UNITED
STATES SECURITIES AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
20-F



☐	REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934



☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the fiscal year ended December 31, 2016__



☐	TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the transition period from to_____________



OR



☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Date
of event requiring this shell company report: _______



Commission
file number 016353



37
CAPITAL INC.

(Exact
name of Registrant as specified in its charter)



British
Columbia, Canada

(Jurisdiction
of Incorporation or organization)



Suite
300, 570 Granville Street, Vancouver, British Columbia, Canada V6C 3P1

(Address
of principal executive offices)



Securities
to be registered pursuant to Section 12(b) of the Act:



None



Securities
registered or to be registered pursuant to Section 12 (g) of the Act:





Common
Stock, Fully Paid and Non-Assessable Common Shares Without Par Value

(Title
of Class)



Securities
for which there is reporting obligation pursuant to Section 15(d) of the Act: None



Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report: 2,067,724 common shares as of December 31, 2016. No preferred shares issued and outstanding.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒



1









If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒



Note-
Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.



Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past ninety days. Yes ☒ No ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition
of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





|Large
    accelerated filer ☒ | Accelerated
    filer ☐ | Non-accelerated
    filer ☒
|----------------------------- | ----------------------- | ---------------------------







Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:





|U.S.
    GAAP ☐ | International
    Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other
    ☐
|--------------- | ----------------------------------------------------------------------------------------------------------- | -----------







If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item
the registrant has elected to follow.

| | Item
                          17 ☐ | Item
                                         18 ☐
| | ----------------------------------- | --------------------------------------------------



If
this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act.) Yes ☐ No ☒



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐No ☒





2









37
CAPITAL INC.



FORM
20-F ANNUAL REPORT 2016



TABLE
OF CONTENTS



|ITEM
    1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        | 4 
|----------------------------------------------------------------------------------------- | --
|ITEM
    2.  OFFER STATISTICS AND EXPECTED TIMETABLE                                      | 4 
|ITEM
    3.  KEY INFORMATION                                                              | 4 
|ITEM
    4.  INFORMATION ON THE COMPANY                                                   | 7 
|ITEM
    5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 | 14
|ITEM
    6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   | 20
|ITEM
    7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 26
|ITEM
    8.  FINANCIAL INFORMATION                                                        | 30
|ITEM
    9.  THE  OFFER & LISTING                                                         | 31
|ITEM
    10. ADDITIONAL INFORMATION                                                       | 34
|ITEM
    11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 44
|ITEM
    12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 46
|ITEM
    13. DEFAULTS, DIVIDEND AVERAGES AND DELINQUENCIES                                | 46
|ITEM
    14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 46
|ITEM
    15. CONTROLS AND PROCEDURES                                                      | 46
|ITEM
    16.  AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES.                           | 47
|ITEM
    17. FINANCIAL STATEMENTS                                                         | 48
|ITEM
    18. FINANCIAL STATEMENTS                                                         | 49
|ITEM
    19. LIST OF EXHIBITS                                                             | 49
|SIGNATURE
    PAGE                                                                        | 86



3





ITEM
1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



|Name
    of Directors and/or Officers of the Issuer                               | Position
    Held as at the date of this Annual Report
|--------------------------------------------------------------------------------- | ------------------------------------------------------
|Bedo
        H. Kalpakian(1)*
        Delta,
        British Columbia, Canada     | President,
        CEO, CFO and Director              
|Jacob
        H. Kalpakian(3)
        Vancouver,
        British Columbia, Canada | Vice
        President and Director                   
|Gregory
        T. McFarlane*
        Las
        Vegas, Nevada, USA              | Director                                              
|Fred
        A. C. Tejada*
        Surrey,
        British Columbia, Canada       | Director                                              
|Neil
        Spellman(2)(4)
        Carlsbad,
        CA, USA                     | Director                                              
|Maria
        P. Arenas
        Surrey,
        British Columbia, Canada          | Corporate
        Secretary                           



| | (1) | Chairman
                                         of the Audit Committee. As of April 1, 2017, Bedo H. Kalpakian has stepped doesn as President,
                                         CEO & CFO.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | On
                                         August 23, 2016, Mr. Neil Spellman joined the Issuer’s Board of Directors.
| | --- | ----------------------------------------------------------------------------------------------------------------------

| | (3) | As
                                         of April 1, 2017, Mr. Jacob H. Kalpakian has been appointed as President & CEO.
| | --- | ---------------------------------------------------------------------------------------------------------------------------

| | (4) | As
                                         of April 1, 2017, Mr. Neil Spellman has been appointed as CFO.
| | --- | ----------------------------------------------------------------------------------------------------------



*Members
of the Audit Committee

ITEM
2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not
applicable.



ITEM
3. KEY INFORMATION



Item
3.A. Selected Financial Data



The
selected financial data in Table I has been derived from the audited consolidated financial statements of 37 Capital Inc. (hereinafter
referred to as the “Company” or the “Registrant” or “37 Capital”). The financial data under
2016, 2015, 2014, 2013 and 2012 have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”). The information should be read in conjunction
with the Registrant's consolidated financial statements and notes thereto included in Item 17 of this Annual Report.



All
financial figures presented herein and throughout this Annual Report are expressed in Canadian dollars (Cdn$) unless otherwise
specified. On August 31, 2012 the Company’s share capital was consolidated on the basis of fifteen old common shares for
one new common share, and on July 7, 2014 the Company’s share capital was consolidated on the basis of six old common shares
for one new common share. All common shares and per share amounts included in this Annual Report on Form 20-F (2016) have been
restated to give retroactive effect to the 6:1 share consolidation, which took effect on July 7, 2014 as further described in
Results of Operations in Item 4.(a) of this document.





4









TABLE
I



The
financial data under the tables 2016, 2015, 2014, 2013 and 2012 have been prepared in accordance with IFRS.



|                                                               |   | Year
                                         Ended December
                                         31, 2016 |            | Year
                                         Ended December
                                         31, 2015 |  | Year
                                         Ended December
                                         31, 2014 |            | Year
                                         Ended December
                                         31, 2013 |  | Year
                                         Ended December
                                         31, 2012
|-------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------- | ---------- | -------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- | ---------- | -------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------
|Operating
    Revenue                                          | $ |                                                                                                                | 0          |                                                                                                                |  |                                                                                                                | 0          |                                                                                                                |  |                                                                                                               
|Interest
    Income                                            | $ |                                                                                                                | 0          |                                                                                                                |  |                                                                                                                | 0          |                                                                                                                |  |                                                                                                               
|Comprehensive
    loss                                         | $ |                                                                                                                | (347,963   | )                                                                                                              |  |                                                                                                                | (334,993   | )                                                                                                              |  |                                                                                                               
|Basic
    and diluted loss per common share before other items | $ |                                                                                                                | (0.17      | )                                                                                                              |  |                                                                                                                | (0.31      | )                                                                                                              |  |                                                                                                               
|Total
    Assets                                               | $ |                                                                                                                | 5,922      |                                                                                                                |  |                                                                                                                | 3,277      |                                                                                                                |  |                                                                                                               
|Capital
    Stock                                              | $ |                                                                                                                | 25,372,201 |                                                                                                                |  |                                                                                                                | 25,272,401 |                                                                                                                |  |                                                                                                               
|Number
    of common shares at year-end                        |   |                                                                                                                | 2,067,724  |                                                                                                                |  |                                                                                                                | 1,067,724  |                                                                                                                |  |                                                                                                               
|Long-term
    obligations                                      | $ |                                                                                                                | 0          |                                                                                                                |  |                                                                                                                | 0          |                                                                                                                |  |                                                                                                               
|Cash
    dividends                                             | $ |                                                                                                                | 0          |                                                                                                                |  |                                                                                                                | 0          |                                                                                                                |  |                                                                                                               



Note:
All common shares and per share amounts included in the above table have been restated to give retroactive effect to the 6:1
share consolidation which took effect on July 7, 2014 as described in Information on the Company under Item 4. of this Annual
Report.



Bank
of Canada Exchange Rates



|                   |  | Monthly
    High ($) (1) |  | Monthly
    Low ($)(1)
|------------------ |  | ------------------------ |  | ----------------------
|July
    2016      |  |                          |  | 0.7778                
|August
    2016    |  |                          |  | 0.7833                
|September
    2016 |  |                          |  | 0.7784                
|October
    2016   |  |                          |  | 0.7628                
|November
    2016  |  |                          |  | 0.7516                
|December
    2016  |  |                          |  | 0.7614                



(1)The high and low exchange rates have been calculated using the rates of the Bank of Canada.



5









|                        |  | For
    Year Ended December 31, 2016 |  | For
    Year Ended December 31, 2015 |  | For
    Year Ended December 31, 2014 |  | For
    Year Ended December 31, 2013 |  | For
    Year Ended December 31, 2012
|----------------------- |  | ------------------------------------ |  | ------------------------------------ |  | ------------------------------------ |  | ------------------------------------ |  | ------------------------------------
|Average
    rate ($)(2) |  |                                      |  | 0.7499                               |  |                                      |  | 0.7821                               |  |                                     
|High
    ($)(3)         |  |                                      |  | 0.7972                               |  |                                      |  | 0.8511                               |  |                                     
|Low
    ($)(3)          |  |                                      |  | 0.6854                               |  |                                      |  | 0.7161                               |  |                                     



(2)The
average exchange rate for the period has been calculated using the yearly rate of the Bank of Canada.

(3)The
high and low exchange rates in each period were determined from the yearly rate of the Bank of Canada.



All
of the amounts in the Exchange rates tables above are stated in U.S. currency. Accordingly, at the closing on December 30, 2016,
the US $1.00 was equal to Cdn $1.3427.



Item
3.D. Risk Factors



The
Company and the Securities of the Company, should be considered a highly speculative investment. The following risk factors should
be given special consideration when evaluating an investment in any of the Company's Securities:



1).RISKS RELATED TO THE COMPANY’S BUSINESS



-
Regulations: 37 Capital’s proposed mineral exploration programs, are subject to extensive federal, provincial
and local laws and regulations governing such exploration, development and operation of mining activities as well as the protection
of the environment, including laws and regulations relating to obtaining permits to mine, protection of air and water quality,
hazardous waste management, mine reclamation and the protection of endangered or threatened species.



-
Exploration and Development: The resource properties in which the Company has an interest are in the exploration stages
only and do not have a known body of commercial ore. Exploration and development of natural resource properties involve a high
degree of risk and few properties which are explored are ultimately developed into producing properties. Substantial expenditures
are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties,
to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial
benefits may be derived from the discovery of a major deposit, no assurance can be given that resources will be discovered in
sufficient quantities or grades to justify commercial operations or that the funds required for development can be obtained on
a timely basis.



-
Operating Hazards and Risks:Exploration for natural resources involves many risks, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration, development and production of resources, any
of which could result in work stoppages, damages to persons or property and possible environmental damages. Although the Company
may obtain liability insurance in an amount which it considers adequate, the nature of these risks is such that liabilities might
exceed policy limits, the liabilities and hazards might not be insurable against, or the Company might not elect to insure itself
against such liabilities due to high premium costs or other reasons, in which event the Company could incur significant costs
that could have a material adverse effect upon its financial condition.



-
Fluctuating Metal Prices: The prices of those commodities have fluctuated widely, particularly in recent years, and
are affected by numerous factors beyond the Company's control including international, economic and political trends, expectations
of inflation or deflation, currency exchange rate fluctuations, interest rates fluctuations, global or regional consumptive patterns,
speculative activities and increased production due to new extraction developments and improved extraction and production methods.
The effect of these factors on the prices of metals, and therefore the economic viability of the Company's interest in exploration
projects, cannot be accurately predicted.



6









-
Environmental Factors: Should the Company decide to conduct any mineral exploration works then all phases of the Company's
mineral exploration works shall be subject to environmental regulation in the various jurisdictions in which the Company operates.
Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees.



-
Competition: The resource industry is intensely competitive in all of its respective phases, and the Company competes
with many companies possessing much greater financial resources and technical facilities than the Company. As such, competition
is adversely affecting the Company's ability to acquire suitable mineral exploration properties at reasonable prices.



-
Management: The Company is dependent on a relatively small number of key employees, the loss of any of whom could have
an adverse effect on the Company.



-
Dilution: There are a number of outstanding securities and agreements pursuant to which common shares of the Company
may be issued in the future. This will result in further dilution to the Company's shareholders.



-
Revenues and Dividends: Although during Q4 of 2014 the Company generated a minimal revenue of $4,157, however the Company
does not anticipate to generate any revenue in the future and has not recognized any revenue in fiscal 2015 and 2016. In the event
that the Company generates any revenues in the future, then the Company intends to retain its earnings in order to finance growth.
Furthermore, apart from the Arrangement Agreement, the Company has not paid any dividends in the past and does not expect to pay
any dividends in the future.



-
Requirement of New Capital: As a company without any revenues, the Company typically needs more capital than it has
available to it or can expect to generate through the sale of its assets. In the past, the Company has had to raise, by way of
debt and equity financings, considerable funds to meet its capital needs. There is no assurance that the Company will be able
to continue to raise funds needed for its business. Failure to raise the necessary funds in a timely fashion will limit the Company's
growth or may jeopardize the Company’s ability to continue as a going concern. The Company has outstanding debts, has working
capital deficiency, has no revenues, has incurred operating losses, and has no assurances that sufficient funding will be available
to the Company to continue its operations for an extended period of time.



-
U.S. Federal Income Tax Considerations: The Company is classified as a Passive Foreign Investment Company ("PFIC")
for U.S. Federal Income Tax purposes. Classification as a PFIC will create U.S. Tax consequences to a U.S. shareholder of the
Company that are unique to the PFIC provisions and that are not encountered in other investments. Prospective investors are advised
to consult their own tax advisors with respect to the tax consequences of an investment in the common shares of the Company.



-
Penny Stock: The Company's securities are deemed to be Penny Stocks and are therefore subject to Penny Stock
rules as defined in Rule 3a(51)(1) of the 1934 Exchange Act. The Penny Stock disclosure requirements may have the effect of reducing
the level of trading activity of the Company's securities in the secondary market. Penny Stocks are low-priced shares of small
companies not traded on a U.S. national exchange or quoted on Nasdaq. The Company's securities are quoted for trading on the OTCQB
tier of the OTC Markets Group (“OTCQB”). Penny Stocks, such as the Company's securities, can be very risky. Prices
of Penny Stocks are often not available. Investors in Penny Stocks are often unable to sell stock back to the dealer that sold
them the stock. Investors may lose all their investment in Penny Stocks. There is no guaranteed rate of return on Penny Stocks.
Before an investor purchases any Penny Stock, U.S. Federal law requires a salesperson to tell the investor the "offer"
and the "bid" on the Penny Stock, and the "compensation" the salesperson and the firm receive
for the trade. The firm also must mail a confirmation of these prices to the investor after the trade. The Investor's Broker-dealer
is required to obtain the investor's signature to show that the investor has received the statement titled "Important Information
on Penny Stocks" before the investor first trades in a Penny Stock. This Statement is required by the U.S. Securities and
Exchange Commission ("SEC") and contains important information on Penny Stocks. Furthermore, under penalty of Federal
Law the Investor's brokerage firm must tell the investor at two different times - before the investor agrees to buy or sell a
Penny Stock, and after the trade, by written confirmation the following: 1) the bid and offer price quotes for the Penny Stock,
and the number of shares to which the quoted prices apply, 2) the brokerage firm's compensation for the trade, 3) the compensation
received by the brokerage firm's salesperson for the trade. In addition, to these items listed above the investor's brokerage
firm must send the investor monthly account statements and a written statement of the investor's financial situation and investment
goals as required by the Securities Enforcement and Penny Stock Reform Act of 1990.



-
Disruption in Trading: Trading in the common shares of the Company may be halted or suspended or may be subject
to cease trade order at any time for certain reasons, including, but not limited to, the failure by the Company to submit documents
to the Regulatory Authorities within the required time periods.



-
Tax Considerations –Persons considering the purchase of the Company’s common shares should consult their
tax advisors with regard to the application of Canadian, U.S. and other tax laws to their particular situation.



-   
Investment in Mexican Gaming Company:In respect to the Company’s investment in the Mexican gaming company, as
there are no assurances whatsoever that in the future the Company shall receive any casino royalty revenues from the Mexican land
based casino, on December 31, 2014 the Company has recorded impairment of $799,999 in regards to the Company’s investment
in the Mexican gaming company. The Company did not recognize any revenue during fiscal 2015 and 2016. Furthermore, the Company
does not expect that it will recover its investment in the Mexican gaming company.



ITEM
4. INFORMATION ON THE COMPANY



Item
4.A. History and Development of the Company



The
legal and commercial name of the company is 37 CAPITAL INC. (“37 Capital”).



The
Company was incorporated by memorandum under the Company Act of the Province of British Columbia, Canada on August 24, 1984 (Exhibit
3.1 – Incorporated by reference) and was registered extra-provincially in the Province of Ontario, Canada on October 19,
1984. On May 31, 1988, the Company adopted as the French form of its name "Ressources Armeno Inc.". On May 25, 1992,
the name of the Company was changed to Ag Armeno Mines and Minerals Inc. in the English form, and "Les Mines et Mineraux
Ag Armeno Inc." in the French form. On April 25, 2000, the name of the Company was changed from Ag Armeno Mines and Minerals
Inc. in the English form, and "Les Mines et Mineraux Ag Armeno Inc.", in the French form, to Golden Nugget Exploration
Inc. On May 2, 2002, the name of the Company was changed from Golden Nugget Exploration Inc. to Lucky 1 Enterprises Inc. On January
17, 2005, the name of the Company was changed from Lucky 1 Enterprises Inc. to Bronx Ventures Inc. and the Company adopted new
Articles (Exhibit 3.2 - Incorporated by reference). On March 19, 2007, the Company changed its name to Zab Resources Inc. On April
16, 2009, the Company changed its name from Zab Resources Inc. to Kokomo Enterprises Inc. On August 31, 2012, the Company changed
its name from Kokomo Enterprises Inc. to High 5 Ventures Inc. (Exhibit 3.5 – Incorporated by reference).

On
July 7, 2014, the Company changed its name to 37 Capital Inc. (see Exhibit 3.6 – Incorporated by reference).



