our players to share their personal information with each other and with third parties, including on the internet and mobile platforms. There are numerous federal, state and local laws around the world regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other player data on the Internet and mobile platforms, the scope of which are changing, subject to differing interpretations, and may be inconsistent between countries or conflict with other rules. We generally comply with industry standards and are subject to the terms of our own privacy policies and privacy-related obligations to third parties (including voluntary third-party certification bodies such as TRUSTe). We strive to comply with all applicable laws, policies, legal obligations and certain industry codes of conduct relating to privacy and data protection, to the extent reasonably attainable. However, it is possible that Nasdaq (asthese obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to players or other third parties, or our privacy ­related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other player data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our players to lose trust in us, which could have an adverse effect on our business. Additionally, if third parties we work with, such as players, vendors or developers, violate applicable laws or our policies, such violations may also put our players' information at risk and could in turn have an adverse effect on our business.

In the area of information security and data protection, many states have passed laws requiring notification to players when there is a security breach for personal data, such as the 2002 amendment to California'sInformation Practices Act, or requiring the adoption of minimum information security standards that are often vaguely defined below)and difficult to practically implement. The costs of compliance with these laws may increase in

10

the future as a result of changes in interpretation. Furthermore, any failure on our part to comply with these laws may subject us to significant liabilities.

In operating ourmedia and entertainment business, we may fail to launch new products according to our timetable, and our new products may not determinebe commercially successful.

In order for our media and entertainment business strategy to succeed over time, we will need to license, acquire, or develop new digital entertainment products that the Company has regained compliancecan generate additional revenue and diversify our revenue sources. A number of factors, including technical difficulties, government approvals and licenses of intellectual property right required for launching new products, lack of sufficient development personnel and other resources, and adverse developments in our relationship with the Nasdaq ruleslicensors of our new licensed products could result in delay in launching our new products. Therefore, we cannot assure you that we will be able to meet our timetable for development of our business.

There are many factors that may adversely affect the popularity of our new products. For example, we may fail to anticipate and adapt to future technical trends and new business models, fail to satisfy consumer preferences and requirements, fail to effectively plan and organize marketing and promotion activities, fail to effectively detect and prevent programming errors or defects in the products, and fail to operate our new products at acceptable costs. We cannot assure you that our new products will gain market acceptance and become commercially successful. If we are not able to license, develop or acquire additional digital entertainment products that are commercially successful, our future revenues and profitability may decline. If our games and other entertainment offerings do not meet consumer expectations, whether because they fail to function as advertised or otherwise, our sales may suffer. If our games and services do not function as consumers expect, it may negatively impact our business.

Our industry is subject to rapid technological change, and if we do not adapt to, and appropriately allocate our new resources among, emerging technologies and business models, our business may be negatively impacted.

The entertainment industry in general, and the gaming, tv and film segments thereof in particular, are rapidly evolving, primarily as a result of free content, minimal entry costs for creation and distribution, and expanded use of mobile devices. We must continually anticipate and adapt our products to emerging technologies, delivery platforms and business models in order to stay competitive and try to predict and prepare for rapid changes in consumer demand that could materially alter public preferences for different forms of entertainment and leisure activities. The rapid growth of technology and shifting consumer tastes prevent us from being able to accurately predict the overall effect that technological growth may have on our potential revenue and profitability. When we choose to incorporate a new technology into a product or to develop a product for a new platform, operating system or media format, we often are required to make a substantial investment prior to the introduction of the product. If we invest in the development of products incorporating a new technology or for a new platform that does not achieve significant commercial success, our revenues from those products likely will be lower than we anticipated and may not cover our development costs. Further, our competitors may adapt to an emerging technology or business model more quickly or effectively than we do, creating products that are technologically superior to ours, more appealing to consumers, or both. If, on the other hand, we elect not to pursue the development of products incorporating a new technology or for new platforms, or otherwise elect not to pursue a new business model, that achieves significant commercial success, it may have adverse consequences. It may take significant time and resources to shift product development resources to that technology, platform or business model, as the case may be, and may be more difficult to compete against existing products incorporating that technology or for that platform or against companies using that business model. Any failure to successfully adapt to, and appropriately allocate resources among, emerging technologies and to keep pace with rapid technological change could negatively impact our business and prevent us from achieving profitability or sustaining a meaningful market position.

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Our business is subject to our ability to develop commercially successful products for the current video game platforms.

We are a provider of video game products primarily for the casual-game consumer and have published video games for interactive entertainment hardware platforms, including Nintendo’s DS, 3DS, Wii and WiiU, Sony’s PlayStation 3 and 4, or PS3 and PS4, Microsoft’s Xbox 360 and Xbox One and the personal computer, or PC.  The success of our business is subject to the continued popularity of these platforms and our ability to develop commercially successful products for these platforms.

Companies and governmental agencies may restrict access to our website, other websites that carry our products, mobile applications or the internet, generally, which could lead to losses or slower growth due to the Company’s shell company status. See “The Company’s Planeffects such restrictions may have on our player base.

In general, players need to regain complianceaccess the internet and platforms such as Facebook, Apple, Google, Liquid’s website, the websites of our partners or entities controlled by us or mobile applications in order to play the games we offer or will offer. Companies and governmental entities may block or restrict access to these sites or applications or the internet generally for a number of reasons, for example, confidentiality, security, a determination that greater regulatory oversight is required, or they may adopt policies that restrict the access of employees to access the sites and applications. If companies or governmental entities block, limit or otherwise adopt restrictive policies or regulations which materially interfere with the Nasdaq’s minimum $2.5 million stockholders’ equityability of players to play our games, our business and operations will likely be negatively affected and could lead to losses or slower growth than anticipated.

The video game hardware manufacturers set the royalty rates and other requirementsfees that we must pay to provide games for continued listingtheir platforms, and therefore have significant influence on our costs. If one or more of these manufacturers change their fee structure, our profitability will be materially impacted.

In order to provide products and service for a video game system such as Nintendo’s DS, 3DS, Wii and WiiU, Sony’s PlayStation 3 and 4, or PS3 and PS4, Microsoft’s Xbox 360 and Xbox One, we must take a license from Nintendo, Sony and Microsoft, respectively, which give these companies the opportunity to set the fee structure that we must pay in order to provide games for that platform. Similarly, these companies have retained the flexibility to change their fee structures, or adopt different fee structures for online purchases of games, online gameplay and other new features for their consoles. The control that hardware manufacturers have over the fee structures for their platforms and online access could adversely impact our costs, profitability and margins. Because providing products for video game systems is the largest portion of our business, any increase in fee structures would significantly harm our ability to generate profits.

Acquisitions we pursue in our industry and related industries could result in operating difficulties, dilution to our shareholders and other consequences harmful to our business.