7









On
April 4, 1985, the Company's common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal
Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed
its common shares from the Montreal Exchange, and, on October 3, 1994, the Company's shares were delisted from the Nasdaq SmallCap
Market. Effective October 4, 1994, the Company's shares have been listed for trading on the OTC Bulletin Board and are now listed
for trading on the OTCQB tier of the OTC Markets Group Inc. (“OTCQB). Effective November 29, 1999 the Vancouver Stock Exchange
became known as the Canadian Venture Exchange (hereinafter referred to as the “CDNX”) as a result of the merger between
the Vancouver Stock Exchange and the Alberta Stock Exchange. On July 5, 2001, the Company made a formal application to the CDNX
requesting the voluntary delisting of the Company’s common shares from trading on the CDNX, as a result of which, the common
shares of the Company were delisted from trading on the CDNX effective at the close of trading on July 31, 2001.



On
July 30, 1986, the Company's share capital split on the basis of one-old-for-two-new common shares. On May 25, 1992, the Company's
share capital was consolidated on the basis of ten-old-for-one-new common share. On April 25, 2000, the Company’s share
capital was consolidated on the basis of fifteen-old-for-one-new common share. On May 2, 2002, the Company’s share capital
was consolidated on the basis of five-old-for-one-new common share and its authorized share capital was subsequently increased
to 200,000,000 common shares without par value. On January 17, 2005, the Company’s share capital was consolidated on the
basis of thirty-five-old-for-one-new common share and its authorized share capital was increased to an unlimited number of common
and preferred shares without par value. On March 19, 2007, the Company subdivided its capital stock on a 1 (old) share for 50
(new) shares basis. As a result, the shares of Bronx Ventures Inc. were de-listed from trading and the shares of Zab Resources
Inc. (“Zab”) commenced trading on March 22, 2007 on the OTC Bulletin Board in the USA under the symbol “ZABRF”.



As
of November 28, 2007, the common shares of the Company have been listed for trading on the Canadian Securities Exchange (“CSE”)
(formerly known as the Canadian National Stock Exchange (CNSX)) under the trading symbol “ZABK”. On October 17, 2008,
the Company’s CSE symbol was changed to “ZAB” pursuant to the CSE adopting a three character symbol format.



On
April 16, 2009, the Company’s share capital was consolidated on the basis of 25 (old) shares for 1 (new) share and the Company
changed its name to Kokomo Enterprises Inc. (“Kokomo”). As a result, the shares of Zab were de-listed from trading
and the shares of Kokomo commenced trading in Canada on the CSE under the symbol “KKO”, and in the U.S.A. the shares
of Kokomo commenced trading on the OTC Bulletin Board under the symbol “KKOEF”.



On
August 31, 2012, the Company’s share capital was consolidated on the basis of 15 (old) common shares for 1 (new) common
share and the Company changed its name to High 5 Ventures Inc. (“High 5”). As a result, the shares of Kokomo were
de-listed from trading and the shares of High 5 commenced trading in Canada on the CSE under the symbol “HHH”, and
in the U.S.A. the shares of High 5 trade on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s
common shares is 42966V105.



On
April 8, 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed
to purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican
land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200
for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty
revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment
and recorded impairment of $799,999 on the investment due to nominal royalty payments received.



8









On
July 7, 2014, the Company’s share capital was consolidated on the basis of 6 (old) common shares for 1 (new) common share
and the Company changed its name to 37 Capital Inc. (“37 Capital”). As a result, the shares of High 5 were de-listed
from trading and the shares of 37 Capital commenced trading in Canada on the CSE under the symbol “JJJ”, and in the
U.S.A. the shares of 37 Capital trade on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s
common shares is 88429G102.



Since
its incorporation, the Company has been engaged primarily in the identification, acquisition, exploration and, if warranted, the
development of natural resource properties and, for a brief period of time from 1991 to 1994, the Company, through its formerly
owned Ecuadorean subsidiary, Armenonic del Ecuador S.A. (“Armenonic”) operated the San Bartolome lead/zinc/silver
mine in Ecuador.



37
Capital is a junior mineral exploration company. The Company has a 33% undivided interest in the Extra High Property located in
the Province of British Columbia, and the Company has a one-half percent (1/2%) gross receipts royalty interest in certain lithium
mineral properties located in the Province of Ontario. The principal business of 37 Capital is in mineral exploration. The Company's
ability to pursue its stated primary business and to meet its obligations as they come due is dependent upon the ability of management
to obtain the necessary financings either through private placements or by means of public offerings of the Company's securities
or through the exercise of incentive stock options or warrants or through debt financings or through the sale of its assets.



Arrangement
Agreement



On
February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns
Capital Inc. (“4 Touchdowns”).



On
April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 –
Incorporated by reference)with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”).



At
the Company’s annual and special meeting which was held on June 4, 2015 (see Exhibit 12 - Incorporated by reference),
the Company’s shareholders passed all the resolutions presented including the re-election of the board of directors, re-appointment
of the Company’s auditor, approval of the Company’s stock option plan, and the proposed Plan of Arrangement with 27
Red and 4 Touchdowns.



In
respect to the plan of arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court
of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement.



The
Company has completed the plan of arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2). The effective date of the Arrangement
was on February 12, 2016 (the “Effective Date”). The Company’s Shareholders of record on the Effective Date
received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. On the Effective
Date, and pursuant to the Arrangement, all of the Class 1 Reorganization Shares were automatically transferred by Shareholders
to Spinco1 in exchange for 2,067,724 common shares of Spinco1 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco1 being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 1 Reorganization Shares by the transfer to Spinco1 of $20,677 and a promissory note in the principal amount of
$20,677. Furthermore on the Effective Date, all of the Class 2 Reorganization Shares were automatically transferred by Shareholders
to Spinco2 in exchange for 2,067,724 common shares of Spinco2 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco2 being issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 2 Reorganization Shares by the transfer to Spinco2 of $20,677 and a promissory note in the principal amount of
$20,677. A copy of the Arrangement Agreement is available on www.SEDAR.com.



9









As
of the date of this Report, both 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) have not started conducting any business, and are
seeking business opportunities to get involved in.



Effective
as of April 26, 2013, the Company’s office is located at Suite 300, 570 Granville Street, Vancouver, British Columbia, Canada,
V6C 3P1. The telephone number is (604) 681-1519 (ext. 6106) and the telefax number is (604) 681-9428. The contact person is Bedo
H. Kalpakian.



The
Company's registered office and records office is located at 1055 West Georgia Street, Suite 1500, PO Box 11117, Vancouver, BC
V6E 4N7. The telefax number is (604) 685-7084).



The
Registrar and Transfer Agent of the Company is Computershare Investor Services Inc., 510 Burrard Street, Vancouver, BC, Canada
V6C 3B9. The telefax number is (604) 661-9407.



The
Company’s Board of Directors decided to change the Company’s auditors. Effective as of March 28, 2017, the Company’s
Auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, 1500-1140 W. Pender St., Vancouver, BC
V6E 4G1. The telefax is (604) 689-2778. The former Auditors of the Company were Smythe LLP, Chartered Professional Accountants,
7th floor, Marine Building, 355 Burrard Street, Vancouver, British Columbia, Canada V6C 2G8. The telefax number is
(604) 688-4675.



Item
4.B. Business Overview



Summary



37
Capital is a junior mineral exploration company. The Company has a 33% undivided interest in the Extra High Property located in
the Province of British Columbia, and the Company is entitled to receive a one-half percent (1/2%) gross receipts royalty interest
from certain lithium mineral properties located in the Province of Ontario after six months from the date of commencement of commercial
production. The principal business of 37 Capital is in mineral exploration. However, as of December 31, 2014 and 2013, the
Company has a minority investment in a non-mining related project located in Mexico. As at December 31, 2014, the Company assessed
the fair value of its investment and has recorded impairment of $799,999 on its investment due to nominal royalty payments received.
As of the date of this Report, the Company does not expect to recover its investment in the non-mining related project located
in Mexico.



37
Capital is a reporting issuer in the Provinces of British Columbia, Alberta, Quebec and Ontario and files all public documents
on www.Sedar.com . The Company is a foreign private issuer in the United States of America and in this respect files, on EDGAR,
its Annual Report on Form 20-F and other reports on Form 6K. The following link, http://www.sec.gov/cgi-bin/browse-edgar•action=getcompany&CIK=0000825171&owner=exclude&count=40
will give you direct access to the Company’s filings.



Presently,
37 Capital is seeking opportunities of merit to get involved in. It should be noted that there are no assurances that 37 Capital
shall be successful in its attempts of seeking opportunities of merit to get involved in.



Item
4. C. Organizational Structure



Arrangement
Agreement



On
February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns
Capital Inc. (“4 Touchdowns”).



On
April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 –
Incorporated by reference)with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”).



10









At
the Company’s annual and special meeting which was held on June 4, 2015 (see Exhibit 12 - Incorporated by reference),
the Company’s shareholders passed all the resolutions presented including the re-election of the board of directors, re-appointment
of the Company’s auditor, approval of the Company’s stock option plan, and the proposed Plan of Arrangement with 27
Red and 4 Touchdowns.



In
respect to the plan of arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court
of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement.



The
Company has completed the plan of arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2). The effective date of the Arrangement
was on February 12, 2016 (the “Effective Date”). The Company’s Shareholders of record on the Effective Date
received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. On the Effective
Date, and pursuant to the Arrangement, all of the Class 1 Reorganization Shares were automatically transferred by Shareholders
to Spinco1 in exchange for 2,067,724 common shares of Spinco1 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco1 being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 1 Reorganization Shares by the transfer to Spinco1 of $20,677 and a promissory note in the principal amount of
$20,677. The redemption of shares was distributed to the shareholders’ of 27 Red as a capital distribution and recorded
as a dividend. Furthermore on the Effective Date, all of the Class 2 Reorganization Shares were automatically transferred by Shareholders
to Spinco2 in exchange for 2,067,724 common shares of Spinco2 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco2 being issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 2 Reorganization Shares by the transfer to Spinco2 of $20,677 and a promissory note in the principal amount of
$20,677. The redemption of shares was distributed to the shareholders’ of 27 Red as a capital distribution and recorded
as a dividend. A copy of the Arrangement Agreement is available on SEDAR.



As
of the date of this Report, both 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) have not started conducting any business, and are
seeking business opportunities to get involved in.



Item
4.D. Property, Plants and Equipment



I.
Extra High Property, Kamloops Mining Division, British Columbia, Canada



On
March 26, 2004, the Company entered into an Option Agreement (Exhibit 10.5 – Incorporated by reference) with an arm’s
length party (the “Arm’s Length Party”) in respect to certain mineral claims, which are situated in the Kamloops
Mining Division in British Columbia (the “Extra High Property”). Pursuant to the terms of the Option Agreement as
amended on March 8, 2005, the Company obtained the right to acquire a 100% undivided interest in the Extra High Property, subject
to a 1.5% net smelter returns royalty (the “Arm’s Length Royalty”), by making staged cash payments totalling
$150,000 and incurring exploration expenditures on the Extra High Property totalling $500,000 over a period of three years. Upon
the Company earning a 100% undivided interest in the Extra High Property, the Company obtained the right to purchase at any time
50% of the Arm’s Length Royalty by paying to the Arm’s Length Party the sum of $500,000 leaving the Arm’s Length
Party with a 0.75% NSR royalty.



In
the spring of 2004, the Company commissioned an independent review of the Extra High Mineral Property by Erik Ostensoe, P. Geo.,
who prepared a report, dated the 22nd day of April, 2004 titled “National Policy 43-101 Report, Extra High Mineral
Property, Kamloops Mining Division, British Columbia”. The report recommended exploration work programs be carried out on
the Extra High Mineral Property in order to evaluate the mineral potential of the Extra High Mineral Property. This report has
been filed on www.Sedar.com by the Company.



11









From
May, 2005 up to December, 2005, the Company conducted its exploration program on the Extra High Property. The exploration program
consisted of soil sampling, geological mapping, trenching and diamond drilling. A total of 1,874.3 metres of NQ diamond drilling
and 455 lineal metres of trenching were completed while 194 soil samples were collected over 4 areas on the Extra High Mineral
Property. The exploration work program was conducted by, and was under the direct supervision of, J.W. Murton, P. Eng, a qualified
person as defined by National Instrument 43-101. At the time, Mr. J.W. Murton was a director of the Company. Mr. J. W. Murton
has recommended a two phase exploration program on the Extra High Mineral Property due to the positive results obtained from the
2005 exploration program. Mr. J. W. Murton has prepared for the Company a Technical Report (NI 43-101) on the Extra High Property
(2005 Exploration Program) dated February 28, 2006 which has been filed by the Company on www.Sedar.com, and on the Company’s
corporate website, www.37capitalinc.com. For further particulars about the Extra High Mineral Property and the 2005 Exploration
Program, please visit either www.sedar.com or www.37capitalinc.com. Mr. J.W. Murton is no longer a director of the Company.



On
September 8, 2006, the Company entered into an Option Agreement (Exhibit 10.11 – Incorporated by reference) with Colt Resources
Inc. (“Colt”), a company formerly related by certain directors and officers, whereby Colt obtained the right to acquire
a 50% undivided interest, subject to the Arm’s Length Royalty, in the Extra High Property by incurring exploration expenditures
of $240,000 on the Extra High Property by no later than February 28, 2007 and by making cash payments to the Company
totalling $133,770 by no later than March 26, 2007.



On
September 12, 2006, the Company and the Arm’s Length Party amended the Option Agreement (Exhibit 10.5.1 – Incorporated
by reference) by entering into an Amending Agreement whereby the Company was granted an extension period until June 26, 2007 to
make the balance of cash payments to the Arm’s Length Party and incur the remaining exploration expenditures on the Extra
High Property.



On
October 31, 2006, the Company and Colt entered into an Amending Agreement (Exhibit 10.11.2 – Incorporated by reference)
whereby Colt was granted an extension period until June 26, 2007 to incur exploration expenditures on the Extra High Property
and to make the cash payments to the Company.



On
April 16, 2007, the Company and the Arm’s Length Party amended the Option Agreement (Exhibit 10.5.2 – Incorporated
by reference) by entering into an Amending Agreement whereby the Company was released of the requirement to incur the remaining
exploration expenditures but instead was required to make a cash payment of $60,000 (paid) to the Arm’s Length Party.



On
June 14, 2007, the Company amended its Option Agreement with Colt whereby Colt would have the right to acquire a 34% interest
in the Extra High Property by making cash payments to the Company totalling $193,770 by no later than June 26, 2007. The Amending
Agreement released Colt of the requirement to incur $240,000 in exploration expenditures on the Extra High Property.



On
June 26, 2007, the Company made its final payment to the Arm’s Length Party thereby earning a 100% undivided interest in
the Extra High Property subject only to the Arm’s Length Royalty. Colt made its final payment to the Company and earned
its 34% interest in the Extra High Property, thus reducing the Company’s interest to 66%.



During
2007, the Company and its joint venture partner Colt conducted a diamond drilling program on the Extra High Property. A total
of 1,293.59 metres were drilled in 8 NQ diamond drill holes. The diamond drilling program was targeted at expanding the previously
indicated mineralization in the K7 lens and was successful in revealing the potential for larger zones of lower grade mineralization
lying adjacent to the massive sulphide mineralization indicated in earlier work. The diamond drilling program was conducted by
and was under the direct supervision of J. W. Murton, P. Eng., a qualified person as defined by National Instrument 43-101. At
the time, Mr. J. W. Murton was a director of the Company. For further particulars about the diamond drilling program please see
the report on the 2007 Diamond Drilling Program dated February 28, 2008 that was prepared for the Company and Colt by J. W. Murton,
P. Eng. which has been filed by the Company on its corporate website www.high5ventures.com





12







At
December 31, 2007, the Company held a 66% interest in the Extra High Property.



On
January 21, 2008, the Company entered into an Option Agreement (the “2008 Option Agreement”) (Exhibit 10.11.3
- Incorporated by reference) with Colt whereby Colt was granted the right and option to acquire, in two separate equal tranches,
the Company’s 66% undivided interest in the Extra High Property. Pursuant to the 2008 Option Agreement, Colt exercised the
first tranche of the option by making a cash payment of $250,000 to the Company thus acquiring from the Company a 33% undivided
interest in the Extra High Property. As a result of Colt exercising the first tranche of the option, Colt increased its undivided
interest in the Extra High Property to 67% and has become the operator of the Extra High Property.



In
order to exercise the second tranche of the option, Colt was required to make a cash payment of $250,000 to the Company on or
before December 31, 2008. Colt did not exercise the second tranche of the option. Consequently, Colt now holds a 67% undivided
interest in the Extra High Property and the Company now holds a 33% undivided interest in the Extra High Property. Pursuant to
the Joint Venture which the Company and Colt have formed, each party shall henceforth contribute its proportionate share of property
related expenditures. If any party fails to contribute its share of future property related expenditures, then its interest will
be diluted on a straight-line basis. If any party’s interest is diluted to less than 10%, then that party’s interest
in the Extra High Property will be converted into a 0.5% net smelter returns royalty.



As
at December 31, 2012, 2013, 2014, 2015 and 2016, the Company held a 33% undivided interest in the Extra High Property.



Neither
the Company nor the operator of the Extra High Property has incurred any meaningful exploration or evaluation expenditures in
recent years with respect to the Extra High Property. Accordingly, during the fiscal year-ended 2011 the Company recognized an
impairment provision of $151,339 to reduce the carrying amount to $1. If there is an indication in the future that the impairment
loss recognized no longer exists or has decreased, the recoverable amount will be estimated and the carrying value of the property
will be increased to its recoverable amount. The Company did not incur any expenditures on the Extra High Property during the
years 2013, 2014 and 2015, however during 2016 the Company transferred from its PAC account with the Mineral Titles Office of
the Province of British Columbia credits totalling $4,096 to Colt’s PAC account to enable Colt to use the credits towards
assessment filing on the Extra High Property.



Pursuant
to the March 30, 2016 Amending Agreement (Exhibit 10.11.4 – Incorporated by reference), Colt and the Company have
agreed to reduce the size of the Extra High Property from 1,077 hectares to 650 hectares by abandoning certain claims.



The
Extra High Property is located on Samatosum Mountain, immediately south of the formerly producing Samatosum Mine, 60 km northeast
of Kamloops, British Columbia.



On
March 31, 2016, the Company together with Colt have extended to December 25, 2019 the expiry date of certain mineral claims totalling
650 hectares which comprise the Extra High Property.



As
of the date of this Annual Report, the Company holds a 33% undivided interest in the Extra High Property.



13









Legal
Description



The
Extra High Mineral Property tenures are as follows:



|TENURE
        NUMBER | NAME
        OF CLAIM | Property
                                         Size
        (in
        hectares) | CONVERSION
                                         DATE OR DATE
        STAKED | BC
    MAP # | EXPIRY
    DATE
|--------------------- | --------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------- | ------------ | ---------------
|509949                | Extra
    High        | 60.829                                                                               | 2005/MAR/31                                                                     | 082M         | 2019/DEC/25    
|509961                | Extra
    High        | 121.664                                                                              | 2005/MAR/31                                                                     | 082M         | 2019/DEC/25    
|509969                | Extra
    High        | 344.834                                                                              | 2005/MAR/31                                                                     | 082M         | 2019/DEC/25    
|510214                | Extra
    High        | 40.557                                                                               | 2005/APR/05                                                                     | 082M         | 2019/DEC/25    
|510215                | Extra
    High        | 81.124                                                                               | 2005/APR/05                                                                     | 082M         | 2019/APR/02    
|Total:                |                       | 650                                                                                  |                                                                                 |              |                



During
2016, the Company together with Colt have abandoned the following mineral claims totaling 427 hectares which were previously part
of the Extra High Property:



|TENURE
        NUMBER | NAME
        OF
        CLAIM | Property
                                         Size
        (in
        hectares) | CONVERSION
                                         DATE OR DATE
        STAKED | BC
    MAP # | EXPIRY
    DATE
|--------------------- | ----------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------- | ------------ | ---------------
|509956                | Extra
    High                | 182.52                                                                               | 2005/MAR/31                                                                     | 082M         | 2016/APR/02    
|509963                | Extra
    High                | 40.569                                                                               | 2005/MAR/31                                                                     | 082M         | 2016/APR/02    
|510213                | Extra
    High                | 20.289                                                                               | 2005/APR/05                                                                     | 082M         | 2016/APR/02    
|510306                | Extra
    High                | 60.857                                                                               | 2005/APR/05                                                                     | 082M         | 2016/APR/02    
|509952                | Super
    High  #1            | 60.824                                                                               | 2005/MAR/31                                                                     | 082M         | 2016/MAR/31    
|520184                | Super
    High  #2            | 20.275                                                                               | 2005/SEP/20                                                                     | 082M         | 2016/SEP/20    
|520186                | Super
    High  #3            | 40.544                                                                               | 2005/SEP/20                                                                     | 082M         | 2016/SEP/20    



A
2016 Assessment Report on Preliminary Metallurgical Testing on the Extra High Property was prepared for Colt by J.W. Murton on
May 20, 2016.



| | II. | Ontario,
                                         Canada Lithium Properties (Mineral Leases)
| | --- | --------------------------------------------------------------------------------------------



These
Mineral Leases were previously written off at the end of fiscal 2000. During the year ended December 31, 2008, the Company sold
all of its Mineral Leases for gross proceeds of $54,500. However, in the event that at a future date the Mineral Leases are placed
into commercial production, then the Company is entitled to receive a 0.50% gross receipts royalty after six months from the date
of commencement of commercial production.



| | III. | Investment
                                         in Mexican Gaming Company
| | ---- | -----------------------------------------------------------------------------



In
April 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed to
purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican
land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200
for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty
revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment
and recorded impairment of $799,999 on the investment due to nominal royalty payments received (see Exhibit 10.13 – Incorporated
by reference). As of the date of this Report, the Company does not expect to recover its investment in the Mexican gaming
company.



ITEM
5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Item.
5.A. Results of Operations



The
following table contains selected annual information for the three years ended December 31, 2016, 2015 and 2014 which are in accordance
with IFRS:





14









|                                                               |   | Year
                                         Ended December
                                         31, 2016 |          | Year
                                         Ended December
                                         31, 2015 |  | Year
                                         Ended December
                                         31, 2014
|-------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------- | -------- | -------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------
|Revenue                                                        | $ |                                                                                                                | 0        |                                                                                                                |  |                                                                                                               
|Interest
    income                                            |   |                                                                                                                | 0        |                                                                                                                |  |                                                                                                               
|Expenses                                                       |   |                                                                                                                | (347,963 | )                                                                                                              |  |                                                                                                               
|Basic
    and diluted loss per common share before other items |   |                                                                                                                | (0.17    | )                                                                                                              |  |                                                                                                               
|Comprehensive
    loss                                         |   |                                                                                                                | (347,963 | )                                                                                                              |  |                                                                                                               
|Total
    assets                                               |   |                                                                                                                | 5,922    |                                                                                                                |  |                                                                                                               
|Long-term
    financial obligations                            |   |                                                                                                                | 0        |                                                                                                                |  |                                                                                                               
|Cash
    dividends                                             |   |                                                                                                                | 0        |                                                                                                                |  |                                                                                                               



Note:
All common shares and per share amounts included in the above table for the years ended December 31, 2016, 2015 and 2014 have
been restated to give retroactive effect to the 6:1 share consolidation which took effect on July 7, 2014 as described in Information
on the Company under Item 4. of this Annual Report. Earnings (loss) per common share calculations in the above table are based
on the weighted average number of shares outstanding as shown in the Annual Statements of Comprehensive Loss for the above mentioned
periods.



All
financial figures presented herein are expressed in Canadian Dollars (CDN$) unless otherwise specified.



Effective
August 31, 2012, the Company changed its name from Kokomo Enterprises Inc. (“Kokomo”) to High 5 Ventures Inc. (“High
5”) and consolidated its share capital on the basis of fifteen (old) Kokomo common shares for one (new) High 5 common share.
The common shares of the Company trade on the Canadian Securities Exchange (CSE) under the symbol “HHH”, and in
theUSA, the Company's common shares trade on the OTCQB tier of the OTC markets under the trading symbol “HHHEF”.
The Cusip number of the Company’s common shares is 42966V105. The Company’s office is located at Suite 300, 570 Granville
Street, Vancouver, BC, Canada, V6C 3P1. The Company’s registrar and transfer agent is Computershare Investor Services Inc.
located at 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9.



On
July 7, 2014, the Company’s share capital was consolidated on the basis of 6 (old) common shares for 1 (new) common share
and the Company changed its name to 37 Capital Inc. (“37 Capital”). As a result, the shares of High 5 were de-listed
from trading and the shares of 37 Capital commenced trading in Canada on the CSE under the symbol “JJJ”, and in the
U.S.A. the shares of 37 Capital trade on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s
common shares is 88429G102.



All
common shares and per share amounts have been restated to give retroactive effect to the 6:1 share consolidation, which took effect
on July 7, 2014.



In
April 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed to
purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican
land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200
for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty
revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment
and recorded impairment of $799,999 on the investment due to nominal royalty payments received (see Exhibit 10.13 – Incorporated
by reference). As of the date of this Report, the Company does not expect to recover its investment in the Mexican land
based casino.



15









For
the year ended December 31, 2016:



| | • | The
                                         Company’s operating expenses were $347,963 as compared to $334,993 for the corresponding
                                         period in 2015 and as compared to $1,050,947 for the corresponding period in 2014.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company recorded a comprehensive loss of $347,963 as compared to a comprehensive loss
                                         of $334,993 during the corresponding period in 2015 as compared to a comprehensive loss
                                         of $1,046,790 during the corresponding period in 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s basic and diluted loss per common share was $0.17 as compared to a basic
                                         and diluted loss of $0.31 during the corresponding period in 2015 and as compared to
                                         a basic and diluted loss of $0.98 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total assets were $5,922 as compared to $3,277 during the corresponding
                                         period in 2015 and as compared to $3,530 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total liabilities were $1,170,027 as compared to $836,510 during the
                                         corresponding period in 2015 and as compared to $529,764 during the corresponding period
                                         in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company had a working capital deficiency of $1,164,107 as compared to a working capital
                                         deficiency of $ $833,235 during the corresponding period in 2015 and as compared to a
                                         working capital deficiency of $526,236 during the corresponding period in 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Company is presently not a party to any legal proceedings whatsoever.



Summary
of Quarterly Results



|For the
    Quarterly Periods ended: |   | December
    31, 2016 |          | September
    30, 2016 |  | June
    30, 2016 |         | March
    31, 2016
|------------------------------------ | - | --------------------- | -------- | ---------------------- |  | ----------------- | ------- | ------------------
|Total
    Revenues                   | $ |                       | 0        |                        |  |                   | 0       |                   
|Net
    loss and comprehensive loss  |   |                       | (142,396 | )                      |  |                   | (50,133 | )                 
|Loss
    per common share            |   |                       | (0.07    | )                      |  |                   | (0.02   | )                 



|For the
    Quarterly Periods ended: |   | December
    31, 2015 |         | September
    30, 2015 |  | June
    30, 2015 |         | March
    31, 2015
|------------------------------------ | - | --------------------- | ------- | ---------------------- |  | ----------------- | ------- | ------------------
|Total
    Revenues                   | $ |                       | 0       |                        |  |                   | 0       |                   
|Net
    loss and comprehensive loss  |   |                       | (90,042 | )                      |  |                   | (70,172 | )                 
|Loss
    per common share            |   |                       | (0.08   | )                      |  |                   | (0.07   | )                 



16









|For the
    Quarterly Periods ended: |   | December
    31, 2014 |          | September
    30, 2014 |  | June
    30, 2014 |         | March
    31, 2014
|------------------------------------ | - | --------------------- | -------- | ---------------------- |  | ----------------- | ------- | ------------------
|Total
    Revenues                   | $ |                       | 4,157    |                        |  |                   | 0       |                   
|Net
    loss and comprehensive loss  |   |                       | (892,875 | )                      |  |                   | (61,466 | )                 
|Loss
    per common share            |   |                       | (0.84    | )                      |  |                   | (0.06   | )                 



The
Company’s business is not of a seasonal nature.



Item
5.B. Liquidity and Capital Resources



Liquidity
and Capital Resources



The
Company has incurred significant operating losses over the past three fiscal years, has limited resources, and no sources of operating
cash flow.



During
2017, the Company shall require at least $400,000 so as to conduct its operations uninterruptedly. In order to meet this requirement,
the Company intends to seek equity and/or debt financings through private placements and/or public offerings and/or loans. In
the past, the Company has been successful in securing equity and debt financings in order to conduct its operations uninterruptedly.
While the Company does not give any assurances whatsoever that in the future it will continue being successful in securing equity
and/or debt financings in order to conduct its operations uninterruptedly, it is the Company’s intention to pursue these
methods for future funding of the Company.



For
the year ended December 31, 2016:



| | • | The
                                         Company’s operating expenses were $347,963 as compared to $334,993 for the corresponding
                                         period in 2015 and as compared to $1,050,947 for the corresponding period in 2014.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company recorded a comprehensive loss of $347,963 as compared to a comprehensive loss
                                         of $334,993 during the corresponding period in 2015 as compared to a comprehensive loss
                                         of $1,046,790 during the corresponding period in 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s basic and diluted loss per common share was $0.17 as compared to a basic
                                         and diluted loss of $0.31 during the corresponding period in 2015 and as compared to
                                         a basic and diluted loss of $0.98 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total assets were $5,922 as compared to $3,277 during the corresponding
                                         period in 2015 and as compared to $3,530 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total liabilities were $1,170,027 as compared to $836,510 during the
                                         corresponding period in 2015 and as compared to $529,764 during the corresponding period
                                         in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company had a working capital deficiency of $1,164,107 as compared to a working capital
                                         deficiency of $ $833,235 during the corresponding period in 2015 and as compared to a
                                         working capital deficiency of $526,236 during the corresponding period in 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17









Private
Placement Financing



On
January 4, 2016, the Company closed the first and last tranche of the non-brokered private placement which was announced on July
31, 2015 and the Company has issued an aggregate of 1,000,000 Units at $0.10 per Unit for total proceeds to the Company of $100,000.
Each Unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional
common share in the capital of the Company at an exercise price of $0.135 per common share until January 4, 2021. All securities
issued in connection with this financing included a hold period in accordance with applicable securities law. A director of the
Company and a family member subscribed to this non-brokered private placement.



There
were no share financings during the year ended December 31, 2015.



There
were no share financings during the year ended December 31, 2014.



Warrants



As
at December 31, 2016, a total of 1,033,333 warrants with a weighted average exercise price of $0.14 per warrant share were outstanding.



If
any warrants are exercised in the future, then any funds received by the Company from the exercising of warrants shall be used
for general working capital purposes. However, there are no assurances whatsoever that any warrants will be exercised before their
expiry.



Loan
2016



The
Company has borrowed the sum of $103,924 from an arm’s length party to pay certain amounts that were owed by the Company
to some of its creditors. The borrowed amount of $103,924 is non-interest bearing, unsecured and is payable on demand.



Refundable
Subscription



During
the twelve months ended December 31, 2016, the Company cancelled subscription agreements from a non-brokered private placement
financing which was announced on July 31, 2015 from three subscribers totalling $45,000. The Company has refunded $35,000 to two
subscribers. The refundable subscription of $10,000 is included in Accounts Payable in the Company’ financial statements
for the year ended December 31, 2016.



Convertible
Debentures Financing 2015



On
January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000.
The convertible debentures have a maturity date of twelve months from the date of closing, and bear interest at the rate of 12%
per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company at the Company’s
option at a conversion price of $0.30 per share. The liability component of the convertible debenture was recognized initially
at the fair value of a similar liability that does not have an equity conversion option, which was calculated based on the application
of a market interest rate of 20%. The amount of $222,006 has been recorded under convertible debentures and the amount of $27,994
has been recorded under the equity portion of convertible debenture reserve. As of December 31, 2016, the convertible debentures
are in default; however, the Company has not been served with a default notice.



18









Convertible
Debentures Financing 2013



During
the year ended December 31, 2013, the Company issued several convertible debentures for a total amount of $975,000 to several
arm’s length parties. The convertible debentures have a maturity date of 18 months from the date of closing, and bear interest
at the rate of 15% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the
Company at a conversion price of $1.50 per share. The liability component of the convertible debenture was recognized initially
at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a
market interest rate of 20%. The difference between the $975,000 face value of the debentures and the fair value of the liability
component was recognized in equity. On the initial recognition of the convertible debentures, the amount of $913,072 has been
recorded under convertible debentures and the amount of $61,928 has been recorded under the equity portion of convertible debentures.



Pursuant
to the financing, the Company has made cash payments of $48,000 and issued 2,000 common shares of the Company and 3,333 agent
warrants of the Company with fair value of $8,115 as finders’ fees. Each warrant entitles the holder to purchase one additional
common share of the Company at a price of $1.50 per share until July 23, 2018. The amount of transaction costs directly attributable
to the financing of $56,115 were allocated to the liability and equity components of the debenture proportionately at $52,551
and $3,564, respectively. The discount on the debentures is being accreted such that the liability component will equal the face
value of the debentures at maturity plus accrued interest.



On
September 4, 2013, the amount of $858,118 which comprised of certain convertible debentures and their corresponding accrued interest
was converted into 610,724 common shares of the Company. The equity portion of the convertible debentures was reduced in the amount
of $52,562.



As
of December 31, 2016, one of the convertible debentures is in default, however, the Company has not been served with a default
notice.



Stock
Options



During
the twelve months ended December 31, 2016, there were a total of 33,334 stock options that were granted to consultants which expired
unexercised. As at December 31, 2016, there were no outstanding stock options.



Item
5.C. Research and development, patents and licences



The
Company does not have a research and development department nor does it have any patents or licenses.



Item
5.D. Trend Information



During
the last several years commodity prices have fluctuated significantly, and should this trend continue or should commodity prices
remain at current levels, then companies such as 37 Capital will have difficulty in raising funds and/or acquiring mineral properties
of merit at reasonable prices.



Item
5.E. Off balance sheets arrangements.



The
Company has no off balance sheets arrangements and the Company’s financial information including its balance sheets and
statements of comprehensive loss have been fairly represented in accordance with IFRS.



19









Item
5.F. Tabular disclosure of contractual obligations



The
Company has four convertible debentures totalling $350,000 plus accrued interest which have matured and are payable on demand
(see Exhibits 10.14 & 10.15– Incorporated by reference). In addition to the Convertible Debentures which have matured
and are due, the Company has borrowed the sum of $103,924 from an arm’s length party which is payable on demand, and the
Company is obliged to refund to a subscriber the sum of $10,000. The Company has no Capital Lease Obligations or Purchase Lease
Obligations reflected on the Company’s Balance Sheets, however the Company has Obligations pursuant to the 2015 and 2013
Convertible Debentures Financing (see Exhibit 10.15 – Incorporated by reference), the loan in the amount of $103,924 payable
to the arm’s length party and, the refund of $10,000 to a subscriber.



In
respect to information covered by Items 5.E. and 5.F., all financial information and statements have been fairly represented in
accordance with IFRS.



Item
5.G. Safe Harbour



Special
Note regarding Forward-Looking Statements



We
make certain forward looking-statements in this Form 20-F within the meaning of Section 27A of the Securities Act 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity,
resources, business outlook, proposed acquisitions, market forces, corporate strategies, contractual commitments, capital requirements
and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbour for forward-looking statements.
To comply with the terms of the safe harbour, we note that a variety of factors could cause our actual results and experience
to differ substantially from the anticipated results or other expectations expressed in our forward-looking statements. When words
and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,”
“intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,”
“possible,” “seeks,” “may,” “could,” “should,” “might,”
“likely,” “enable” or similar words or expressions are used in this Form 20-F, as well as statements containing
phrases such as “in our view,” “there can be no assurances,” “although no assurances can be given,”
or “there is no way to anticipate with certainty,” forward-looking statements are being made. These forward-looking
statements speak as of the date of this Form 20-F.



The
forward-looking statements are not guarantees of future performance and involve risk and uncertainties. These risks and uncertainties
may affect the operation, performance, development and results of our business and could cause future outcomes to differ materially
from those set forth in our forward-looking statements. These statements are based on our current beliefs as to the outcome projected
or implied in the forward-looking statements. Furthermore, some forward-looking statements are based upon assumptions of future
events which may not prove to be accurate. The forward-looking statements involve risks and uncertainties including, but not limited
to, the risks and uncertainties referred to in “Item 3.D. RISK FACTORS,” and elsewhere within the document and in
other of our filings with the Securities and Exchange Commission.



New
risk factors emerge from time to time and it is not possible for us to predict all such risk factors which can cause actual results
to differ significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, investors
should not overly rely or attach undue weight to forward-looking statements as an indication of our actual future results.