As part of our growth strategy, we may selectively pursue strategic acquisitions in our industry and related industries. We may not be able to consummate such acquisitions, which could adversely impact our growth. If we do consummate acquisitions, integrating an acquired company, business or technology may result in unforeseen operating difficulties and expenditures, including:

·

increased expenses due to transaction and integration costs;

·

potential liabilities of the acquired businesses;

·

potential adverse tax and accounting effects of the acquisitions;

·

diversion of capital and other resources from our existing businesses;

·

diversion of our management’s attention during the acquisition process and any transition periods;

·

loss of key employees of the acquired businesses following the acquisition; and

·

inaccurate budgets and projected financial statements due to inaccurate valuation assessments of the

12

acquired businesses.

Our evaluations of potential acquisitions may not accurately assess the value or prospects of acquisition candidates and the anticipated benefits from our future acquisitions may not materialize. In addition, future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, including our common stock, the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition.

Changes in tax laws or tax rulings could materially affect our effective tax rates, financial position and results of operations.

The tax regimes to which we are subject or under which we operate is unsettled and may be subject to significant change. Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional income based taxes, non-income taxes (such as payroll, sales, use, value-added, net worth, property and goods and services taxes), or tariffs related to the import or export of our offerings, could materially affect our financial position and results of operations. Any significant changes to our effective tax rate or the imposition of significant tariffs on our products may result in a material adverse consequence on our business, financial condition, results of operations, and cash flows.

Risks Related to the Film Industry

Our results of operations may fluctuate significantly as to its film operations depending upon the Company successfully closing its planned acquisitiontiming of Liquid” below.television shows and films delivered or made available to various media

Results of operations with respect to our production and distribution of film and television operations for any periods are significantly dependent upon the number and timing of television programs and films delivered or made available to various media. Consequently, our results of operations may fluctuate materially from period to period and the results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate and are not necessarily closely correlated with revenue recognition. Although traditions are changing, due in part to increased competition from new channels, industry practice is that broadcasters make the most of their annual programming commitments between February and June, such that new programs can be ready for telecast at the start of the broadcast season in September, or a mid-season replacements in January. Because of this annual production cycle, our film revenues may not be earned on an even basis throughout the year. Results from operations may fluctuate materially from quarter to quarter and the results for any one quarter are not necessarily indicative or results for future quarters.

Our entertainment programming may not be accepted by the public which would result in a portion of our costs not being recouped or anticipated profits not neing realized.

The entertainment industry involves a substantial degree of risk. Acceptance of entertainment programming represents a response not only to the production's artistic components, but also the quality and acceptance of other competing programs released into the marketplace at or near the same time. The availability of alternative forms of entertainment and leisure time activities, general economic conditions, public tastes generally and other intangible factors, all of which could change rapidly or without notice und cannot be predicted with certainty.

There is a risk that some or all or of our programming will not be purchased or accepted by the public generally, resulting in a portion of costs not being recouped or anticipated profits not being realized. There can be no certaintyassurance that revenue from existing or future programming will replace loss of revenue associated with the Transactioncancellation or unsuccessful commercialization of any particular production.

13

Our film and television productions may not receive favorable reviews or ratings or perform well in ancillary markets, broadcasters may not license the rights to our film and television programs and distributors may not distribute or promote our films and television programs, any of which could have a material adverse effect on our results of operations or financial condition.

Because the performance of television and film programs in ancillary markets, such as home video and pay and free television is often directly related to reviews from critics and/or television ratings, poor reviews from critics or poor television ratings may negatively affect future revenue. Our results of operations will depend, in part on the experience and judgment of our management to select and develop new investment and production opportunities. We cannot make assurances that our films and television programs will obtain favorable reviews or ratings or that its films and television programs will perform well in ancillary markets or that broadcasters will license the rights to broadcast any of our film and television programs in development or renew licenses to broadcast film and television programs in our library. The failure to achieve any or the foregoing could have a material adverse effect on our business, results or operations or financial condition.

Licensed distributors’ decisions regarding the timing or release of and promotional support for our films, television programs and related products are important in determining the success of these films, programs and related products. We do not control the timing and manner in which our licensed distributors distribute our films, television programs or related products. Any decision by those distributors not to distribute or promote one of our films, television programs or related products or to promote competitors’ films, programs or related products to a greater extent than they promote us could have a material adverse effort on our business, operations or financial condition.

We are dependent upon certain key personnel.

We are dependent upon the services of key executives, including our Chair, Joshua Jackson, and our CFO, Daniel Cruz. The loss of our executive officers or our other key personnel, particularly with little or no notice, could cause delays on projects and could have an adverse impact on our client and industry relationships, our business, operating results or financial condition.

Due to the relatively small size of our company, the loss of key persons or our inability to attract and retain additional highly-skilled employees may adversely affect our business and future operations. The loss of one or more key employees or contractors, if not replaced, could adversely affect Liquid’s project exploration and development programs, consolidated operations and financial condition.

Our success depends in part on our ability to hire and retain competent and skilled management and technical, sales and other personnel.

Our success depends to a significant extent on our ability to identify, hire, and retain qualified creative, technical and managerial personnel in a competitive job market. We expect competition for personnel with the specialized creative and technical skills needed to create our products and provide our services will continue to intensify in future. Our competitors may be able to offer a work environment with higher compensation or more opportunities to work with cutting-edge technology than we can. If we are unable to retain our key personnel or appropriately match skill sets with our needs, we would be required to expend significant time and financial resources to identify and hire new qualified personnel and to transfer significant internal historical knowledge, which might significantly delay or prevent the achievement of our business objectives.

We may be involved in legal proceedings that may result in adverse outcomes.

From time to time, we may be involved in claims, suits, government investigations, audits and proceedings arising from the ordinary course of our business. Such claims, suits, government investigations, audits and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the

14

outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion of management resources and other factors.

Declines in consumer spending and other adverse changes in the economy could have a material adverse effect on our business, financial condition and operating results.

Most of our products and services involve discretionary spending on the part of consumers. We believe that consumer spending is influenced by general economic conditions and the availability of discretionary income. This makes our products particularly sensitive to general economic conditions and economic cycles as consumers are generally more willing to make discretionary purchases, including purchases of products like ours, during periods in which favorable economic conditions prevail. Adverse economic conditions such as a prolonged general economic downturn, including periods of increased inflation, unemployment levels, tax rates, interest rates, energy prices or declining consumer confidence could also reduce consumer spending. Reduced consumer spending may result in reduced demand for our products and may also require increased selling and promotional expenses, which may have an adverse effect on our business, financial condition and operating results. In addition, uncertainty and adverse changes in the economy could also increase costs associated with developing and publishing our products, increase the cost and availability of sources of financing, and increase our exposure to material losses from bad debts, any of which could have a material adverse effect on our business, financial condition and operating results. If economic conditions worsen, our business, financial condition and operating results could be adversely affected.