ITEM
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



As
of December 31, 2016, the name, municipality of residence and the principal occupation of the directors and officers of the Company
are the following:





20









|Name
    and municipality of residence                                                            | Position
    with the Registrant     | Date
    of Birth          | Principal
    occupation                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Term
    of Office with the Registrant                                                                                                                                                                                                                                                                                                   
|------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Bedo
                                         H. Kalpakian*(1)
        Delta,
        B.C. Canada | President,
    CEO, CFO and Director | May
    14, 1946           | Vice
                                         President of the Registrant
        
        President
        of Registrant
        
        CEO
        & CFO of the Registrant
        
        Chairman
        of Jackpot Digital Inc. (“JP”) (formerly Las Vegas From Home.com Entertainment Inc.)
        
        CFO
        of JP
        
        Director
        of Green Arrow Resources Inc.
        
        President,
        CEO of Colt Resources Inc. | 1984
                                         to 1990
        
        1991
        to Present
        
        2004
        to Present
        
        1991
        to Present
        
        
        
        
        2004
        to Present
        
        April
        2012 to Present
        
        2007
        to 2008
|Jacob
        H. Kalpakian(2)
        Vancouver,
        B.C. Canada                              | Vice
        President and Director  | October
        18, 1968   | Vice
        President of Registrant;
        
        President
        of JP
        CEO
        of JP
        
        President
        & CEO of Green Arrow Resources Inc.
        
        Vice
        President of Colt Resources Inc.                                                                                                                                                                                                                           | 1991
        to Present
        
        1991
        to Present
        2004
        to Present
        
        April
        2012 to Present
        
        2007
        to 2008                                                                                                                                                    
|Gregory
                                         T. McFarlane*
        Las
        Vegas, NV, USA | Director                             | November
    13, 1968      | Director
                                         of the Registrant and JP;
        
        Principal
        of McFarlane Media, LLC (2005)                                                                                                                                                                                                                                                                                                                            | 1992
                                         to Present
        
        
        2005
        to Present                                                                                                                                                                                                                               
|Fred
                                         A.C. Tejada*
        Surrey,
        B.C. Canada    | Director                             | August
    1, 1958         | Director
                                         of the Registrant
        
        
        President
        of Tirex Resources Inc.
        
        Vice
        President Operations and Exploration of Tirex Resources
        
        Vice
        President Exploration of Panoro Minerals Ltd.                                                                                                                                                                | December
                                         2009 to Present
        
        October
        2011 to Present
        
        June
        2011 to October 2011
        
        July
        2007 to June 2011                                                                                                                    
|Neil
                                         Spellman(3)
        Carlsbad,
        CA, USA       | Director                             | January
    24, 1954       | Senior
    Vice President of DB Financial                                                                                                                                                                                                                                                                                                                                                                                                                                | August
                                         2016 to Present                                                                                                                                                                                                                                                                          
|Maria
        P. Arenas
        Surrey,
        B.C. Canada                                       | Corporate
        Secretary          | September
        29, 1969 | Corporate
        Secretary of the Registrant
        
        Corporate
        Secretary of JP
        
        Corporate
        Secretary of Green Arrow Resources Inc.                                                                                                                                                                                                                                                                                              | 2008
        to Present
        
        
        2008
        to Present
        
        2012
        to Present                                                                                                                                                                                                                       



*Members
of the Company’s audit committee.



| | (1) | As
                                         of April 1, 2017, Bedo H. Kalpakian has stepped down as President, CEO & CFO.
| | --- | -------------------------------------------------------------------------------------------------------------------------

| | (2) | As
                                         of April 1, 2017, Mr. Jacob H. Kalpakian has been appointed as President & CEO.
| | --- | ---------------------------------------------------------------------------------------------------------------------------

| | (3) | As
                                         of April 1, 2017, Mr. Neil Spellman has been appointed as CFO.
| | --- | ----------------------------------------------------------------------------------------------------------





21







Jacob
H. Kalpakian is the nephew of Bedo H. Kalpakian. All directors serve for a term of one year until the next annual general meeting
or until the date of their resignation, whichever occurs first.



There
are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person referred
to above was selected as a director or member of senior management.



Item
6.B. Compensation



Certain
directors, officers and employees of the Company were covered under a group medical and dental insurance plan until June 30, 2013.
Presently there exists no plan regarding directors' and officers' pension, retirement or other similar benefits. Furthermore,
there are no amounts set aside or accrued by the Company to provide pension, retirement or similar benefits.



In
the past, the Company hired the services of J.W. Murton & Associates to provide geological services. J.W. Murton & Associates
is a private company owned by a former director of the Company.



Pursuant
to the Management Services Agreement with Kalpakian Bros. of B.C. Ltd. (“Kalpakian Bros.”) dated November 1, 2001
(Exhibit 10.4 - Incorporated by reference), as amended on August 18, 2003, July 31, 2005 (Exhibit 10.4.1 - Incorporated by reference)
and November 10, 2010 (Exhibit 10.4.2 - Incorporated by reference) (the “Management Services Agreement”), the total
amount for Management Fees was $35,000 during the year ended December 31, 2016 (2015: $60,000; 2014: $33,000). In February 2012,
the Management Services Agreement was amended (Exhibit 10.4.3 - Incorporated by reference) whereby the remuneration payable to
Kalpakian Bros. for the services provided to the Company was reduced from $10,000 plus HST per month to $5,000 plus HST per month
effective as of March 1, 2012. Subsequently, the Management Services Agreement was further amended (Exhibit 10.4.4 - Incorporated
by reference) whereby the remuneration payable to Kalpakian Bros. was further reduced from $5,000 plus HST per month to $2,500
plus HST per month as of April 1, 2012. On October 1, 2012, the Management Services Agreement was further amended whereby the
remuneration payable to Kalpakian Bros. has been reduced from $2,500 plus HST to $500 plus HST per month (Exhibit 10.4.5 - Incorporated
by reference). On July 1, 2014, the monthly remuneration payable to Kalpakian Bros. was increased from $500 plus GST per month
to $5,000 plus GST per month (Exhibit 10.4.6 – Incorporated by reference). The principals of Kalpakian Bros. are
Bedo H. Kalpakian and Jacob H. Kalpakian, both of whom are directors of the Company. Effective as of August 1, 2016, the Management
Services Agreement has been terminated by mutual consent.



Pursuant
to indemnity agreements dated April 1, 1993, January 7, 2008, December 18, 2009 and August 2 2016, between the Company and each
of Bedo H. Kalpakian, Jacob H. Kalpakian, Gregory T. McFarlane, Maria P. Arenas, Fred A.C. Tejada and Neil Spellman (collectively
"the directors and officers"), the Company agreed to indemnify and save the directors and officers, their heirs and
personal representatives harmless from and against all costs, charges and expenses arising out of their association with the Registrant.
These costs, charges and expenses include any amounts paid to settle an action or to satisfy a judgement brought or found against
the directors and/or officers and any amounts paid to settle an administrative action or proceeding provided that the indemnified
party has acted in good faith and in the best interests of the Company. The Company Act requires a Court Order to be obtained
prior to the Company making payment under the indemnity agreements. To date, the Company has not made any payments under the indemnity
agreements.



During
2016, 2015 and 2014, there were no stock options granted to Directors, Officers and Employees.



The
Company has no long-term incentive plans in place and, has not granted any stock appreciation rights.



22









Item
6.C. Board Practices



6.C.1.
Directors’ Terms of service.



All
directors are elected annually by the Company’s shareholders to serve for a term of one year until the next annual general
meeting of the shareholders with the exception of Neil Spellman who was appointed to the Board of Directors on August 23, 2016.
All directors may be annually re-elected by the Company’s shareholders at the annual general meeting of the shareholders
for additional one year terms. Bedo H. Kalpakian has served as a director since 1984; Jacob H. Kalpakian has served as a director
since 1991; Gregory T. McFarlane has served as a director since 1992 and Fred A.C. Tejada has served as a director since December
2009.



6.C.2.
Details of Directors’ Service Contracts.



Pursuant
to the Management Services Agreement with Kalpakian Bros. of B.C. (“Kalpakian Bros.”) Ltd. dated November 1, 2001
(Exhibit 10.4 - Incorporated by reference), as amended on August 18, 2003, July 31, 2005 and November 1, 2010 (Exhibits 10.4.1
and 10.4.2 - Incorporated by reference) (the “Management Services Agreement”), the total amount for Management Fees
was $35,000 during the year ended December 31, 2016 (2015: $60,000; 2014: $33,000). In February 2012, the Management Services
Agreement was amended (Exhibit 10.4.3 - Incorporated by reference) whereby the remuneration payable to Kalpakian Bros. for the
services provided to the Company was reduced from $10,000 plus HST per month to $5,000 plus HST per month as of March 1, 2012.
Subsequently, the Management Services Agreement was further amended (Exhibit 10.4.4 – Incorporated by reference) whereby
the remuneration payable to Kalpakian Bros. was further reduced from $5,000 plus HST per month to $2,500 plus HST per month as
of April 1, 2012. On October 1, 2012, the Management Services Agreement was further amended whereby the remuneration payable to
Kalpakian Bros. has been reduced from $2,500 plus HST to $500 plus HST per month (Exhibit 10.4.5 - Incorporated by reference).
On July 1, 2014, the monthly remuneration payable to Kalpakian Bros. was increased from $500 plus GST per month to $5,000 plus
GST per month (Exhibit 10.4.6 – Incorporated by reference). The principals of Kalpakian Bros. are Bedo H. Kalpakian
and Jacob H. Kalpakian, both of whom are directors of the Company. Effective as of August 1, 2016, the Management Services Agreement
has been terminated by mutual consent.



6.C.3.
Details relating to the Company’s audit committee and remuneration committee.



All
directors are elected annually by the Company’s shareholders to act as directors of the Company for a term of one year.
The Company’s audit committee is appointed on an annual basis by the Company’s directors. Presently, the Company’s
audit committee consists of the following directors; Bedo H. Kalpakian, Gregory T. McFarlane and Fred A.C. Tejada. The majority
of the members of the audit committee must be made up of directors who are not officers of the Company. The audit committee is
also responsible to monitor compliance of the Company’s Code of Ethics (see item 16.B).



Pursuant
to Canadian National Policy (52-110) with respect to Audit Committee Disclosure, the charter of the Company’s Audit Committee
and other information required to be disclosed have been disclosed in the Company’s Annual Information Circular with respect
to the Company’s Annual General Shareholder’s meeting which was held on December 9, 2016. The Company’s 2016
Annual Information Circular (see Exhibit 13* – Attached) includes the Company’s Audit Committee Disclosure under Form
52-110F2.



The
Company does not have a remuneration committee or an executive committee largely due to its size.



Item
6.D. Employees



The
Company employs 2 individuals in Management.



The
Company’s employees are not represented by a union or other collective bargaining organization and the Company has not experienced
any work stoppage by its employees. The Company believes that its employee relations are good.



23









Item
6.E. Share Ownership



The
number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December
31, 2016 are as follows:



|Name
                                         of Director/Officer and
        Municipality           | Number
                                         of
        Issued
        Shares | Percentage
    of the total Issued Share Capital*
|---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | -------------------------------------------------
|Bedo
                                         H. Kalpakian
        Delta,
        BC, Canada         | 616,395
    (1)                                                                  | 29.81%                                           
|Jacob
                                         H. Kalpakian
        Vancouver,
        BC, Canada    | 50,664(2)                                                                        | 2.45%                                            
|Gregory
                                         T. McFarlane
        Las
        Vegas, Nevada, USA | 126
        direct                                                               | 0.01%                                            
|Fred
                                         A.C. Tejada
        Surrey,
        BC, Canada         | 0                                                                                | 0.00%                                            
|Neil
                                         Spellman
        Carlsbad,
        CA, USA             | 3                                                                                | 0.00%                                            
|Maria
                                         P. Arenas
        Surrey,
        BC, Canada          | 572
        direct                                                               | 0.03%                                            



Notes:
*Based on 2,067,724 issued and outstanding common shares as of December 31, 2016.

| | (1) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd. and 3,000 are held
                                         by BHK Management Inc.                                         
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd., 3,000 are held by
                                         30 Rock Management Inc. and 14,156 are held by a family member.
| | (3) | Kalpakian
                                         Bros. of B.C. Ltd. is a private company controlled by and in which Bedo H. Kalpakian
                                         and Jacob H. Kalpakian are the principal shareholders.    
| | (4) | BHK
                                         Management Inc. is a private company controlled by Bedo H. Kalpakian.                                                                                                                         
| | (5) | 30
                                         Rock Management Inc. is a private company controlled by Jacob H. Kalpakian.                                                                                                                    





The
number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December
31, 2015 are as follows:



|Name
                                         of Director/Officer and
        Municipality           | Number
                                         of
        Issued
        Shares | Percentage
    of the total Issued Share Capital*
|---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | -------------------------------------------------
|Bedo
                                         H. Kalpakian
        Delta,
        BC, Canada         | 118,0959(1)                                                                      | 11.06%                                           
|Jacob
                                         H. Kalpakian
        Vancouver,
        BC, Canada    | 70,088(2)                                                                        | 6.56%                                            
|Gregory
                                         T. McFarlane
        Las
        Vegas, Nevada, USA | 126
        direct                                                               | 0.01%                                            
|Fred
                                         A.C. Tejada
        Surrey,
        BC, Canada         | 0                                                                                | 0.00%                                            
|Maria
                                         P. Arenas
        Surrey,
        BC, Canada          | 572
        direct                                                               | 0.05%                                            

Notes:
*Based on 1,067,724 issued and outstanding common shares as of December 31, 2015.

| | (1) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd., 3,000 are held by
                                         BHK Management Inc. and 1,700 are held by a family member.    
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd., 3,000 are held by
                                         30 Rock Management Inc. and 33,580 are held by family members.
| | (3) | Kalpakian
                                         Bros. of B.C. Ltd. is a private company controlled by and in which Bedo H. Kalpakian
                                         and Jacob H. Kalpakian are the principal shareholders.   
| | (4) | BHK
                                         Management Inc. is a private company controlled by Bedo H. Kalpakian.                                                                                                                        
| | (5) | 30
                                         Rock Management Inc. is a private company controlled by Jacob H. Kalpakian.                                                                                                                   





24









The
number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December
31, 2014 are as follows:



|Name
                                         of Director/Officer and
        Municipality           | Number
                                         of
                                                                                                                                                                                                                 Issued
                                         Shares | Percentage
    of the total Issued Share Capital*
|---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------
|Bedo
                                         H. Kalpakian
        Richmond,
        BC, Canada      | 153,931
                                         (directly)
                                                                                                                                                                     14,164
                                         (indirectly)(1)                           | 15.74%                                           
|Jacob
                                         H. Kalpakian
        Vancouver,
        BC, Canada    | 41,544
                                         (directly)
                                                                                                                                                                     46,044
                                         (indirectly)(2)                            | 8.20%                                            
|Gregory
                                         T. McFarlane
        Las
        Vegas, Nevada, USA | 126
        direct                                                                                                                                                                                                                                                                                                         | 0.01%                                            
|Fred
                                         A.C. Tejada
        Surrey,
        BC, Canada         | 0                                                                                                                                                                                                                                                                                                                          | 0.00%                                            
|Maria
                                         P. Arenas
        Surrey,
        BC, Canada          | 572
        direct                                                                                                                                                                                                                                                                                                         | 0.05%                                            

Notes:*	Based
on 1,067,724 issued and outstanding common shares as of December 31, 2014.

| | (1) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd., 3,000 are held by
                                         BHK Management Inc. and 1,700 are held by a family member.    
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Of
                                         these common shares, 9,464 are held by Kalpakian Bros. of B.C. Ltd., 3,000 are held by
                                         30 Rock Management Inc. and 33,580 are held by family members.
| | (3) | Kalpakian
                                         Bros. of B.C. Ltd. is a private company controlled by and in which Bedo H. Kalpakian
                                         and Jacob H. Kalpakian are the principal shareholders.   
| | (4) | BHK
                                         Management Inc. is a private company controlled by Bedo H. Kalpakian.                                                                                                                        
| | (5) | 30
                                         Rock Management Inc. is a private company controlled by Jacob H. Kalpakian.                                                                                                                   





Item
6.E.2. Stock Options for Employees



From
time to time the Company grants Incentive Stock Options to its directors, officers, employees and consultants. The incentive stock
options entitle the holders to acquire common shares of the Company from treasury. The incentive stock options are a means of
rewarding future services provided to the Company and are not intended as a substitute for salaries or wages, or as a means of
compensation for past services rendered.



At
the Company’s Annual General Meeting of shareholders held on April 30, 2004, the shareholders of the Company approved the
Company’s 2004 Stock Option Plan (Exhibit 10.7 - Incorporated by reference). Shareholders of the Company adopted and approved
the 2015 Stock Option Plan at the Company’s Annual and Special General Meeting of Shareholders which took place on June
4, 2015 (see Exhibit 12 – Incorporated by reference) and was re-approved by the Shareholders of the Company at the last
Annual General Meeting of Shareholders which took place on Friday, December 9, 2016 (see Exhibit 13* Attached).



The
Company’s 2015 Stock Option Plan reserves for granting to directors, officers, employees and consultants up to 20% of the
issued and outstanding common shares of the Company calculated from time to time on a rolling basis. The terms of the options
are determined at the date of grant.



During
2013, the Company granted to two consultants a total number of 33,334 stock options exercisable at $1.20 per share of which 21,667
stock options expired on March 18, 2016 and 11,667 stock options expired on May 15, 2016.



During
2016, 2015 and 2014 there were no stock options granted to Directors, Officers and, Employees.



25





ITEM
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A.1.The Company is a publicly-owned corporation, the common shares of which are owned by Canadian residents, U.S. residents, and
residents of other countries. The Company is neither directly nor indirectly owned nor controlled by any other corporation or
any foreign government. All shares in the following tables have been re-stated to give retroactive effect to the Company’s
6:1 share consolidation on July 7, 2014.



As
at December 31, 2016, the following persons or corporations beneficially own, directly or indirectly, or exercise control
over shares carrying more than 5% of the issued and outstanding shares of the Company:



|Name
                                         of Shareholder
        and
        Municipality                                                              | Number
                                         of
        Issued
        Capital | Percentage
                                         of the
        Total
        Issued Share Capital*
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------
|Bedo
                                         H. Kalpakian,
        Delta,
        BC and
        Jacob
        H. Kalpakian
        Vancouver,
        BC | 657,595
        (1)                                                               | 31.80%                                                                                                

| | (1) | Of
                                         these shares, 603,931 common shares are held by Bedo H. Kalpakian directly, 24,044 common
                                         shares are held by Jacob H. Kalpakian directly, 15,464 common shares are held by private
                                         companies which are controlled by and in which Bedo H. Kalpakian and Jacob H. Kalpakian
                                         are the principal shareholders and 14,156 common shares are held by a family member of
                                         Jacob H. Kalpakian.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*
Based on 2,067,724 issued and outstanding common shares as of December 31, 2016.



As
at December 31, 2015, the following persons or corporations beneficially own, directly or indirectly, or exercise control
over shares carrying more than 5% of the issued and outstanding shares of the Company:



|Name
                                         of Shareholder
        and
        Municipality                                                              | Number
                                         of
        Issued
        Capital | Percentage
                                         of the
        Total
        Issued Share Capital*
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------
|Bedo
                                         H. Kalpakian,
        Delta,
        BC and
        Jacob
        H. Kalpakian
        Vancouver,
        BC | 178,719
        (1)                                                               | 16.74%                                                                                                

| | (2) | Of
                                         these shares, 103,931 common shares are held by Bedo H. Kalpakian directly, 24,044 common
                                         shares are held by Jacob H. Kalpakian directly, 15,464 common shares are held by private
                                         companies which are controlled by and in which Bedo H. Kalpakian and Jacob H. Kalpakian
                                         are the principal shareholders and 35,280 common shares are held by family members of
                                         Bedo H. Kalpakian and Jacob H. Kalpakian.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*
Based on 1,067,724 issued and outstanding common shares as of December 31, 2015.



As
at December 31, 2014, the following persons or corporations beneficially own, directly or indirectly, or exercise control
over shares carrying more than 5% of the issued and outstanding shares of the Company:



|Name
                                         of Shareholder
        and
        Municipality                                                                                          | Number
                                         of
        Issued
        Capital | Percentage
                                         of the
        Total
        Issued Share Capital*
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------
|Bedo
                                         H. Kalpakian,
                                         Richmond, BC and
        Jacob
        H. Kalpakian
        Vancouver,
        BC | 246,219
        (1)                                                               | 23.06
        %                                                                                       

| | (3) | Of
                                         these shares, 153,931 common shares are held by Bedo H. Kalpakian directly, 41,544 common
                                         shares are held by Jacob H. Kalpakian directly, 15,464 common shares are held by private
                                         companies which are controlled by and in which Bedo H. Kalpakian and Jacob H. Kalpakian
                                         are the principal shareholders and 35,280 common shares are held by family members of
                                         Bedo H. Kalpakian and Jacob H. Kalpakian.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*
Based on 1,067,724 issued and outstanding common shares as of December 31, 2014.



26









7.A.1.(c)All shareholders of the Company have equal voting rights. Holders of common shares of the Company are entitled to one vote
per share at all meetings of shareholders, to receive dividends as and when declared by the Directors, and to receive a pro-rata
share of the assets of the Company available for distribution to common shareholders in the event of the liquidation, dissolution
or winding up of the Company. There are no pre-emptive, conversion or surrender rights attached to the common shares of the Company.



7.A.2.As of December 31, 2016, the Company had 2,067,724 issued and outstanding common shares. The number of outstanding common
shares of the Company held in the United States and the number of registered holders thereof were 4,470 outstanding common shares
and 5 registered shareholders (which include depository trusts which hold shares on behalf of non-registered shareholders).



7.A.3.To the best of the Company’s knowledge the Company is not controlled directly or indirectly by another corporation or
by any foreign government or by any natural or legal person severally or jointly other than as disclosed in 7.A.1.in this Annual
Report.



7.A.4.To the best of the Company’s knowledge, there are no known arrangements which may at a subsequent date result in a change
of control of the Company.



Item
7.B. Related Party Transactions



The
Company shares office space and certain employees with Jackpot Digital Inc. (“Jackpot”) and Green Arrow Resources
Inc. (“Green Arrow”), companies related by common key management personnel.



The
Company together with Jackpot and Green Arrow had entered into a sub-lease agreement with an arm’s length party for office
space which expired on July 30, 2014. Under the sub-lease agreement, the three companies were required to pay a base rent of $5,687
plus property and operating expenses for the leased premised. From May 1, 2013 until July 30, 2014, the Company was charged by
Green Arrow the amount of $2,089 per month for basic rent, operating costs, and applicable taxes.



The
Company together with Jackpot and Green Arrow have entered into an office lease agreement with an arm’s length party for
office space effective as of August 1, 2014 for a one year period. The office lease has been extended until July 31, 2016 . The
office lease has been further extended for a period of one year until July 31, 2017. Under the office lease agreement, as of August
1, 2016, the three companies are required to pay a monthly base rent of $7,194 plus property and operating expenses for the leased
premises. A lease deposit of $10,000 has been made by Jackpot. As of December 1, 2016, Green Arrow is no longer required or obligated
to pay the basic rent.



The
amounts due to related parties are unsecured, payable on demand as at December 31, 2016 and 2015 consist of the following:



|                                                             |  | 2016 |         | 2015
|------------------------------------------------------------ |  | ---- | ------- | ----
|                                                             |  |      |         |     
|Advances
    from directors (interest at prime plus 1%)      |  | $    | 45,505  |     
|Entities
    controlled by directors (non-interest-bearing)* |  |      | 377,143 |     
|                                                             |  | $    | 422,648 |     

*Includes
promissory notes issued as part of the Plan of Arrangement



During
the years ended December 31, 2016, 2015 and 2014, the following amounts were charged by related parties.



27









|                                                               |  | 2016 |         | 2015 |  | 2014
|-------------------------------------------------------------- |  | ---- | ------- | ---- |  | ----
|                                                               |  |      |         |      |  |     
|Interest
    charged on amounts due to related parties         |  | $    | 978     |      |  | $   
|Rent
    charged by entities with common directors             |  |      | 28,298  |      |  |     
|Office
    expenses charged by an entity with common directors |  |      | 86,044  |      |  |     
|                                                               |  | $    | 115,320 |      |  | $   



The
remuneration of directors and key management personnel during the years ended December 31, 2016, 2015 and 2014 is as follows:



|                    |  | 2016 |        | 2015 |  | 2014
|------------------- |  | ---- | ------ | ---- |  | ----
|Management
    fees |  | $    | 35,000 |      |  | $   



On
January 6, 2015, the Company closed convertible debentures financing with two directors of the Company for the Principal amount
of $250,000. The convertible debentures have a maturity date of twelve months from the date of closing, and bear interest at the
rate of 12% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company
at a conversion price of $0.30 per share. The liability component of the convertible debentures was recognized initially at the
fair value of a similar liability that does not have an equity conversion option, which was calculated based on the application
of a market interest rate of 20%. The amount of $222,006 has been recorded under convertible debentures and the amount of $27,994
has been recorded under the equity portion of convertible debenture reserve. The Principal amount of $250,000 together with the
accrued interest of the convertible debentures became due and payable on January 6, 2016 (the “Due Date”). However,
on the Due Date the Company was unable to repay the Principal amount and the accrued interest to the two directors. As of the
date of this Annual Report, the Company has not repaid to the two directors the Principal amount of $250,000 together with the
accrued interest. As of December 31, 2016, the convertible debentures are in default, however, the Company has not been served
with a default notice.



The
Company has an agreement for office support services with Jackpot. Under the agreement, the Company is entitled to receive office
support services from Jackpot at a monthly rate of $7,000 plus applicable taxes. The agreement expires April 30, 2018. The
agreement can be terminated by either party upon giving three months’ written notice.



Jackpot
is related to the Company by virtue of the fact that Jackpot’s CEO and President, namely Jacob H. Kalpakian, was the Vice-President
of the Company, and the Chairman and CFO of Jackpot namely Bedo H. Kalpakian, was the CEO, CFO and President of the Company. Furthermore,
Gregory T. McFarlane and Neil Spellman are directors of both the Company and Jackpot.



Green
Arrow is related to the Company by virtue of the fact that Green Arrow’s CEO and President, namely Jacob H. Kalpakian, is
the President & CEO of the Company, and the CFO of Green Arrow namely Neil Spellman is the CFO of the Company. Furthermore,
Fred A.C. Tejada is a director of both the Company and Green Arrow, and Bedo Kalpakian was a former director of Green Arrow.



Pursuant
to the Management Services Agreement with Kalpakian Bros. of B.C. (“Kalpakian Bros.”) Ltd. dated November 1, 2001
(Exhibit 10.4 - Incorporated by reference), as amended on August 18, 2003, July 31, 2005 and November 1, 2010 (Exhibits 10.4.1
and 10.4.2 - Incorporated by reference) (the “Management Services Agreement”), the total amount for Management Fees
was $35,000 during the year ended December 31, 2015 (2015: - $60,000; 2014: $33,000). In February 2012, the Management Services
Agreement was amended (Exhibit 10.4.3 - Incorporated by reference) whereby the remuneration payable to Kalpakian Bros. for the
services provided to the Company was reduced from $10,000 plus HST per month to $5,000 plus HST per month as of March 1, 2012.
Subsequently, the Management Services Agreement was further amended (Exhibit 10.4.4 – Incorporated by reference) whereby
the remuneration payable to Kalpakian Bros. was further reduced from $5,000 plus HST per month to $2,500 plus HST per month as
of April 1, 2012. On October 1, 2012, the Management Services Agreement was further amended whereby the remuneration payable to
Kalpakian Bros. has been reduced from $2,500 plus HST to $500 plus HST per month (Exhibit 10.4.5 - Incorporated by reference).
Effective as of July 1, 2014, the monthly remuneration payable to Kalpakian Bros. has been increased from $500 plus GST per month
to $5,000 plus GST per month (Exhibit 10.4.6 – Incorporated by reference).The principals of Kalpakian Bros. are
Bedo H. Kalpakian and Jacob H. Kalpakian, both of whom are directors of the Company. Effective as of August 1, 2016, the Management
Services Agreement was terminated by mutual consent.



28









On
January 4, 2016, a director of the Company and a family member acquired 1,000,000 units of the Company at the price of $0.10 per
unit.



Previously,
the Company hired the services of J.W. Murton & Associates to provide geological services. J.W. Murton & Associates is
a private company owned by J.W. Murton, a former director of the Company.



On
September 8, 2006, the Company entered into an option agreement for the Extra High Property with Colt Resources Inc. (“Colt”);
this agreement was subsequently amended on October 31, 2006 and June 14, 2007. The terms of the agreement were completed in full
on June 26, 2007 (see Item 4.D – I.)



On
January 21, 2008, the Company entered into an option agreement for the Extra High Property with Colt (the “2008 Option Agreement”)
(see Item 4.D – I). During 2008, pursuant to the 2008 Option Agreement, Colt exercised the first tranche of the option by
making a cash payment of $250,000 however Colt did not exercise the second tranche of the option.



Colt
was previously related to the Company by virtue of the fact that Bedo H. Kalpakian was the President and CEO of Colt and is the
President, CEO and CFO of the Company, and Jacob H. Kalpakian was the Vice President and Director of Colt and is the Vice President
and Director of the Company. Furthermore, J. Wayne Murton was a former Director of the Company and is a director of Colt.



In
connection with the non-brokered private placement financing which closed on January 4, 2016 (see Liquidity and Capital Resources
of this Annual Report), the Company issued an aggregate of 1,000,000 Units at $0.10 per Unit for total proceeds to the Company
of $100,000 which were subscribed for by a director of the Company and a family member of two directors of the Company.



The
Company is or was related to the following companies by common management and/or directors and/or officers:



|- |  | Jackpot
                                         Digital Inc. (“Jackpot”), a public company listed on the TSX Venture Exchange,
                                         also quoted in the U.S.A. on the OTCQB of the OTC Markets Group and on the Berlin &
                                         Frankfurt Stock Exchanges. Jacob H. Kalpakian, and Bedo H. Kalpakian are officers, directors
                                         and shareholders of Jackpot and Gregory T. McFarlane and Neil Spellman are directors
                                         of Jackpot;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | Kalpakian
                                         Bros. of B.C. Ltd., a private company incorporated under the laws of the Province of
                                         British Columbia, the principal shareholders of which are Jacob H. Kalpakian and Bedo
                                         H. Kalpakian, directors of the Company;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | BHK
                                         Management Inc., a private company incorporated under the laws of the Province of British
                                         Columbia, the principal shareholder of which is Bedo H. Kalpakian, a director of the
                                         Company;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | 30
                                         Rock Management Inc., a private company incorporated under the laws of the Province of
                                         British Columbia, the principal shareholder of which is Jacob H. Kalpakian, a director
                                         of the Company;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | Colt
                                         Resources Inc. (“Colt”), is a public company listed on the TSX Venture Exchange
                                         in Canada and on the OTCPINK of the OTC Markets Inc. in the U.S.A. Colt was formerly
                                         related to the Company by certain directors and officers as more particularly described
                                         in this Annual Report;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | J.W.
                                         Murton & Associates, a private company incorporated under the laws of the Province
                                         of British Columbia, the principal shareholder of which is J. Wayne Murton, a former
                                         director of the Company;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- |  | Green
                                         Arrow Resources Inc. (“Green Arrow”) is a public company listed on the TSX
                                         Venture Exchange. Jacob H. Kalpakian is a director of Green Arrow since April 2012. Jacob
                                         H. Kalpakian is also the President and CEO of Green Arrow, Neil Spellman is the CFO and
                                         a director of Green Arrow and Bedo Kalpakian was a director of Green Arrow until March
                                         14, 2017.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



29









Item
7.C. Interests of Experts and Counsel



Not
Applicable.



ITEM
8. FINANCIAL INFORMATION



Item
8.A. Financial Statements and Other Information



The
Company’s Audited Consolidated Financial Statements together with the Management’s Discussion & Analysis for the
year ended December 31, 2016, are included in Item 17 of this report.



Item
8.A.7. Legal Proceedings



On
January 17, 2017 a Notice of Civil Claim was filed in the Supreme Court of British Columbia by 310047 B.C. Ltd. against the Company
for the sum of $53,024.40 being monies due by the Company to 310047 B.C. Ltd. pursuant to an assignment by the Company’s
solicitor Clark Wilson LLP.



On
February 21, 2017 an Assignment of Debt Agreement was entered into between Clark Wilson LLP, and 310047 B.C. Ltd., and JAMCO Capital
Partners Inc. (“JAMCO”) whereby the outstanding debt in the amount of $53,024.40 was assigned to JAMCO. The Company
has acknowledged this assignment to JAMCO and has agreed to adjust the Company’s financial accounts and records to reflect
this assignment. JAMCO is an arm’s length party to the Company. As a result of this Assignment of Debt Agreement, a Notice
of Discontinuance was filed in the Supreme Court of British Columbia on March 21, 2017 by 310047 B.C. Ltd. and Clark Wilson LLP
whereby the Civil Claim that was filed by 310047 B.C. Ltd. against the Company has been discontinued.



The
Company's corporate legal counsels are: McMillan LLP, Lawyers, (Attention: Michael Kennedy), Royal Centre, 1055 W. Georgia Street,
Suite 1500, PO Box 11117, Vancouver, BC V6E 4N7. The telefax number is (604) 685-7084.



Item
8.A.8. Dividends



The
Company entered into an Arrangement Agreement. For further particulars, please see Item 4. C. Organizational Structure.



Item
8. B. Significant Changes



In
April 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed to
purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican
land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200
for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty
revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment
and recorded impairment of $799,999 on the investment due to nominal royalty payments received by the Company. As of the date
of this Annual Report, the Company does not expect to recover its investment in the Mexican gaming company.



30









On
July 7, 2014, the Company changed its name from High 5 Ventures Inc. (“High 5”) to 37 Capital Inc. (“37 Capital”)
and consolidated its share capital on the basis of one new 37 Capital common share for every six old High 5 common shares (1:6).
As a result, the Company’s trading symbol on the CSE is “JJJ” and in the USA, on the OTCQB tier of the OTC Markets
the Company’s trading symbol is “HHHEF”. The Cusip number of the Company’s common shares is 88429G102.



On
February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns
Capital Inc. (“4 Touchdowns”).



On
April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 –
Incorporated by reference)with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”).



At
the Company’s annual and special meeting which was held on June 4, 2015 (see Exhibit 12 - Incorporated by reference),
the Company’s shareholders passed all the resolutions presented including the re-election of the board of directors, re-appointment
of the Company’s auditor, approval of the Company’s stock option plan, and the proposed Plan of Arrangement with 27
Red and 4 Touchdowns.



In
respect to the plan of arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court
of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement.



The
Company has completed the plan of arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2). The effective date of the Arrangement
was on February 12, 2016 (the “Effective Date”). The Company’s Shareholders of record on the Effective Date
received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. On the Effective
Date, and pursuant to the Arrangement, all of the Class 1 Reorganization Shares were automatically transferred by Shareholders
to Spinco1 in exchange for 2,067,724 common shares of Spinco1 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco1 being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 1 Reorganization Shares by the transfer to Spinco1 of $20,677 and a promissory note in the principal amount of
$20,677. Furthermore on the Effective Date, all of the Class 2 Reorganization Shares were automatically transferred by Shareholders
to Spinco2 in exchange for 2,067,724 common shares of Spinco2 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco2 being issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 2 Reorganization Shares by the transfer to Spinco2 of $20,677 and a promissory note in the principal amount of
$20,677. A copy of the Arrangement Agreement is available on www.SEDAR.com.



As
of the date of this Report, both 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) have not started conducting any business, and are
seeking business opportunities to get involved in.

ITEM
9. THE OFFER & LISTING



Item
9.A. (4) Listing Details



On
April 4, 1985, the Company's common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal
Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed
its common shares from the Montreal Exchange, and, on October 3, 1994, the Company's shares were delisted from the Nasdaq SmallCap
Market. Effective October 4, 1994, the Company's shares have been listed for trading on the OTC Bulletin Board, now on the OTCQB
tier of the OTC Markets Group (“OTCQB”). Effective on November 29, 1999 the Vancouver Stock Exchange became known
as the CDNX as a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange. On July 5, 2001, the
Company made a formal application to the CDNX requesting the voluntary delisting of the Company’s common shares from trading
on the CDNX, as a result of which, the common shares of the Company were de-listed from trading on the CDNX effective at the close
of trading on July 31, 2001. The trading symbol of the Company's common shares when they were listed on the CDNX was "GGG".
During the period commencing from January, 2001, up to July 31, 2001, a total of 24,873 common shares of the Company traded on
the CDNX at prices ranging from a high of $6.00 to a low of $3.30.