Our business is subject to a variety of other U.S. and foreign laws, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business.

We are subject to a variety of laws in the United States and abroad, including laws regarding consumer protection, intellectual property, export and national security, that are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the United States. For example, laws relating to the liability of providers of on line services for activities of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the ads posted or the content provided by users. It is also likely that as our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions. We are potentially subject to a number of foreign and domestic laws and regulations that affect the offering of certain types of content, such as that which depicts violence, many of which are ambiguous, still evolving and could be interpreted in ways that could harm our business or expose us to liability. In addition, certain of our games may become subject to gambling-related rules and regulations and expose us to civil and criminal penalties if we do not comply.

It is difficult to predict how existing laws will be completed.applied to our business and the new laws to which we may become subject. If we are not able to comply with these laws or regulations or if we become liable under these laws or regulations, we could be directly banned, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to modify our games, which would harm our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results.

It is possible that a number of laws and regulations may be adopted or construed to apply to us in the United States and elsewhere that could restrict the on line and mobile industries, including player privacy, advertising, taxation, content suitability, copyright, distribution and antitrust. Furthermore, the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer protection laws that may

15

impose additional burdens on companies such as ours conducting business through the Internet and mobile devices. We anticipate that scrutiny and regulation of our industry will increase, and we will be required to devote legal and other resources to addressing such regulation. For example, existing laws or new laws regarding the regulation of currency and banking institutions may be interpreted to cover virtual currency or goods. If that were to occur we may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may be subject to additional regulation and oversight, all of which could significantly increase our operating costs. Changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of social game services and impair our business.

Our management team has limited experience managing a public company.

Members of our management team have limited experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. These obligations will require significant attention from our management and could divert their attention away from the day-to-day management of our business. In the event that our management team are not successful or efficient as managers of a public company, this could have a material adverse effect on our business, results of operations, or financial condition.

We may not be able to manage our potential growth.

For us to succeed, our business needs to experience significant expansion. There can be no assurance that it will achieve this expansion. This expansion, if accomplished, may place a significant strain on our management, operational and financial resources. To manage any material growth, we will be required to implement operational and financial systems, procedures and controls. We will also be required to expand our finance, administrative and operations staff. There can be no assurance that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations at any increased level. Our failure to manage growth effectively could have a material adverse effect on our business, results of operations and financial condition.

Our business will suffer if we are unable to successfully integrate acquired companies into our business or otherwise manage the growth associated with multiple acquisitions.

We have acquired businesses, personnel and technologies in the past and we intend to continue to pursue acquisitions that are complementary to our existing business and expand our employee base and the breadth of our offerings. Our ability to grow through future acquisitions will depend on the availability of suitable acquisition and investment candidates at an acceptable cost, our ability to compete effectively to attract these candidates and the availability of financing to complete larger acquisitions. Since we expect the social game industry to consolidate in the future, we may face significant competition in executing our growth strategy. Future acquisitions or investments could result in potential dilutive issuances of equity securities, use of significant cash balances or incurrence of debt, contingent liabilities or amortization expenses related to goodwill and other intangible assets, any of which could adversely affect our financial condition and results of operations. The benefits of an acquisition or investment may also take considerable time to develop, and we cannot be certain that any particular acquisition or investment will produce the intended benefits. Integration of a new company’s operations, assets and personnel into ours will require significant attention from our management. The diversion of our management's attention away from our business and any difficulties encountered in the integration process could harm our ability to manage our business. Future acquisitions will also expose us  to potential risks, including risks associated with any acquired liabilities, the integration of new operations, technologies and personnel, unforeseen or hidden liabilities and unanticipated, information security vulnerabilities, the diversion of resources from our existing businesses, sites and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, and potential loss of, or harm to, our relationships with employees, players, and other suppliers as a result of integration of new businesses.

We use a limited number of suppliers.

We rely on a limited number of suppliers for hardware, software, and film and gaming production equipment. While other sources of supply do exist for this equipment, an unexpected disruption in supply or an increase in pricing could have a negative impact on our earnings.

Risks Related to Intellectual Property

We depend on protection afforded by trademarks and copyrights to protect our intellectual property.

We hold a number of trademarks and copyrights relating to certain significant products. We rely on trademark laws and contractual provisions to protect these trademarks and copyrights, and there can be no assurance that third parties will not infringe or misappropriate our trademarks and copyrights. Existing trade secret, copyright and trademark laws offer only limited protection and do not account for common law claims. Furthermore, the monitoring and enforcement against the unauthorized use of our intellectual property rights could entail significant expenses and could prove difficult or impossible. As previously announcedwell, the laws of other countries in which we may choose to market our products may afford little or no effective protection of our intellectual property. If we lose some or all of our intellectual property rights, our business may be materially adversely affected.

Intellectual property claims may increase our costs or require us to cease selling affected products, which could adversely affect our financial condition and results of operations.

Development of original content, including publication and distribution, sometimes results in claims of intellectual property infringement. Although we make efforts to ensure our products do not violate the intellectual property rights of others, it is possible that third parties may still allege infringement. These claims and any litigation resulting from these claims may be time consuming and costly to defend, divert management attention, and result in damage awards payable by us. They could also prevent us from selling the affected product; or require us to redesign the affected product to avoid infringement or obtain a license for future sales of the affected product or prevent us from utilizing important technologies, ideas or formats.

Security breaches involving the source code for our products or other sensitive and proprietary information could adversely affect our business.

We securely store the source code for our interactive entertainment software products as it is created. A breach, whether physical, electronic or otherwise, of the systems on September which such source code and other sensitive data are stored could lead to damage or piracy of our software. In addition, certain parties with whom we do business are given access to our sensitive and proprietary information in order to provide services and support our team. These third parties may misappropriate our information and engage in unauthorized use of it. If we are subject to data security breaches, we may have a loss in sales or increased costs arising from the restoration or implementation of additional security measures which could materially and adversely affect our business, financial condition and operating results. Any theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could adversely affect our competitive position, reputation, brand, and future sales of our products. Our business could be subject to significant disruption, and we could suffer monetary and other losses and reputational harm, in the event of such incidents and claims.

Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement could harm our business and operating results.

We regard the protection of our trade secrets, copyrights, trademarks, trade dress, domain names and other product rights as critical to our success. We strive to protect our intellectual property rights by relying on

17

federal, state and common law rights, as well as contractual restrictions. We enter into confidentiality and invention assignment agreements with our employees and contractors and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

We pursue the registration of our domain names, trademarks, and service marks in the United States and in certain locations outside the United States. We are seeking to protect our trademarks, patents and domain names in an increasing number of jurisdictions, a process that is expensive and time-consuming and may not be successful or which we may not pursue in every location. We may, over time, increase our investment in protecting our innovations through increased patent filings that are expensive and time-consuming and may not result in issued patents that can be effectively enforced.

Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect our business and operating results. If we fail to maintain, protect and enhance our intellectual property rights, our business and operating results may be harmed.

The proliferation of "cheating" programs and scam offers that seeks to exploit our games anti players affects the game-playing experience and may lead players to stop playing our games.

Unrelated third parties have developed, and may continue to develop, "cheating" programs that enable players to exploit our games, play them in an automated way or obtain unfair advantages over other players who do play fairly. These programs harm the experience of players who play fairly and may disrupt the virtual economy of our games. In addition, unrelated third parties attempt to scam our players with fake offers for virtual goods. We devote significant resources to discover and disable these programs and activities, and if we are unable to do so quickly our operations may be disrupted, our reputation damaged and players may stop playing our games. This may lead to lost revenue from paying players, increased cost of developing technological measures to combat these programs and activities, legal claims relating to the diminution in value of our virtual currency and goods, and increased customer service costs needed to respond to dissatisfied players.

Risk Related to Our Stock

We may not be able to maintain our listing on the NASDAQ Capital Market.

Our common shares currently trades on the NASDAQ Capital Market. Following our business combination in August 2018, we were required to establish compliance with the NASDAQ initial listing requirements, which we did in October 2018. NASDAQ has continued listing requirements that we must maintain to avoid delisting. The standards include, among others, a minimum bid price requirement of $1.00 per share and any of: (i) a minimum stockholders’ equity of $2.5 million; (ii) a market value of listed securities of $35 million; or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three fiscal years. Our results of operations and our fluctuating shares price directly impact our ability to satisfy these listing standards. If we are unable to maintain these listing standards, we may be subject to delisting.

A delisting from NASDAQ would result in our common shares being eligible for quotation on the over-the-counter market which is generally considered to be a less efficient system than listing on markets such as NASDAQ or other national exchanges because of lower trading volumes, transaction delays, and reduced security analyst and news media coverage. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common shares. Additionally, trading of our common shares on the OTCBB may make us less desirable to institutional investors and may, therefore, limit our future equity funding options and

18 2017,

could negatively affect the liquidity of our shares.

If we make a significant acquisition that requires the issuance of our common shares, we may be required to reapply for NASDAQ listing.

Reapplying for NASDAQ listing may require us to satisfy the more stringent original listing standards of the NASDAQ Capital Market, which has substantially higher standards than the continuing listing standards. If any such application is not approved, our shares of common shares could be delisted from the NASDAQ Capital Market.

Additional capital raising efforts in future periods may be dilutive to our then current shareholders or result in increased interest expense in future periods.

In order to finance our operations, we have raised funds through the issuance of common shares and securities convertible into common shares and may do so again in future. We cannot predict the size of future issuances of common shares or the size or terms of future issuances of debt instruments or other securities convertible into common shares, or the effect, if any, that future issuances and sales of our securities will have on the market price of our common shares. Sales or issuances of substantial numbers of common shares, or the perception that such sales could occur, may adversely affect the market price of our common shares. With any additional sale or issuance of common shares, or securities convertible into common shares, our investors will suffer dilution to their voting power.

We could lose our “foreign private issuer” status in the future, which could result in significant additional costs and expenses to us.

In order to maintain our current status as a “foreign private issuer” (as defined in Rule 405 under the United StatesSecurities Act of 1933), where more than 50% of our outstanding voting securities are directly or indirectly owned by residents of the United States, we must not have any of the following: (i) a majority of our executive officers or directors being U.S. citizens or residents, (ii) more than 50% of our assets being located in the United States, or (iii) our business being principally administered in the United States. If we were to lose our foreign private issuer status:

·

we would no longer be exempt from certain of the provisions of U.S. securities laws, such as Regulation FD and the Section 16 short swing profit rules;

·

we would be required to commence reporting on forms required of U.S. companies, such as Forms l0-K, 10-Q and 8-K, rather than the forms currently available to us, such as Forms 20-F and 6-K;

·

we would be subject to additional restrictions on offers and sales of securities outside the United States, including in Canada;

·

we might lose the ability to rely upon exemptions from the NASDAQ corporate governance requirements that are available to foreign private issuers; and

·

if we engage in capital raising activities after losing our foreign private issuer status, there is a higher likelihood that investors may require the Company entered into a definitive arrangement agreement dated September 17, 2017 (the “to file resale registration statements with the Securities and Exchange Commission (“Arrangement AgreementSEC”) as a condition to any such financing.

If we are characterized as a passive foreign investment company for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), our U.S. shareholders may suffer adverse tax consequences.

If 75% or more of our gross income in a taxable year, including our pro-rata share of the gross income of any company, U.S. or foreign, in which we are considered to own, directly or indirectly, 25% or more of the shares by value, is passive income, then we will be a passive foreign investment company, or “PFIC,” for U.S. federal income tax purposes. Alternatively, we will be considered to be a PFIC if at least 50% of our assets in a taxable

19

year, averaged over the year and ordinarily determined based on fair market value and including our pro-rata share of the assets of any company in which we are considered to own, directly or indirectly, 25% or more of the shares by value, are held for the production of, or produce, passive income. Once treated as a PFIC, for any taxable year, a foreign corporation will generally continue to be treated as a PFIC for all subsequent taxable years for any shareholder who owned shares of the foreign corporation when it was treated as a PFIC. If we were to be a PFIC, and a U.S. holder does not make an election to treat us as a “qualified electing fund,” or QEF, or a “mark-to-market” election, “excess distributions” to a U.S. holder, and any gain recognized by a U.S. holder on a disposition of our ordinary shares, would be taxed in an unfavorable way. Among other consequences, our dividends, to the extent that they constituted excess distributions, would be taxed at the regular rates applicable to ordinary income, rather than the 20% maximum rate applicable to certain dividends received by an individual from a qualified foreign corporation, and certain “interest” charges may apply. In addition, gains on the sale of our ordinary shares would be treated in the same way as excess distributions.

The tests for determining PFIC status are applied annually and it is difficult to make accurate predictions of future income and assets, which are relevant to the determination of PFIC status. In addition, under the applicable statutory and regulatory provisions, it is unclear whether we would be permitted to use a gross loss from sales (sales less cost of goods sold) to offset our passive income in the calculation of gross income. Although we do not expect that we will be a PFIC in the future, in light of the periodic asset and income tests applicable in making this determination, no assurance can be given that we will not become a PFIC. If we do become a PFIC in the future, U.S. holders who hold ordinary shares during any period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC, subject to exceptions for U.S. holders who made a timely QEF or mark-to-market election, or certain other elections. We do not currently intend to prepare or provide the information that would enable our shareholders to make a QEF election.

We have never paid cash dividends on our common shares, and we do not anticipate paying cash dividends in the foreseeable future.