31









On
July 30, 1986, the Company's share capital split on the basis of one-old-for-two-new common shares. On May 25, 1992, the Company's
share capital was consolidated on the basis of ten-old-for-one-new common share. On April 25, 2000, the Company’s share
capital was consolidated on the basis of fifteen-old-for-one-new common share. On May 2, 2002, the Company’s name was changed
to Lucky 1 Enterprises Inc. and its share capital was consolidated on the basis of five-old-for-one-new common share and its authorized
share capital was subsequently increased to 200,000,000 common shares without par value. On January 17, 2005, the Company’s
name was changed to Bronx Ventures Inc. and its share capital was consolidated on the basis of thirty-five-old-for-one-new-common
share, and its authorized share capital was subsequently increased to an unlimited number of common and preferred shares without
par value. Effective at the opening of business on January 24, 2005, the common shares of Lucky 1 Enterprises Inc. were de-listed,
and the common shares of Bronx Ventures Inc. commenced trading on the OTC Bulletin Board and were listed on the OTC Bulletin Board
in the U.S.A. under the trading symbol “BRXVF”. On March 19, 2007, the Company changed its name to Zab Resources Inc.
and subdivided its stock on a one (1) old for 50 (new) shares basis. As a result, the shares of Bronx Ventures Inc. were de-listed
from trading and the shares of Zab Resources Inc. commenced trading on the OTC Bulletin Board and were listed on the OTC Bulletin
Board in the USA under the symbol “ZABRF” on March 22, 2007.



Effective
November 28, 2007, the common shares of the Company have been listed for trading on the Canadian Securities Exchange (“CSE”)
(formerly Canadian National Stock Exchange) under the trading symbol “ZABK”. On October 17, 2008, the Company’s
CSE symbol was changed to “ZAB” pursuant to the CSE adopting a three character symbol format.



On
April 16, 2009, the Company changed its name from Zab Resources Inc. (“Zab”) to Kokomo Enterprises Inc. (“Kokomo”)
and the Company’s share capital was consolidated on the basis of 25 (old) shares of Zab for 1 (new) share of Kokomo. As
a result, the shares of Zab were de-listed from trading and the shares of Kokomo commenced trading in Canada on the CSE under
the symbol “KKO”, and in the U.S.A. the shares of Kokomo commenced trading on the OTCQB under the symbol “KKOEF”.
The Cusip number of the Company’s common shares was 500323100.



On
August 31, 2012, the Company changed its name from Kokomo Enterprises Inc. (“Kokomo”) to High 5 Ventures Inc. (“High
5”) and the Company’s share capital was consolidated on the basis of 15 (old) shares of Kokomo for 1 (new) share of
High 5. As a result, the shares of Kokomo were de-listed from trading and the shares of High 5 commenced trading in Canada on
the CSE under the symbol “HHH” and in the USA, the shares of High 5 commenced trading on the OTCQB under the symbol
“HHHEF”. The Cusip number of the Company’s common shares is 42966V105.



On
July 7, 2014, the Company’s share capital was consolidated on the basis of 6 (old) common shares for 1 (new) common share
and the Company changed its name to 37 Capital Inc. (“37 Capital”). As a result, the shares of High 5 were de-listed
from trading and the shares of 37 Capital commenced trading in Canada on the CSE under the symbol “JJJ”, and in the
U.S.A. the trading symbol of the Company’s shares remains unchanged on the OTCQB and trade under the symbol “HHHEF”.
The Cusip number of the Company’s common shares is 88429G102.



The
following tables set forth the market price range and trading volumes of the common shares of the Company on the OTCQB and on
the CSE for the periods indicated.



All
common shares and per share amounts have been restated to give retroactive effect to the 6:1 share consolidation, which took effect
on July 7, 2014.



32







OTCQB
– OTC Markets Group

Trading
Range



|Five
    Most Recent Financial Years |  | U.S.$
    High |  | U.S.$
    Low |  | Volume
|------------------------------------ |  | -------------- |  | ------------- |  | ------
|2012                                 |  |                |  | 0.90          |  |       
|2013                                 |  |                |  | 1.68          |  |       
|2014                                 |  |                |  | n/a           |  |       
|2015                                 |  |                |  | n/a           |  |       
|2016                                 |  |                |  | n/a           |  |       
|                                     |  |                |  |               |  |       
|Two
    Most Recent Financial Years  |  |                |  |               |  |       
|                                     |  |                |  |               |  |       
|Year
    2015                        |  |                |  |               |  |       
|Jan
    1 – Mar 31                   |  |                |  | n/a           |  |       
|Apr
    1 – Jun 30                   |  |                |  | n/a           |  |       
|Jul
    1 – Sept 30                  |  |                |  | n/a           |  |       
|Oct
    1 – Dec 31                   |  |                |  | n/a           |  |       
|                                     |  |                |  |               |  |       
|Year
    2016                        |  |                |  |               |  |       
|Jan
    1 – Mar 31                   |  |                |  | n/a           |  |       
|Apr
    1 – Jun 30                   |  |                |  | n/a           |  |       
|Jul
    1 – Sept 30                  |  |                |  | n/a           |  |       
|Oct
    1 – Dec 31                   |  |                |  | n/a           |  |       



CSE

Canadian
Stock Exchange

(formerly
Canadian National Stock Exchange)



Trading
Range



|Five
    Most Recent Financial Years |                                                                          | Cdn
    $ High |  | Cdn
    $ Low |       | Volume
|------------------------------------ | ------------------------------------------------------------------------ | -------------- |  | ------------- | ----- | ------
|                                     | 2012                                                                     |                |  |               | 11.70 |       
|                                     | 2013                                                                     |                |  |               | 1.50  |       
|                                     | 2014                                                                     |                |  |               | 0.90  |       
|                                     | 2015                                                                     |                |  |               | 0.51  |       
|                                     | 2016                                                                     |                |  |               | 0.20  |       
|                                     |                                                                          |                |  |               |       |       
|                                     | Two
                                         Most Recent Financial Years |                |  |               |       |       
|                                     |                                                                          |                |  |               |       |       
|                                     | Year
                                         2015                       |                |  |               |       |       
|                                     | Jan
                                         1 – Mar 31                  |                |  |               | 0.51  |       
|                                     | Apr
                                         1 – Jun 30                  |                |  |               | 0.51  |       
|                                     | Jul
                                         1 – Sep 30                  |                |  |               | 0.18  |       
|                                     | Oct
                                         1 – Dec 31                  |                |  |               | 0.20  |       
|                                     |                                                                          |                |  |               |       |       
|                                     | Year
                                         2016                       |                |  |               |       |       
|                                     | Jan
                                         1 – Mar 31                  |                |  |               | 0.20  |       
|                                     | Apr
                                         1 – Jun 30                  |                |  |               | 0.15  |       
|                                     | Jul
                                         1 – Sep 30                  |                |  |               | 0.10  |       
|                                     | Oct
                                         1 – Dec 31                  |                |  |               | 0.10  |       





33







Item
9.C. Markets



On
April 4, 1985, the Company's common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal
Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed
its common shares from the Montreal Exchange, and, on October 3, 1994, the Company's shares were de-listed from the Nasdaq SmallCap
Market. On October 4, 1994, the Company's shares were listed for trading on the OTC Bulletin Board. On November 29, 1999 the Vancouver
Stock Exchange became known as the CDNX as a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange.
On July 5, 2001, the Company made a formal application to the CDNX requesting the voluntary delisting of the Company’s common
shares from trading on the CDNX, as a result of which, the common shares of the Company were de-listed from trading on the CDNX
effective at the close of trading on July 31, 2001.



On
November 28, 2007, the common shares of the Company were listed for trading on the Canadian Stock Exchange (“CSE”)
(formerly Canadian National Stock Exchange) under the trading symbol “ZABK”. On October 17, 2008, the Company’s
CSE symbol was changed to “ZAB” pursuant to the CSE adopting a three-character symbol format.



On
April 16, 2009, the Company changed its name from Zab Resources Inc. (“Zab”) to Kokomo Enterprises Inc. (“Kokomo”),
and the Company consolidated its capital stock on the basis of 25 (old) shares of Zab for 1 (new) share of Kokomo. As a result,
the shares of Zab were de-listed from trading and the shares of Kokomo commenced trading in Canada on the CSE under the symbol
“KKO”, and in the U.S.A. the shares of Kokomo commenced trading on the OTCQB under the symbol “KKOEF”.
The Cusip number of the Company’s common shares was 500323100.



On
August 31, 2012, the Company changed its name from Kokomo Enterprises Inc. (“Kokomo”) to High 5 Ventures Inc. (“High
5”) and the Company’s share capital was consolidated on the basis of 15 (old) shares of Kokomo for 1 (new) share of
High 5. As a result, the shares of Kokomo were de-listed from trading and the shares of High 5 commenced trading in Canada on
the CSE under the symbol “HHH” and in the USA, the shares of High 5 commenced trading on the OTCQB under the symbol
“HHHEF”. The Cusip number of the Company’s common shares is 42966V105.



On
July 7, 2014, the Company changed its name from High 5 Ventures Inc. (“High 5”) to 37 Capital Inc. (“37 Capital”)
and consolidated its share capital on the basis of one new 37 Capital common share for every six old High 5 common shares (1:6).
As a result, the Company’s trading symbol on the CSE is “JJJ” and in the USA, the trading symbol of the Company’s
shares remains unchanged on the OTCQB and trade under the symbol “HHHEF”. The Cusip number of the Company’s
common shares is 88429G102.



ITEM
10. ADDITIONAL INFORMATION



Item
10. A. Share Capital



Effective
July 7, 2014, the Company’s name was changed to 37 Capital Inc. (“37 Capital”), its share capital was consolidated
on the basis of 6 (old) shares of High 5 for 1 (new) share of 37 Capital.



At
the Company’s 2005 Special General Meeting held on January 10, 2005, the shareholders approved the deletion of the Pre-Existing
Company Provisions in the notice of Articles of the Company and approved the alteration of the Company’s Notice of Articles.
The shareholders approved the increase of the Company's authorized capital to an unlimited number of Common and Preferred Shares,
both without par value, approved the adoption of new articles in substitution for the old articles of the Company (Exhibit 3.2
- Incorporated by reference).



34









The
authorized share capital of the Company consists of an unlimited number of common and preferred shares without par value of which
2,067,724 common shares are issued and outstanding as of December 31, 2016. No preferred shares have been issued.



Holders
of common shares of the Company are entitled to one vote per share at all meetings of shareholders of the Company, to receive
dividends as and when declared by the Directors, and to receive a pro-rata share of the assets of the Company available for distribution
to common shareholders in the event of the liquidation, dissolution or winding up of the Company. There are no pre-emptive, conversion
or surrender rights attached to the common shares of the Company.



All
shares have been issued pursuant to resolutions of the Board of Directors of the Company.



|Outstanding
                                         Share Data   | No.
                                         of
        Common
        Shares | No.
                                         of
        Preferred
        Shares | Exercise
                                         Price
        per
        Share | Expiry
    Date        
|----------------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -----------------------
|Issued
        and Outstanding
        as
        at May 11, 2017 | 2,067,724                                                                     | Nil                                                                              | N/A                                                                               | N/A                    
|Warrants
        as at
        May
        11, 2017               | 1,000,000                                                                     | Nil                                                                              | Cdn
        $0.135                                                                | January
        4, 2021
|Agent’s
        Warrants as at
        May
        11, 2017       | 3,333                                                                         | Nil                                                                              | Cdn
        $1.50                                                                 | July
        23, 2018  
|Fully
        Diluted as at
        May
        11, 2017          | 3,071,057                                                                     | Nil                                                                              |                                                                                   |                        





Item
10.A.4. Warrants



All
warrants have been issued pursuant to resolutions of the Board of Directors of the Company.



The
following summarizes the warrants that have been granted, exercised, cancelled or expired during the years ended December 31,
2016, 2015 and 2014:



Warrants
activity for the years ended December 31, 2016, 2015 and 2014 are as follows:



|                                        |  | Number
    of Warrants |           | Weighted
    Average Exercise Price
|--------------------------------------- |  | ---------------------- | --------- | -----------------------------------
|Balance,
    January 1, 2014            |  |                        | 293,983   |                                    
|Expired                                 |  |                        | (23,148   | )                                  
|Balance,
    December 31, 2014 and 2015 |  |                        | 270,835   |                                    
|Expired                                 |  |                        | (267,502  | )                                  
|Issued                                  |  |                        | 1,000,000 |                                    
|Balance,
    December, 2016             |  |                        | 1,033,333 |                                    



35







As
of December 31, 2016, the following warrants were outstanding:



|Expiry
    Date     |  | Exercise
    Price |       | Number
    of Warrants Outstanding
|------------------- |  | ------------------ | ----- | ----------------------------------
|                    |  |                    |       |                                   
|July
    23, 2018   |  |                    | 1.50  |                                   
|January
    4, 2021 |  |                    | 0.135 |                                   
|                    |  |                    |       |                                   



The
weighted average remaining contractual life for warrants outstanding at December 31, 2016 is 4.01 years.



Item
10.A.5. Stock Options



The
Board of Directors of the Company resolved to adopt on April 12, 2004, the 2004 Stock Option Plan (Exhibit 10.7 - Incorporated
by reference) which provides for the granting of incentive stock options to directors, officers, employees and consultants of
the Company entitling them to purchase up to 20% of the issued and outstanding common shares of the Company as of the day of granting.
Shareholders subsequently approved the 2004 Stock Option Plan at the Company’s Annual General Meeting which was held on
April 30, 2004. The 2004 Stock Option Plan replaces the Company’s 2002 and 2003 Stock Option Plans (See Exhibit 10.1 –
Incorporated by reference). The 2004 Stock Option Plan was re-approved by the Shareholders at the Company’s Annual General
Meeting held on September 18, 2013. The material terms of the Stock Option Plan (“2015 Stock Option Plan”) are outlined
in the Company’s Information Circular included with the 2016 Notice of Annual and Special General Meeting (see Exhibit
13 – Attached).



From
time to time, the Company grants stock options to its directors, employees and consultants on terms and conditions acceptable
to the Regulatory Authorities. The stock options entitle the holders to acquire common shares of the Company from treasury (see
Exhibit 13 – Attached).



Options
activity for the years ended December 31, 2016, 2015 and 2014 are as follows:



|                                        |  | Number
    of Options |  | Weighted
    Average Exercise Price
|--------------------------------------- |  | --------------------- |  | -----------------------------------
|Balance,
    December 31, 2014 and 2015 |  |                       |  | 33,334                             
|Expired                                 |  |                       |  | (33,334                            
|Balance,
    December 31, 2016          |  |                       |  | —                                  



Item
10. A.6. History of Share Capital



There
are no special voting rights attached to any of the Company’s issued and outstanding shares. All shares which were issued
from the Company’s Treasury were issued for cash or in the case of Finder’s Fees, for services rendered.



36









CAPITAL
STOCK



Authorized:Unlimited number of Common and Preferred shares without par value. No preferred shares have been issued.



All
common shares and per share amounts have been restated to give retroactive effect to the 6:1 share consolidation, which took effect
on July 7, 2014.







|                                                                                           |  | Capital
    Stock |           |        |  | Reserves                                             |            |          |  |        
|------------------------------------------------------------------------------------------ |  | ----------------- | --------- | ------ |  | ---------------------------------------------------- | ---------- | -------- |  | -------
|                                                                                           |  | Common
    Shares |           | Amount |  | Equity
    Portion of Convertible Debentures Reserve |            | Warrants |  | Options
|Balance,
    December 31, 2013                                                             |  |                   | 1,067,725 |        |  | $                                                    | 25,272,401 |          |  | $      
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Adjustment
    of common shares due to fractional rounding pursuant to share consolidation |  |                   | (1        | )      |  |                                                      | —          |          |  |        
|Expiry
    of warrants                                                                     |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2014                                                             |  |                   | 1,067,724 |        |  |                                                      | 25,272,401 |          |  |        
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Convertible
    debentures                                                                 |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2015                                                             |  |                   | 1,067,724 |        |  |                                                      | 25,272,401 |          |  |        
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Issue
    of common shares and         warrants, net of share issue costs                  |  |                   | 1,000,000 |        |  |                                                      | 99,800     |          |  |        
|Expiry
    of options                                                                      |  |                   | —         |        |  |                                                      | —          |          |  |        
|Dividend
    upon redemption of reorganization shares (note 5)                             |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2016                                                             |  |                   | 2,067,724 |        |  | $                                                    | 25,372,201 |          |  | $      



37







Item
10.B. Articles of Association



The
Company’s shareholders considered and approved a special resolution to adopt new Articles for the Company at the Company’s
Special Meeting which was held on January 10, 2005, (Exhibit 3.2 - Incorporated by reference). On September 18, 2014, the Company’s
shareholders considered and approved a resolution to adopt an Amendment to the Articles for the implementation of the Advance
Notice Provisions (see Exhibit 3 – Incorporated by reference).



Item
10. C. Material Contracts



On
March 26, 2004, the Company entered into an Option Agreement (Exhibit 10.5 – Incorporated by reference) with an arm’s
length party (the “Arm’s Length Party”) in respect to certain mineral claims, which are situated in the Kamloops
Mining Division in British Columbia (the “Extra High Property”). Pursuant to the terms of the Option Agreement as
amended on March 8, 2005, the Company obtained the right to acquire a 100% undivided interest in the Extra High Property, subject
to a 1.5% net smelter returns royalty (the “Arm’s Length Royalty”), by making staged cash payments totalling
$150,000 and incurring exploration expenditures on the Extra High Property totalling $500,000 over a period of three years. Upon
the Company earning a 100% undivided interest in the Extra High Property, the Company obtained the right to purchase at any time
50% of the Arm’s Length Royalty by paying to the Arm’s Length Party the sum of $500,000 leaving the Arm’s Length
Party with a 0.75% NSR royalty.