We have never declared or paid any cash dividends on our common shares and do not intend to pay any cash dividends in the foreseeable future. We currently intend to retain any future earnings to fund the growth of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant. As a result, capital appreciation, if any, of our common shares will be the sole source of gain for the foreseeable future.

Sales of a substantial number of our common shares into the public market could result in significant downward pressure on our share price.

Our common shares are traded on the NASDAQ under the symbol “YVR.” As of November 30, 2019, there were 5,345,660 common shares issued and outstanding. The concurrent sale of a substantial number of our common shares in the public market could cause a reduction in the market price of our common shares.

We are incorporated in British Columbia, Canada, and all but one of our directors and officers live in Canada, and all of the Company’s assets, with the exception of Majesco, are in Canada; therefore, investors may have difficulty initiating legal claims and enforcing judgments against us and our directors and officers.

We are a company incorporated under the laws of British Columbia, all but one of our directors and officers are residents of Canada and all our assets and operations, with the exception of our 51% held subsidiary Majesco Entertainment Company ("Majesco”), are located outside of the United States. It may not be possible for shareholders to enforce in Canada judgments against the Company obtained in the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws.

20

While reciprocal enforcement of judgment legislation exists between Canada and the United States, we and our insiders may have defenses available to avoid in Canada the effect of U.S. judgments under Canadian law, making enforcement difficult or impossible. There is uncertainty as to whether Canadian courts would enforce (a) judgments of U.S. courts obtained against us or our insiders predicated upon the civil liability provisions of the U.S. federal and state securities laws or (b) in original actions brought in Canada, liabilities against us or our insiders predicated upon the U.S. federal and state securities laws. Therefore, our shareholders in the United States may have to avail themselves of remedies under Canadian corporate and securities laws for any perceived oppression, breach of fiduciary duty and like legal complaints. Canadian law may not provide for remedies equivalent to those available under U.S. law.

Item 4. – Information on the Company

A.

History and development of the Company.

1.

The legal name of the Company is “Liquid Media Group Ltd.”

2.

The Company was incorporated under theCompany Act(British Columbia) on February 4, 1986 under the name “2060 Investments Ltd.”  On May 21, 1986, the Company changed its name to “Camfrey Resources Ltd.”  On March 16, 1993, the Company changed its name to “Brio Industries Inc.,” and on October 25, 1999, the Company changed its name to Leading Brands, Inc. On August 10, 2018, the Company changed its name to “Liquid Media Group Ltd.”

On August 9, 2018, the Company consummated a business combination with Liquid to acquire LiquidCanada by way of a plan of arrangement pursuant tounder theBusiness Corporations Act (British Columbia) (the “"TransactionArrangement"). Pursuant to the Arrangement, Liquid Canada was acquired by and became a wholly-owned subsidiary of the Company.  As part of the Arrangement, on August 10, 2018, the Company changed its name to Liquid Media Group Ltd. and Liquid Canada changed its name to Liquid Media Group (Canada) Ltd.  At the time of completion of the Arrangement, the Company had 1,848,980 common shares issued and outstanding which included 1,288,497 common shares issued to former Liquid Canada shareholders, representing 69.69% of the Company’s issued and outstanding shares. Initially, the common shares of the Company issued in connection with the Arrangement were listed on NASDAQ under the ticker symbol “LBIX”. Effective August 10, 2018, the trading symbol of the Company was changed to “YVR”.

3.

The Company is a corporation incorporated under the laws of the province of British Columbia, Canada, and is governed by theBusiness Corporations Act (British Columbia). The head office of the Company is located at #202, 5626 Larch Street, Vancouver, BC, V6M 4E1;Tel: 604-602-0001

4.

During the Company’s fiscal year ended November 30, 2019, the Company realized several material changes to both its organizational structure as well as the nature of its business.

On January 22, 2019, the Company changed its auditor from Charlton & Company to Davidson & Company LLP.

In February 2019, the Company closed its private placement offering of unsecured convertible debentures raising US$2,678,000.  Each debenture will mature two years from closing, will bear interest at 2% per annum, and will be convertible into units at a price of US$1.50 per unit.  Each unit will consist of one common share and one share purchase warrant with each warrant entitling the holder to acquire one common share of the Company for US$1.75 for a period of two years from the closing date of the offering.  At the time of the closing of the Debenture offering, the Company also converted US$255,000 of accounts payable to non-related parties into 113,334 common shares at a price of US$2.62.

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In February 2019, the Company granted 461,500 stock options to certain officers, directors, and consultants of the Company with an exercise price of US$2.55 per share and a term of five years.

In February 2019, the Company issued 113,334 common shares valued at $391,013 to settle debt of $335,792.

In April 2019, the Company issued 46,539 common shares valued at $243,162 to settle debt of $199,896 and issued 17,222 common shares valued at $73,980 to various consultants of the Company for consulting and public relations services provided to the Company.

In April 2019, the Company entered into an Assignment and Assumption Agreement whereby the vendor assigned all of its rights and obligations under a Master Services Agreement with A&E Television Networks, LLC. (“A&E”) and is seekingit’s Statements of Work forAncient Aliens: The Game® with A&E to list the post-acquisition entityCompany.

In May 2019, the Company announced that it was expanding the scope of its relationship with A&E, becoming the official operator of the free-to-play, card collecting strategy gameKnightfall™: Rivals, available on The Nasdaq Capital Market (the “iTunes and Google Play.

In May 2019, the Company entered into a Collaboration Agreement with YDX Innovation Corp. (“NasdaqYDX”). In accordance with the applicable Canadian securities laws, whereby the Company plans to hold a special meetingleverage YDX technology to bring classic and future games to life in YDX’s Arkave Virtual Reality (VR) Arenas.  The companies also plan to collaborate on new IP, content, products, and technology.  In November 2019, the Company announce that it had selected ‘Romans from Mars’ as the first title from its library of shareholdersgames for adaptation into an immersive virtual reality (VR) experience through its partnership with YDX.

In May 2019, the Company appointed Nancy Basi to consider resolutions to approve the issuanceits Board of Directors.  Ms. Basi is Executive Director of the Media & Entertainment Centre for the Vancouver Economic Commission and Vice President of the VR/AR Association’s Vancouver Chapter.

In June 2019, the Company showcasedAncient Aliens: The Game® live at AlienCon in Los Angeles.

In June 2019, the Company announced the selection of Miss Kwirk as the first gaming intellectual property for development within its Studio-as-a-Service offering.  Miss Kwirk is the first title in the Company’s retro reboot initiative, a five title series designed to expand the franchise potential of popular retro titles owned by the Company.

In October 2019, the Company announced the repricing of a total of 1,142,598 share purchase warrants issued on or prior to October 15, 2018 to US$1.20 per share.

In November 2019, the Company announced that it was launching an initiative in partnership with the Whistler Film Festival (“WFF”). To mark the countdown to WFF’s 20th anniversary in 2020, Liquid confirmed support of WFF’s new 20x2020 campaign for 2019 and 2020 that will directly support vetted Canadian creators with IP in development to participate in WFF’s slate of talent development programs, which serve to advance projects from script to screen and connect storytellers and dealmakers across borders and on all platforms.

In November 2019, the Company restructured its debt with RDL Realisation, PLC (“RDL”) to extend the maturity date of the loan to November 30, 2020.  Additionally, the Company agreed to make quarterly payments of $250,000 beginning on March 31, 2020 and has pledged 215,000 common shares formingas security against the considerationloan.  RDL also released the previously held security interest over the Company’s shares of Waterproof Studios Inc.

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During the year ended November 30, 2019, various lenders converted $1,795,455 (US$1,133,761) worth of net convertible debentures into 1,000,167 units of the Company, with each unit consisting of one common share and one share purchase warrant to be paid to Liquid shareholders pursuantpurchase one additional common share at an exercise price of US$1.75 per share on or before February 26, 2021.

Subsequent to the Transaction, among other things. A special meetingyear ended November 30, 2019:

·

The Company announced in December 2019, the upcoming launch of Company shareholders is expected to be held concurrently withIridion 3D and its sequel, Iridion II, December 12, 2019 on Steam for PC through its subsidiary Majesco.

·

In January 2020, a special meeting of Liquid shareholders, which will be called by Liquid to consider the Transaction. Closingconsultant of the Transaction is subject to Liquid receiving approval from its shareholders for the Transaction. The Transaction will also require the approval of Company shareholders andfiled a lawsuit in the Supreme Court of British Columbia (the “Court”), as well as certain regulatory approvals. Ifagainst the requisite approvalsCompany for approximately $400,000 for unpaid consulting fees, US$500,000 for the unpaid cash consideration for the purchase of 51% interest in Majesco, and a payment for the difference between US$500,000 and the value of the Liquid shareholders,Company’s shares issued on the purchase of the 51% interest in Majesco.  The Company has accrued $1,064,450 in the Annual Financial Statements.  Management is currently seeking legal advice on this lawsuit.

·

The Company held its annual shareholder meeting on February 4, 2020, at which the Class III directors were elected and Davidson & Company LLP were appointed as the auditors for the ensuing year.  Accordingly, the Company’s violation of the NASDAQ listing require regarding the holding of an annual shareholder meeting was remedied.

·

In January 2020, the Company shareholders,issued 57,125 common shares to settle debt of $193,582 and the Court are not obtained and/or the regulatory approvals and other conditions of the Transaction are not satisfied, the Company may not be able11,674 common shares for $33,058 in services included in commitment to close the Transaction which may result in the Company being unable to maintain its public listing on the Nasdaq.issue shares at November 30, 2019.

Completion of the Transaction is subject to certain conditions that may be outside the control of both the Company and Liquid, including, without limitation, the requisite approvals

·

In February 2020, a consultant of the Company shareholders andfiled a lawsuit in the Liquid Shareholders andSupreme Court of British Columbia against the receiptCompany in relation to the issuance of the final order from the Court. There can be no assurance that these conditions will be satisfied or that the Transaction will be completed as currently contemplated or at all.

There is also no certainty, nor can either party provide any assurance, that the Amended and Restated Arrangement Agreement will not be terminated by either party before completion of the Transaction.

If the Transaction is not completed, the market pricea share certificate for 59,706 common shares of the Company, shares32,149 of which the consultant states is owing to him and the Liquid shares may declinegeneral and their respective businesses may suffer. In addition, the Company and Liquid will each remain liable for significant consulting, accounting and legal costs relatingspecial damages in relation to the Transaction and will not realize anticipated synergies, growth opportunities and other benefits ofshares.  Management is currently seeking legal advice on this lawsuit.  No provision has been included in the Transaction. Liquid and the Company may, if the Transaction is not consummated, be required to raise significant additional capital through the capital markets and/or incur significant borrowings to meet capital requirements. If the Transaction is delayed, the achievement of synergies and the realization of growth opportunities could be delayed and may not be available to the same extent.

The Company’s plan to regain compliance with the Nasdaq’s minimum $2.5 million stockholders’ equity and other requirements for continued listing is contingent upon the Company successfully closing its planned acquisition of Liquid.

On January 23, 2018, the Company received notice from the Nasdaq Listing Qualifications Staff (“Nasdaq Staff”) indicating that the Company no longer complied with Listing Rule 5550(b) (the “Rule”), based in part upon the Company’snon-compliance with the minimum $2.5 million stockholders’ equity requirement for continued listing on the Nasdaqfinancial statements as of November 30, 2019.

·

In February 2020, the Company signed an asset purchase agreement with a vendor to acquire a portfolio of assets including certain streaming platforms for US$3,325,000.

·

Subsequent to November 30, 2019, the Company issued 98,004 common shares for total proceeds of $204,891 (US$154,181) in connection with: (1) the exercise of 66,500 share purchase warrants at US$1.75 per warrant for proceeds of $154,651 (US$116,375), of which $104,651 (US$78,750) wasa included in the commitment to issue shares as at November 30, 2019; and (2) 31,504 share purchase warrants at US$1.20 per warrant for proceeds of $50,240 (US$37,806).

5.

The Company expended $Nil on the purchase of property, plant and equipment in the fiscal years ended November 30, 2019, 2018 and 2017.

6.

Capital expenditures that are planned for the fiscal year ending November 30, 2020 are in Canada and will be funded with cash on hand.

7.

There have been no indications of public takeover offers by third parties in respect of the Company’s shares or by the Company in respect of other companies’ shares during the last and current fiscal year.

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The cash flow used in fiscal year ended February 28, 2018, comparedoperating activities increased by $4,352,890 to $nil in the prior fiscal year. This income represents the net proceeds on the sublease revenue derived from the office on 33 West 8^th Avenue in Vancouver, British Columbia.

Discontinued Operations

Net loss from discontinued operations decreased by $3,238,710 to $2,557,034$(4,026,634) for the year ended February 28, 2018November 30, 2019 from a$326,256 compared to the comparative year. The decline in cash flow from operating activities represents the effect on cash flows from net loss of $5,795,744losses adjusted for items not affecting cash, principally: accrued interest income and expenses, amortization and accretion, share-based compensation expense, changes in the comparable period lastvalue of derivatives, gains and losses on the settlement of debt, unrealized foreign exchange, the share of profit of its equity investment, the unrealized gains on the revaluation of equity instruments, and the write off of various items, in addition to net changes in non-cash balances relating to operations.

Cash used by investing activities for year ended November 30, 2019 decreased by $75,440 compared to the comparative year mostly due to the Company receiving cash from the Arrangement between the Company and Liquid Canada during fiscal 2018.