On
September 8, 2006, the Company entered into an Option Agreement (Exhibit 10.11 – Incorporated by reference) with Colt Resources
Inc. (“Colt”) whereby Colt obtained the right to acquire a 50% undivided interest, subject to the Arm’s Length
Royalty, in the Extra High Property by incurring exploration expenditures of $240,000 on the Extra High Property by no later than
February 28, 2007 and by making cash payments to the Company totaling $133,770 by no later than March 26, 2007.
On September 12, 2006, the Company and the Arm’s Length Party amended the Option Agreement (Exhibit 10.5.1 – Incorporated
by reference) by entering into an Amending Agreement whereby the Company was granted an extension period until June 26, 2007 to
make the balance of cash payments to the Arm’s Length Party and incur the remaining exploration expenditures on the Extra
High Property. On October 31, 2006, the Company and Colt entered into an Amending Agreement (Exhibit 10.11.2 – Incorporated
by reference) whereby Colt was granted an extension period until June 26, 2007 to incur exploration expenditures on the Extra
High Property and to make the cash payments to the Company. Upon Colt earning its 50% undivided interest in the Extra High Property,
the Company and Colt would thereafter equally contribute to all future exploration costs. If any party would fail to contribute
its share of future exploration costs, then its respective interest would be diluted on a straight-line basis. If any party’s
interest would be diluted to less than a 10% interest, then that party’s interest in the Extra High Property would be converted
into a 0.5% NSR royalty. On April 16, 2007, the Company and the Arm’s Length Party amended the Option Agreement (Exhibit
10.5.2 – Incorporated by reference) by entering into an Amending Agreement whereby the Company was released of the requirement
to incur the remaining exploration expenditures but instead was required to make a cash payment of $60,000 (paid) to the Arm’s
Length Party.



On
June 14, 2007, the Company amended its Option Agreement with Colt whereby Colt would have the right to acquire a 34% interest
in the Extra High Property by making cash payments to the Company totalling $193,770 by no later than June 26, 2007. The Amending
Agreement released Colt of the requirement to incur $240,000 in exploration expenditures on the Extra High Property. On June 26,
2007, the Company made its final payment to the Arm’s Length Party thereby earning a 100% undivided interest in the Extra
High Property subject only to the Arm’s Length Royalty. Colt made its final payment to the Company and earned its 34% interest
in the Extra High Property, thus reducing the Company’s interest to 66%.



38









On
January 21, 2008, the Company entered into an Option Agreement (the “2008 Option Agreement”) (see Exhibit 10.11.3
- Incorporated by reference) with Colt whereby Colt was granted the right and option to acquire, in two separate equal tranches,
the Company’s 66% undivided interest in the Extra High Property. Pursuant to the 2008 Option Agreement, Colt exercised the
first tranche of the option by making a cash payment of $250,000 to the Company thus acquiring from the Company a 33% undivided
interest in the Extra High Property. Colt did not exercise the second tranche of the option. As a result of exercising the first
tranche of the option, Colt now holds a 67% undivided interest in the Extra High Property and has become the operator of the Extra
High Property, and the Company now holds a 33% undivided interest in the Extra High Property.



During
the year ended December 31, 2008, the Company sold all of its Ontario Lithium Properties to an arm’s length party for gross
proceeds of $54,500 consisting of $50,000 cash payment and marketable securities of $4,500 valued at the quoted market price at
receipt (see Exhibit 10.12 – Incorporated by reference). Furthermore, the arm’s length party is obligated to pay to
the Company one-half percent (1/2%) gross receipts royalty after six months from the date of commencement of commercial production
from the Ontario Lithium Properties. These properties were previously written-off at the end of fiscal year 2000.



Pursuant
to the Management Services Agreement with Kalpakian Bros. of B.C. (“Kalpakian Bros.”) Ltd. dated November 1, 2001
(Exhibit 10.4 - Incorporated by reference), as amended on August 18, 2003, July 31, 2005 and November 1, 2010 (Exhibits 10.4.1
and 10.4.2 - Incorporated by reference) (the “Management Services Agreement”), the total amount for Management Fees
was $35,000 during the year ended December 31, 2016 (2015: $60,000; 2014: $33,000). In February 2012, the Management Services
Agreement was amended (Exhibit 10.4.3 - Incorporated by reference) whereby the remuneration payable to Kalpakian Bros. for the
services provided to the Company was reduced from $10,000 plus HST per month to $5,000 plus HST per month as of March 1, 2012.
Subsequently, the Management Services Agreement was further amended (Exhibit 10.4.4 – Incorporated by reference) whereby
the remuneration payable to Kalpakian Bros. was further reduced from $5,000 plus HST per month to $2,500 plus HST per month as
of April 1, 2012. On October 1, 2012, the Management Services Agreement was further amended whereby the remuneration payable to
Kalpakian Bros. was reduced from $2,500 plus HST to $500 plus HST per month (Exhibit 10.4.5 - Incorporated by reference). On July
1, 2014, the monthly remuneration payable to Kalpakian Bros. was increased from $500 plus GST per month to $5,000 plus GST per
month (Exhibit 10.4.6 – Incorporated by reference).Effective as of August 1, 2016, the Management Services Agreement
has been terminated by mutual consent.The principals of Kalpakian Bros. are Bedo H. Kalpakian and Jacob H. Kalpakian,
both of whom are directors of the Company.



Item
10. D. Exchange Controls



| | (a) | No
                                         governmental laws, decrees or regulations in the Province of British Columbia, Canada,
                                         restrict export or import of capital, including, but not limited to, foreign exchange
                                         controls, or affect the remittance of dividends, interest or other payments to non-resident
                                         holders of the Registrant's securities.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | There
                                         are no limitations on the right of non-resident or foreign owners to hold or vote such
                                         securities imposed by foreign law or by the charter or other constituent document of
                                         the Registrant.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



39









Item
10.E. Taxation



General



The
following comments summarize the material Canadian and U.S. Federal Income Tax consequences for a shareholder of the Registrant
who is a non-resident of Canada and who is a resident of the United States subject to taxation under the laws of the United States.



The
following is based upon the current provisions of the Income Tax Act (Canada) (the "Tax Act") and regulations thereunder,
the U.S. Internal Revenue Code of 1986 (the "Code") and regulations thereunder, the Canada-United States Income Tax
Convention, 1980 (the "Convention"), the current administrative policies and practices published by Canada Revenue Agency
or by the U.S. Internal Revenue Service and all specific proposals to amend the Tax Act and regulations thereunder that have been
publicly announced by the Minister of Finance (Canada) prior to the date hereof, and judicial decisions, all of which are subject
to change. The following does not take into account the tax laws of the various provinces or territories of Canada or the tax
laws of the various state and local jurisdictions of the United States or foreign jurisdictions.



The
following is intended to be a general description of the Canadian and U.S. Federal income tax considerations material to a purchase
of the common shares and is not intended to be, nor should it be construed to be, legal or tax advice to any prospective holders.
The following does not address consequences peculiar to any holder subject to special provision of Canadian or U.S. income tax
law. Therefore, prospective holders are urged to consult their own tax advisors with respect to the tax consequences of an investment
in the common shares of 37 Capital Inc.



CANADIAN
FEDERAL INCOME TAX CONSIDERATIONS



Dividends
on Common Stock



Under
the Tax Act, a non-resident of Canada is subject to withholding tax at the rate of 25% on dividends from a corporation resident
in Canada. The Convention reduces this rate to 15% for a shareholder resident in the United States. Withholding tax is further
reduced to 5% if the United States resident shareholder is a corporation that beneficially owns at least 10% of the voting stock
of the corporation paying the dividend.



Exemptions
from Withholding Tax



The
Convention provides exemption from Canadian income tax on dividends paid to religious, scientific, literary, educational or charitable
organizations or to an organization constituted and operated exclusively to administer or provide benefits under one or more pension,
retirement or employee benefit funds or plans. To qualify for exemption such organizations must be resident in the United States
and be exempt from income tax under the laws of the United States.



Dispositions
of Common Stock



The
following comments apply only to a shareholder whose Common stock constitutes capital property to him for purposes of the Income
Tax Act.



Common
stock will generally constitute capital property unless the holder is a trader or dealer in securities or is engaged in a venture
in the nature of trade in respect of Common Stock.



40









Common
stock of a resident public corporation will constitute taxable Canadian property of a shareholder at a particular time if at any
time in the preceding five (5) years, 25% or more of the issued shares of any class of the capital stock of the Registrant belonged
to the non-resident shareholder, persons with whom the non-resident did not deal at arm's length, or to the non-resident shareholder
and persons with whom the non-resident shareholder did not deal at arm's length.



Under
the Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains from dispositions of taxable Canadian
property and may deduct allowable capital losses from dispositions of taxable Canadian property. If the shares are considered
taxable Canadian property, the vendor may be required to withhold tax pursuant to section 116 of the Tax Act.



Upon
disposal of capital property the amount, if any, by which a taxpayer's proceeds of disposition exceed or are exceeded by the adjusted
cost base of the capital property (including expenses of disposition) represent the capital gain (or loss) on disposition of the
capital property. One half of the gain (the "taxable capital gain") is brought into income and taxed at normal rates.
One half of the loss (the "allowable capital loss") can be deducted from taxable capital gains realized in the same
year. Pursuant to the Federal Budget which was announced on February 28, 2000, the taxable capital gain and allowable capital
loss inclusion rate was reduced from three-fourths to two-thirds for dispositions after February 27, 2000. On October 18, 2000,
the Federal Budget further reduced the inclusion rate from two-thirds to one-half for dispositions after October 17, 2000. For
dispositions of taxable Canadian property any excess of allowable capital losses over taxable capital gains becomes a "net
capital loss" which can be carried to other years to reduce taxable capital gains from the disposition of such property.



The
Convention gives protection to United States residents from Canadian tax on certain gains derived from the alienation of property.
There is no protection for a gain on a disposition of shares the value of which is derived principally from real property in Canada.
Protection under the Convention will be available as long as the Registrant remains a Canadian public corporation or its shares
continue to be listed on a prescribed stock exchange.



Canada
Revenue Agency has indicated that it considers the protection of the Convention with respect to capital gains extend to a "deemed
disposition" under the Tax Act, including the "deemed disposition" arising upon the death of a taxpayer.



U.S.
FEDERAL INCOME TAX CONSIDERATIONS



37
CAPITAL INC. (“37 Capital") is classified as a Passive Foreign Investment company (“PFIC”) for U.S. federal
income tax purposes since the following conditions have applied for at least one taxable year since 1986:



1)
75% or more of its gross income has been passive;

2)
The average percentage of its assets producing passive income is at least 50%.



The
following is intended to be a general description of the U.S. Federal income tax considerations material to a purchase of the
common shares and is not intended to be, nor should it be construed to be, legal or tax advice to any prospective holders. Prospective
holders are urged to consult their own tax advisors with respect to the tax consequences of an investment in the common shares
of 37 Capital.



Since
37 Capital has satisfied the PFIC criteria for at least one taxable year since 1986, while a shareholder holds shares in High
5, it remains a PFIC as to that shareholder even if it no longer meets the income or asset test. Classification as a PFIC will
create U.S. tax consequences to a U.S. Shareholder that are unique to the PFIC provisions and that are not encountered in other
investments.



41









Generally,
a U.S. shareholder will realize ordinary income on the receipt of cash dividends or property distributions from an investment
in the shares of a foreign corporation to the extent such dividends are paid out of the foreign company's current accumulated
earnings and profits. To the extent of any withholding taxes, both individual and corporate investors must include such taxes
in income and, in turn, claim a foreign tax credit. Certain corporate investors are also entitled to gross up the underlying foreign
corporate income taxes and claim a foreign tax credit.



Thus,
under the general rule, no U.S. federal income tax consequences occur until an actual dividend is paid. Although this general
rule can apply in a PFIC investment, there are significant deviations from this general rule and many elections available to a
U.S. shareholder that can alter the U.S. federal income tax consequences. Such consequences will be unique to each U.S. shareholder.



In
the absence of any PFIC elections, a U.S. shareholder of a PFIC, will be taxed under the excess distribution method. Under this
method, where a current year dividend exceeds 125% of the average of dividends during the preceding three taxable years, the excess
must be allocated rateably to each day in the taxpayer's holding period.



The
amount of the excess allocated to the current year and to years when the corporation was not a PFIC is included in the shareholder's
gross income for the year of the distribution. The remainder of the excess is not included in gross income, but the U.S. shareholder
must pay a deferred tax amount by allocating the remaining excess to all PFIC years, re-computing the tax for each PFIC year and
computing and paying the resultant interest on the recomputed tax for each PFIC year. As indicated above, foreign tax credit relief
is available for withholding taxes for both individual and corporate investors. Relief for underlying corporate tax is only available
for certain corporate investors.



Under
the excess distribution method, gain on the disposition of PFIC shares results in the same allocation process; gross income inclusion;
tax re-computation; and interest charges as an excess distribution.



In
lieu of the excess distribution method, a U.S. shareholder may elect to treat a PFIC as a Qualified Electing Fund ("QEF")
and be taxed under the QEF method. If that election is made, the U.S. shareholder will be taxed currently on its pro-rata share
of the earnings of the QEF. The current income inclusion eliminates the interest charge under the excess distribution method.
Thus, unlike the excess distribution method that requires the receipt of cash from an actual dividend or sale, the QEF method
invokes taxation without the receipt of cash.



Shareholders,
who make a QEF election may, or may not, remain subject to tax under the excess distribution method. If the U.S. shareholder makes
the QEF election for the foreign corporation's first tax year as a PFIC that is included in the shareholder's holding period,
the excess distribution will not apply to the shareholder. Thus, this type of shareholder will include its pro-rata share of PFIC
earnings as a dividend, claim the appropriate foreign tax credit, and not face any interest charge.



If
the shareholder makes the QEF election at a later time, in the absence of any other PFIC election, current taxation under the
QEF method will apply prospectively. However, the excess distribution method continues to apply prior to the effective date of
the QEF election.



If
the shareholder makes the QEF election at a later time, the shareholder has an additional option to make a purging election. If
a purging election is made, the PFIC stock would be treated as if it were sold and the gain treated as an excess distribution
requiring: a gross income inclusion; allocation to PFIC years in the shareholder's holding period, a tax re-computation for PFIC
years in the shareholder's holding period; and an interest charge payment. As a result of the purging election, thereafter the
excess distribution method would not apply to that shareholder.



42









Under
the QEF method, the U.S. shareholder has another option. In lieu of paying the tax on its pro-rata share of PFIC earnings, the
U.S. shareholder in a QEF on the last day of the QEF's tax year may elect to extend the time for payment of any of its undistributed
PFIC earnings tax liability for the tax year. If the election is made, the election is treated as an extension of time to pay
tax and, thus, the U.S. shareholder is liable for interest.



In
lieu of any of the above-described methods, since 37 Capital is regularly traded on a national securities exchange, U.S. shareholders
may wish to make an election to mark to market.



A
U.S. shareholder of a PFIC may make a mark to market election for marketable PFIC stock. If the election is made, the shareholder
includes in income each year an amount equal to the excess, if any, of the fair market value of the PFIC stock as of the close
of the tax year over the shareholder's adjusted basis in the stock. Decreases in market value are allowed as deductions, within
certain prescribed limits.



Generally,
under the mark to market election, the general PFIC rules under the excess distribution method and QEF method do not apply. However,
if the mark to market election is made after a U.S. shareholder has maintained its investment, there are provisions that ensure
that the interest charge on amounts attributable to periods before the election is not avoided.



PERSONS
CONSIDERING THE PURCHASE OF THE COMPANY’S COMMON SHARES SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION
OF CANADIAN, U.S. AND OTHER TAX LAWS TO THEIR PARTICULAR SITUATION.



Item
10. F. Dividends and Paying Agents.



The
Company entered into an Arrangement Agreement. For further particulars, please see Item 4. C. Organizational Structure.



Item
10. G. Statement by Experts



Not
Applicable.



Item
10. H. Documents on Display.



We
have filed this 2016 Annual Report on Form 20-F with the Securities and Exchange Commission under the Securities Exchange Act
of 1934. Statements made in this Annual Report as to the contents of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to this Annual Report,
reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.



We
are subject to the informational requirements of the Securities Exchange Act and file reports and other information with the Securities
and Exchange Commission. Reports and other information which we file with the Securities and Exchange Commission, including this
Annual Report on Form 20-F, may be inspected at the public reference facilities of the Securities and Exchange Commission at:
450 Fifth Street N.W., Room 1024, Washington, D.C. 20549. Additionally, copies of this material may also be obtained from the
Securities and Exchange Commission’s Investor Site at http://www.sec.gov . The Commission’s telephone number is 1-800-SEC-0330.



43









Item
10. I Subsidiary Information



On
February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns
Capital Inc. (“4 Touchdowns”).



On
April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 –
Incorporated by reference)with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”).



At
the Company’s annual and special meeting which was held on June 4, 2015 (see Exhibit 12 - Incorporated by reference),
the Company’s shareholders passed all the resolutions presented including the re-election of the board of directors, re-appointment
of the Company’s auditor, approval of the Company’s stock option plan, and the proposed Plan of Arrangement with 27
Red and 4 Touchdowns.



In
respect to the Plan of Arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court
of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement.



The
Company has completed the plan of arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2). The effective date of the Arrangement
was on February 12, 2016 (the “Effective Date”). The Company’s Shareholders of record on the Effective Date
received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. On the Effective
Date, and pursuant to the Arrangement, all of the Class 1 Reorganization Shares were automatically transferred by Shareholders
to Spinco1 in exchange for 2,067,724 common shares of Spinco1 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco1 being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 1 Reorganization Shares by the transfer to Spinco1 of $20,677 and a promissory note in the principal amount of
$20,677. Furthermore on the Effective Date, all of the Class 2 Reorganization Shares were automatically transferred by Shareholders
to Spinco2 in exchange for 2,067,724 common shares of Spinco2 and issued to Shareholders on a pro rata basis (resulting in one
common share of Spinco2 being issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed
all of the Class 2 Reorganization Shares by the transfer to Spinco2 of $20,677 and a promissory note in the principal amount of
$20,677. A copy of the Arrangement Agreement is available on www.SEDAR.com.



As
a result of the completion of the Arrangement Agreement, 27 Red and 4 Touchdowns are no longer subsidiaries of the Conpany.



As
of the date of this Report, both 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) have not started conducting any business, and are
seeking business opportunities to get involved in.



ITEM
11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT



| | (a) | Risk
                                         management overview
| | --- | -----------------------------------------------------------------



The
Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. This note
presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes
for measuring and managing risk, and the Company's management of capital. The Company employs risk management strategies and policies
to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the
Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the
responsibility to administer and monitor these risks.