Cash provided by financing activities for year ended November 30, 2019 improved by $461,133 compared to the comparative year.  During the fiscal year ended February 28, 2018,November 30, 2019, the financing activities mostly increased because the Company disposedclosed its private placement offering of its legacy beverage operations.unsecured convertible debentures by raising $3,502,793, received loan proceeds of $812,933, and raised $368,617 from the exercise of warrants.  The decrease incomparative year included the loss from discontinued operations compared to the prior year is principally due to thewrite-offclosing of a deferred tax asset of $2,480,257 recognizedprivate placement for $4,157,760, raising $167,500 in the prior year as well as increased losses as a resultloan proceeds, and raising $156,615 from the discontinuationexercise ofco-packing operations. This decrease was offset by the loss recognized on the disposal of the legacy beverage operations of $1,071,946 in the fiscal year ended February 28, 2018. warrants.

Fiscal Year Ended February 28, 2017 – Continuing operationsNovember 30, 2018

Selling, General and Administrative Expenses

For the fiscal year ended February 28, 2017, selling, general and administrative expenses decreased $550,597 from $1,277,127 in the fiscal year ended February 29, 2016 to $726,530 in the year ended February 28, 2017 primarily as a result of:

Other Expenses

Depreciation expense decreased to $1,053 for the fiscal year ended February 28, 2017, as compared to $1,316 in the prior fiscal year.

In the fiscal year ended February 28, 2017, the Company recorded $nil interest income from bank balances compared to $4,900 in the prior fiscal year.

Discontinued Operations

Net loss from discontinued operations increased by $5,684,686 to $5,795,744 for the year ended February 28, 2018 from a net loss of $111,058 in the comparable period last year. The increase in the loss from discontinued operations compared to the prior year is principally thewrite-off of a deferred tax asset of $2,480,257 recognized in the fiscal year ended February 28, 2017, as well as increased losses as a result from the discontinuation ofco-packing operations.

Fiscal Year Ended February 28, 2018

As of February 28,November 30, 2018, the Company had working capital of $1,060,066$710,406 compared to a working capital deficit of $3,939,880$950,981 at the prior fiscal year end. The Company held $1,369,352$4,901,841 in cash account balances (including restricted cash) at February 28,November 30, 2018 compared with $4,315,028$54,307 at the prior fiscal year end.

Considering the positive working capital position, including the cash on hand at February 28,November 30, 2018, the Company believes that it has sufficient working capital to continue operations for the next twelve months.

The increase in cash utilizedflow generated from operating activities improved by $1,482,210 to $326,256 for the year ended November 30, 2018 from $(1,155,954) compared to the prior year. The cash flow improvement from operating activities represents the effect on cash flows from net losses adjusted for items not affecting cash, principally: accrued interest income and expenses, amortization, share-based compensation expense, listing expenses, changes in the fiscal year ended February 28, 2018 for operating activities isvalue of derivatives, write off of intangible assets, gains on the resultsettlement of debt, unrealized foreign exchange, and the highernon-cash expenses (e.g. depreciation,share of loss on disposal, deferred income tax provisions) associated with theof its equity investment, in addition to net loss recordedchanges in the prior fiscal year.non-cash balances relating to operations.

The decrease in cash utilized in the fiscal year ended February 28, 2018 for investing activities is the result of the sale of the Edmonton bottling plant, land and building and sale of a long-unused internet domain in the prior fiscal year.

Cash used by investing activities for year ended November 30, 2018 improved by $415,237 compared to the prior year mostly due to the Company spending more on its associates and issuing loans during the year ended November 30, 2017.  In the current year, the Company also acquired cash from the acquisition of Majesco and the reverse acquisition with LBIX.

Cash provided by (used by) financing activities in the fiscalfor year ended February 28,November 30, 2018 was $nil and changed fromimproved by $4,731,847 compared to the prior fiscalyear.  During the year due to cash being usedended November 30, 2018, the Company closed a private placement netting proceeds of $3,711,189 after the payment of share issuance costs and received loan proceeds of $182,500 from third parties and related parties.  During the year ended November 30, 2017, the Company closed a private placement for the Company’s share repurchase program in the prior fiscal year.$592,427 and repaid $1,756,721 on their credit facility agreement.

Other sources of financing are more fully described in the consolidated financial statements appearing in “Item“Item 18 – Financial Statements”Statements” of this Annual Report.

The Company generally maintains cash or cash equivalents in Canadian and U.S. funds and does not use financial instruments for hedging purposes.

The Company has no material commitments for capital expenditures in the fiscal year ending February 28, 2019.

Fiscal Year Ended February 28, 2017

As of February 28, 2017, the Company had working capital of $3,939,880 compared to working capital of $477,354 at the prior fiscal year end. The Company held $4,315,028 in cash account balances at February 28, 2017 compared with $282,819 at the prior fiscal year end.

Considering the positive working capital position, including the cash on hand at February 28, 2017, available debt and other internal resources, the Company believes that it has sufficient working capital to continue operations for the next twelve months.

The decrease in cash utilized in the fiscal year ended February 28, 2017 for operating activities is the result of the lower net income this fiscal year.

The increase in cash utilized in the fiscal year ended February 28, 2017 for investing activities is the result of the sale of the Edmonton bottling plant, land and building and sale of a long-unused internet domain.

Cash used for financing activities in the fiscal year ended February 28, 2017 decreased in comparison to the prior fiscal year due to less cash being used for the Company’s share repurchase program.

Other sources of financing are more fully described in the consolidated financial statements appearing in “Item 18 – Financial Statements” of this Annual Report.

The Company generally maintains cash or cash equivalents in Canadian and U.S. funds and does not use financial instruments for hedging purposes.

The Company has no material commitments for capital expenditures in the fiscal year ending February 28, 2018.November 30, 2019.

As a shell company, the Company does not have any deferred product costs at this time. C.

Research and development, patents and licenses, etc.

The Company does not have a formal research and development program.  It develops productsvideo games as and when it sees fit by working with existing staff and outside consultants, where appropriate.

D.	Trend Information.

From 2009 until32

Majesco has numerous licensing/royalty agreements whereby Majesco is given the lastright to sell various video games in exchange for royalty payments based on various percentages ranging from 10% to 85% of selling prices.

The Company has a license agreement with Lightning Man for license to market and distribute six video games owned by Lightning Man, including: Bunny Boom, Bar Crasher, Nyctophobia, Resurgence, Clowns and Machetes, and Piggy Pals, over a two year period. As part of the Lightning Man agreement, the Company has agreed to pay a total of $100,000 (in three tranches) to Lightning Man over a 6-month period for the rights to two future video game titles that will be jointly developed by the Company and Lightning Man.

D.

Trend Information.

During the fiscal yearyears ended February 28, 2018,November 30, 2016 and 2017, the Company was focused on producingits film content and selling beverage products that can generate superior margins. The Company now plans to enterdistribution business.  In fiscal 2018, through the film andacquisition of Majesco, the Companyadded gaming content and distribution business viato its planned acquisition of Liquid by way of plan of arrangement.business.

The Company believes that growing demand in the film and gaming content production and distribution business, as well as the accelerated industry adoption of cloud-based gaming, represent growth opportunities for the Company and its shareholders.

F.	Tabular disclosure of contractual obligations.

Off-balance sheet arrangements.

The following table presents ourCompany had no off balance sheet arrangements during the fiscal years ended November 30, 2019, 2018 and 2017.

F.

Tabular disclosure of contractual obligations.

There were no contractual obligations as of February 28, 2018:November 30, 2019:

Critical Accounting Policies

The Company’s annual financial statements have been prepared in accordance with U.S. GAAP.IFRS. Some accounting policies have a significant impact on the amount reported in these financial statements.  A summary of those significant accounting policies can be found in the Summary of Significant Accounting Policies in the annual financial statements.  Note that the preparation of this Annual Report requires the Company to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates. The Company believes, as explained below, that the most critical accounting policies cover the following areas: accounts receivable; inventory;foreign currency translation, financial instruments, investment in associates, intangible assets, goodwill, derivative liability, convertible debentures, share capital, share-based compensation, revenue recognition; stock-based compensation, derivative liabilityrecognition, royalties and licenses, and income taxes.

Accounts Receivable

Accounts receivable invoicesForeign currency translation

The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and Liquid Canada changed from the CAD to the USD dollar effective September 1, 2018.  The functional currency of Majesco is the USD.  The functional currency of Waterproof is the CAD. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21,The Effects of Changes in Foreign Exchange Rates.

Transactions in currencies other than USD are recorded whenat exchange rates prevailing on the productsdates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are deliveredtranslated at the period end exchange rate while non-monetary assets and title transfers to customersliabilities in foreign

33

currencies are translated at historical rates.  Revenues and expenses are translated at the average exchange rates approximating those in effect during the reporting period.  

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company’s USD operations are translated into CAD at the exchange rate at the reporting date.  The income and expenses are translated using average rate.  Foreign currency differences that arise on translation for consolidation purposes are recognized in other comprehensive income (loss).

Financial instruments

Financial assets

On initial recognition, financial assets are recognized at fair value and are subsequently classified and measured at: (i) amortized cost; (ii) fair value through other comprehensive income (“FVOCI”); or when bottling services are performed(iii) fair value through profit or loss (“FVTPL”). The classification of financial assets is generally based on the business model in which a financial asset is managed and collectionits contractual cash flow characteristics. A financial asset is measured at fair value net of related receivables is reasonably assured. Allowances for doubtful accounts are based primarily on historicalwrite-off experience. Account balancestransaction costs that are deemed uncollectibledirectly attributable to its acquisition except for financial assets at FVTPL where transaction costs are charged off againstexpensed. All financial assets not classified and measured at amortized cost or FVOCI are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income.

The classification determines the method by which the financial assets are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Receivables and loans receivable are measured at amortized cost with subsequent impairments recognized in profit or loss. Cash, restricted cash, and investment in equity instruments are classified as FVTPL.

Impairment

An ‘expected credit loss’ impairment model applies which requires a loss allowance after all meansto be recognized based on expected credit losses. The estimated present value of collectionfuture cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been exhausted andhad the potential for recovery is considered remote. Allowances for doubtfulimpairment not been recognized.

For the years presented, the Company did not record an expected credit loss on its accounts receivable; however, an expected credit loss of $nil are netted against accounts$145,431 was recorded on its loans receivable as at February 28, 2018 (2017: $nil)November 30, 2019 (2018 - $Nil). A 10% change

Financial liabilities

Financial liabilities are designated as either: (i) fair value through profit or loss; or (ii) other financial liabilities. All financial liabilities are classified and subsequently measured at amortized cost except for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Accounts payable and accrued liabilities, due to related parties, loans payable, and convertible debentures are classified as other financial liabilities and carried on the statement of financial position at amortized cost.  Derivative liabilities are measured at FVTPL.

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Investment in associates

The Company’s investment in associates was accounted for using the equity method of accounting.  An associate is an entity in which the Company has significant influence and which is neither a subsidiary nor a joint venture.  

Under the equity method, the investment in the estimates for doubtful accounts would not resultassociate is carried in the statement of financial position at cost.  The statement of loss reflects the share of the results of operations of the associate until significant influence ceases. Where there has been a material change recognized directly in the equity of the associate, the Company recognizes its share of any changes and discloses this, when applicable, in the statement of changes in shareholders’ equity (deficiency).  Profits and losses resulting from transactions between the Company and the associate are eliminated to the financial statements.

Inventory

Raw materials and finished goods purchased for resale are valued atextent of the lower of cost, determined on a first-in, first-out basis, and market value. Finished goods, produced from manufacturing operations, are valued at the lower of standard cost which approximates average cost of raw materials, direct labour and overhead and market value. The provisions for obsolete or excess inventory are based on estimated forecasted usage of inventories. A significant change in demand for certain products as compared to forecasted amounts may result in recording additional provisions for obsolete inventory. Provisions for obsolete or excess inventory are recorded as cost of goods sold. At February 28, 2018, the inventory balance was presented net of a provision for obsolete inventoryinterest in the associate.

Associates are those entities in which the Company has significant influence, but not control, over the financial and operating policies.  Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity.  Investments in associates are accounted for using the equity method (equity accounted investees) and are recognized initially at cost.  The financial statements include the Company’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Company from the date that significant influence or joint control commences, until the date that significant influence or joint control ceases.  When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of $nil (2017: $15,638). A 10% change inthat interest, including any long-term investments, is reduced to nil, and the estimatesrecognition of provision for obsolete inventory would not result in a material changefurther losses is discontinued, except to the financial statements.

Revenue Recognition

Revenueextent that the Company has obligations, or has made payments on salesbehalf of products is recognized when the products are delivered and title transfers to customers. Revenues from the provision of manufacturing, bottling or other services are recognized when the services are performed and collection of related receivables is reasonably assured.investee.  The Company records shippingused the equity method of accounting for its 49% investment in Waterproof  until significant influence ceased on March 1, 2019 and handling revenue as a component of sales revenue,for its 50% investment in Household Pests.

Equipment

Equipment is stated at historical cost less accumulated depreciation and shipping and handlingaccumulated impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of sales. Incentives offeredthe item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to customersprofit or loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

Assets under construction are not depreciated until available for their intended use.

Depreciation is charged over the estimated useful lives using the declining balance method as follows:

Computer equipment

30%

Intangible assets

The Company has intangible assets from business acquisitions and development of gaming content. The amortization method, useful life and residual values are assessed annually and the assets are tested for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Amortization expense is recorded on a straight-line basis beginning with the month the corresponding assets are available for use and over the estimated useful lives provided below:

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