44









| | (b) | Fair
                                         value of financial instruments
| | --- | ----------------------------------------------------------------------------



The
fair values of cash, accounts payable and accrued liabilities and due to related parties approximate their carrying values due
to the short-term maturity of these instruments.



Fair
value hierarchy



IFRS
7 Financial Instruments: Disclosures requires classification of fair value measurements using a fair value hierarchy that
reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:



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

Level
2:	 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly

Level
3: Inputs for assets or liabilities that are not based on observable market data.



The
Company’s cash, accounts payable and due to related parties are considered Level 1, convertible debentures and investments
are considered Level 2 and Level 3, respectively, of the fair value hierarchy.



| | (c) | Credit
                                         risk
| | --- | ----------------------------------------------------



Credit
risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations.



The
financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The
Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.



| | (d) | Liquidity
                                         risk
| | --- | -------------------------------------------------------



Liquidity
risk is the risk that the Company will not be able to meets its financial obligations as they are due. The Company's approach
to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.



At
December 31, 2016, the Company had cash of $1,312 (2015 - $783) available to apply against short-term business requirements
and current liabilities of $1,170,027 (2015 - $836,510). All of the current liabilities, except for convertible debentures, are
due within 90 days. Amounts due to related parties are due on demand.



| | (e) | Market
                                         risk
| | --- | ----------------------------------------------------



Market
risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net
earnings or the value of financial instruments. As at December 31, 2016, the Company is not exposed to significant interest
rate risk, currency risk or other price risk on its financial assets and liabilities due to the short term maturity of its financial
liabilities and fixed interest rate on the convertible debentures.



45









ITEM
12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



As
at the date of this Annual Report, the Company has four Convertible Debentures totalling the principal amount of $350,000 plus
accrued interest which have matured and are payable on demand (see Exhibits 10.14 & 10.15 – Incorporated by reference).



ITEM
13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



Except
for outstanding accounts payable, accrued liabilities and the four convertible debentures totalling the principal amount of $350,000
plus accrued interest which have matured and are payable on demand, the Company is not in default in the payment of principal,
interest, sinking fund instalment or any other default with respect to any other indebtedness of the Company.



ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



There
have been no changes in the constituent instruments defining the rights of holders of common stock and no issuance of any other
securities that has modified the rights of holders of common stock.



Use
of Proceeds from Offering



Not
Applicable.

ITEM
15. CONTROLS AND PROCEDURES



| | a) | EVALUATION
                                         OF DISCLOSURE CONTROLS AND PROCEDURES. Our Chief Executive Officer and Chief Financial
                                         Officer have evaluated the effectiveness of our disclosure controls and procedures [(as
                                         defined in Rules 13a-15(d) and 15d -15(e) under the Securities Exchange Act of 1934 (“Exchange
                                         Act”)] as of the end of the period covered by this Annual Report on Form 20-F.
                                         Based on such evaluation, they have concluded that as of such date, our disclosure controls
                                         and procedures are effective and designed to ensure that information required to be disclosed
                                         by us in reports that we file or submit under the Exchange Act is recorded, processed,
                                         summarized and reported within the time periods specified in applicable SEC rules and
                                         forms.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | MANAGEMENT’S
                                         ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Our management, under the
                                         supervision of our Chief Executive Officer and Chief Financial Officer, is responsible
                                         for establishing and maintaining adequate internal control over financial reporting as
                                         defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Our internal control
                                         system was designed to provide reasonable assurance regarding the reliability of financial
                                         reporting and the preparation and fair presentation of our financial statements for external
                                         purposes in accordance with generally accepted accounting principles. Our Chief Executive
                                         Officer and Chief Financial Officer assessed the effectiveness of our internal control
                                         over financial reporting as of December 31, 2016. In making this assessment, they used
                                         the criteria established in the 2013 Internal Control-Integrated Framework issued by
                                         the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on
                                         this assessment, our Chief Executive Officer and Chief Financial Officer have concluded
                                         that, as of December 31, 2016, our internal control over financial reporting is effective
                                         based on those criteria. Notwithstanding the foregoing, all internal control systems,
                                         no matter how well designed, have inherent limitations. Therefore, even those systems
                                         determined to be effective may not prevent or detect misstatements and can provide only
                                         reasonable assurance with respect to financial statement preparation and presentation.
                                         Also, projections of any evaluation of effectiveness to future periods are subject to
                                         the risk that controls may become inadequate because of changes in conditions, or that
                                         the degree of compliance with the policies or procedures may deteriorate.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



46









This
Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public
accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this Annual
Report.



| | c) | CHANGES
                                         IN INTERNAL CONTROLS. There were no changes in our internal controls or in other factors
                                         that could affect these controls subsequent to the date of evaluation by our Chief Executive
                                         Officer and Chief Financial Officer.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



[Exhibit
31.1* – Attached herewith]

ITEM
16. AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES.



16.A.
Audit Committee Financial Expert



The
financial experience of Bedo H. Kalpakian (Chairman of the Audit Committee), including his experience currently serving as Chief
Financial Officer of a public company, and his experience in actively supervising accountants, controllers and auditors determines
that he is an audit committee financial expert within the meaning of the U.S. Sarbanes-Oxley Act of 2002. (See Item 6.C.3. in
this Annual Report for further details on the Audit Committee.)



16.B.
Code of Ethics



On
May 31, 2004, the Company’s Board of Directors adopted a Code of Ethics (the “Code”) for the Company’s
Chief Executive Officer and Chief Financial Officer and its principal accounting officer or controller, or persons performing
similar function (the “Senior Financial Officers”) to deter wrongdoing and promote honest and ethical conduct in the
practice of financial management, full, fair, accurate, timely and understandable disclosure; and compliance with all applicable
laws and regulations. These Senior Financial Officers are expected to abide by this Code as well as by all of the Company’s
other applicable business policies, standards and guidelines. (Exhibit 14.1 –Incorporated by reference)



The
Code of Ethics can be accessed electronically at http://www.37capitalnc.com.



Item
16.C. Auditor’s Fees & Services



| | (a) | Audit
                                         Fees: The aggregate fees billed for each of the last three fiscal years by the Company’s
                                         Auditors were (2016: $16,000) (2015: $18,500) and (2014: $23,500)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Audit
                                         Related Fees were (2016: $Nil) (2015: $Nil) and (2014: $Nil).
| | --- | ------------------------------------------------------------------------------------------------------------



| | (c) | Tax
                                         Fees: Tax fees were (2016: $1,500) (2015: $2,000) and (2014: $2,000).
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (d) | All
                                         other Fees were (2016: $Nil) (2015: $Nil) and (2014: $1,200).
| | --- | ----------------------------------------------------------------------------------------------------------



47









Further
details with respect to the Audit Committee’s Charter is included in the Company’s Management Information Circular
dated November 4, 2016 (see Exhibit 13 * – Attached).



The
Audit Committee’s pre-approval policies and procedures: The Audit Committee has adopted procedures to pre-approve audit
services and all non-audit related services to be rendered by the Company’s external auditors. The Chairman of the Audit
Committee has been delegated authority to pre-approve audit services up to a maximum cost of $30,000 and individual assignments
up to a maximum cost of $5,000. All other assignments must be pre-approved by the Audit Committee. All amounts which exceed the
authorized amounts require further approval from the Audit Committee.

ITEM
17. FINANCIAL STATEMENTS



The
Company’s Audited Consolidated Financial Statements for the year ended December 31, 2016 and 2015, together with the report
of the auditors, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, are filed as part of this Annual Report.
The Company’s consolidated financial statements are stated in Canadian dollars (Cdn $).





|A) Index to Financial
    Statements                                                                                          | 
|----------------------------------------------------------------------------------------------------------------------------- | 
|i) Financial Statements                                                                                                       | 
|- Report of Independent
    Registered Public Accounting Firm to the Shareholders                                             | 
|- Consolidated Balance
    Sheets as at December 31, 2016 and 2015                                                            | 
|- Consolidated
        Statements of Comprehensive Loss for the years ended December 31, 2016, 2015 and 2014                  | 
|- Consolidated
        Statements of Changes in Stockholders’ Deficiency for	the years ended December 31, 2016, 2015 and 2014 | 
|- Consolidated
        Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014                          | 
|-Notes to the
    Consolidated Financial Statements                                                                           | 
|ii) Management’s
    Discussion & Analysis for the year ended December 31, 2016                                               | 







48









ITEM
18. FINANCIAL STATEMENTS



The
Company's consolidated financial statements which are required to be filed hereunder are listed in Item 17 and are specifically
incorporated herein by this reference. The Company's consolidated financial statements are stated in Canadian dollars (Cdn $)
and are prepared in accordance with the International Financial Reporting Standards as issued By the International Accounting
Standards Board.

ITEM
19. LIST OF EXHIBITS

3.1
      Certificate of Incorporation and Memorandum and Articles (Incorporated by reference –

Previously
filed on Registration Statement on Form 20-F, May 1988)



3.2
      New Articles (Incorporated by reference) –Static Copy of British Columbia

Business
Corporations Act (BCBCA). Previously filed on Form 20-F 2004 (SEC Accession No. 0000945234-05-000483) http://www.sec.gov/Archives/edgar/data/825171/000094523405000483/o17223exv3w2.htm



3.        Amendment
to the Articles for the implementation of Advance Notice Provisions.

SEC Accession No. 0001607062-15-000191

http://www.sec.gov/Archives/edgar/data/825171/000160706215000191/ex3.htm



3.4       Certificate
of Name Change to Kokomo Enterprises Inc.

SEC
AccessionNo. 0001137171-09-000478

http://www.sec.gov/Archives/edgar/data/825171/000113717109000478/ex0304.htm



3.5       Certificate
of Name Change to High 5 Ventures Inc.

SEC Accession No. 0001137171-13-000179

http://www.sec.gov/Archives/edgar/data/825171/000113717113000179/cert.htm



3.6       Certificate
of Name Change to 37 Capital Inc.

http://www.sec.gov/Archives/edgar/data/825171/000160706215000191/ex3_6.htm



10.1
     2003 Stock Option Plan (Incorporated by reference previously filed on Form 20-F/A, June 2003)

http://www.sec.gov/Archives/edgar/data/825171/000113717103000199/form20f2002bcl.htm



10.4
     Management Services Agreement, (Incorporated by reference - previously filed on Form 20-F, 2001
as amended on              August 14, 2003 and July 1, 2005)

http://www.sec.gov/Archives/edgar/data/825171/999999999702037711/9999999997-02-037711.txt



10.4.1
  Addendum to the Management Services Agreement dated July 31, 2005 – Previously filed on Form 20F 2005)

(US
Sec Accession No. 0001137171-06-001515)              http://www.sec.gov/Archives/edgar/data/825171/000113717106001515/ex1041.htm



10.4.2
 Addendum to the Management Services Agreement dated November 1, 2010.

SEC
Accession No. 0001137171-11-000333

http://www.sec.gov/Archives/edgar/data/825171/000113717111000333/ex1042.htm



10.4.3
   Addendum to the Management Services Agreement dated February 16, 2012.

SEC
Accession No. 0001137171-12-000177

http://www.sec.gov/Archives/edgar/data/825171/000113717112000177/ex10_43.htm



10.4.4   Addendum
to the Management Services Agreement dated March 28, 2012.

SEC
Accession No. 0001137171-12-000177

http://www.sec.gov/Archives/edgar/data/825171/000113717112000177/ex10_44.htm



10.4.5
 Addendum to the Management Services Agreement dated September 14, 2012.

SEC Accession No. 0001137171-13-000179

http://www.sec.gov/Archives/edgar/data/825171/000113717113000179/managmentagreement.htm



10.4.6
Addendum to the Management Services Agreement dated July 17, 2014.

SEC Accession No. 0001607062-14-000048

http://www.sec.gov/Archives/edgar/data/825171/000160706214000048/hhh73114adden.htm



10.5 
Property Option Agreement – Previously filed on Form 20-F 2003.

(SEC
Accession No. 0001137171-04-000850)

http://www.sec.gov/Archives/edgar/data/825171/000113717104000850/option.htm



10.5.1
Amendment to the Property Option Agreement dated September 12, 2006 –

(SEC
Accession No.0001137171-07-000906)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000906/ex1005a.htm



10.5.2
Amendment to the Property Option Agreement dated April 17, 2007 –

(SEC
Accession No. 0001137171-07-000906)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000906/ex1005b.htm



10.7
    2004 Stock Option Plan - Previously filed on Form 20-F 2003. (SEC Accession No. 0001137171-04-000850)
            http://www.sec.gov/Archives/edgar/data/825171/000113717104000850/ex93.htm

http://www.sec.gov/Archives/edgar/data/825171/000113717104000850/debtsettlement2.htm



10.9.1
Debt Settlement Agreements dated July 12, 2007 – (SEC AccessionNo. 0001137171-08-000659)

http://www.sec.gov/Archives/edgar/data/825171/000113717108000659/ex100901.htm



10.11
Property Option Agreement with Colt Capital Corp. dated September 8, 2006 –

(SEC
Accession No.0001137171-07-000906)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000906/ex1011.htm



10.11.1
First Amendment dated September 22, 2006 to the Property Option Agreement

(SEC
Accession No. 0001137171-07-000906)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000906/ex1011a.htm



10.11.2
Second Amendment dated October 31, 2006 to the Property Option Agreement

(SEC
Accession No. 0001137171-07-000906)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000906/ex1011b.htm



10.11.3
Option Agreement with Colt Resources Inc. dated January 21, 2008 –

(SEC
AccessionNo. 0001137171-08-000659)

http://www.sec.gov/Archives/edgar/data/825171/000113717108000659/ex101103.htm



10.11.4
Amending Agreement dated March 30, 2016 with Colt Resources Inc. –

(SEC Accession No. 0001607062-16-000823)

https://www.sec.gov/Archives/edgar/data/825171/000160706216000823/ex10_114.htm



10.12
  Property Purchase Agreement with James Bay Midarctic Developments Inc. dated July 31, 2008 –

(SEC
AccessionNo. 0001137171-09-000478)

http://www.sec.gov/Archives/edgar/data/825171/000113717109000478/ex1012.htm



10.13
  Purchase and Sale Agreement with Grand Odyssey Casino, S.A. De C.V. dated April 8, 2013.

SEC Accession No. 0001607062-14-000003

http://www.sec.gov/Archives/edgar/data/825171/000160706214000003/hhhef123113form20fex10_13.htm



10.14
    2013 Convertible Debenture Financing

SEC Accession No. 0001607062-14-000003

http://www.sec.gov/Archives/edgar/data/825171/000160706214000003/hhhef123113form20fex10_14.htm



10.15
    2015 Convertible Debenture Financing

http://www.sec.gov/Archives/edgar/data/825171/000160706215000191/ex10_15.htm



11.1*
Statement explaining in reasonable detail how earnings/loss per share is calculated





12.      
Notice of Annual General and Special Meeting 2015 and Management Proxy Materials.

http://www.sec.gov/Archives/edgar/data/825171/000160706215000199/ex20_1.htm



13.*
 Notice of Annual General Meeting 2016 and Management Proxy Materials.



14.
    Notice of Annual General Meeting 2014 and Management Proxy Materials.



14.1    
Code of Ethics - Previously filed on Form 20-F 2003.

(SEC
Accession No.0001137171-04-000850) http://www.sec.gov/Archives/edgar/data/825171/000113717104000850/ex96.htm



15.
      Notice of Annual General Meeting 2013 and Management Proxy Materials.

SEC Accession No. 0001607062-14-000003

http://www.sec.gov/Archives/edgar/data/825171/000160706214000003/hhhef123113form20fex15.htm





16.
      Notice of Annual General Meeting 2012 and Management Proxy Materials.

(SEC
Accession No. 0001137171-12-000249)

http://www.sec.gov/Archives/edgar/data/825171/000113717112000249/infocircular.htm



17.
      Notice of Annual General Meeting 2011 and Management Proxy Materials.

(SEC
AccessionNo. 0001137171-11-000333) http://www.sec.gov/Archives/edgar/data/825171/000113717111000333/ex17.htm



18.
      Notice of Annual General Meeting, 2010 and Management Proxy Materials (Incorporated by reference-

SEC
Accession No. 0001137171-10-000418)



19.
      Notice of Annual General Meeting, 2009 and Management Proxy Materials (Incorporated by reference
– previously             filed on Form 6K for the month of May,
2009 (SEC AccessionNo. 0001137171-09-000424)

http://www.sec.gov/Archives/edgar/data/825171/000113717109000424/ex992.htm



20.
      Notice of Annual General Meeting, 2008 and Management Proxy Materials (Incorporated by reference
– previously             filed on Form 6K June 16, 2008 (SEC
Accession No. 0001137171-08-000573)

http://www.sec.gov/Archives/edgar/data/825171/000113717108000573/ex992.htm



20.1
    Notice of Annual General Meeting, 2007 and Management Proxy Materials (Incorporated by reference –
previously             filed on Form 6K May 31, 2007 (Accession Number
0001137171-07-000842)

http://www.sec.gov/Archives/edgar/data/825171/000113717107000842/0001137171-07-000842-index.htm



20.4
    Notice of Special General Meeting, 2005 and Management Proxy Materials

(Incorporated
by reference - previously filed on Form 6-K December 3, 2004)

http://www.sec.gov/Archives/edgar/data/825171/000113717104001556/ex2.htm



31.1*
 Sarbanes Oxley Act Section 302, Certified by

Jacob
H. Kalpakian, President & C.E.O. (Attached)		Page 95



32.2*
 Sarbanes Oxley Act Section 906, Certified by

Neil
Spellman, C.F.O. (Attached)		Page 96



99.
*   Financial Exhibits: – (unaudited)



99.1*	Schedules
I - Marketable Securities - Other Investments



99.2*
Schedules II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees other than Related Parties



99.3*
Schedules III & IV - Property, Plant and Equipment and Accumulated Depreciation, Depletion and Amortization of Property, Plant
and Equipment



*
Filed Herewith (Attached)



49









37
CAPITAL INC.



Consolidated
Financial Statements

December 31,
2016 and 2015

(Expressed
in Canadian Dollars)







|Index                                                              | Page
|------------------------------------------------------------------ | ----
|Independent
        Auditor’s Report                               | 51  
|                                                                   |     
|Consolidated Financial Statements                                  |     
|                                                                   |     
|Consolidated Balance Sheets                                        | 52  
|                                                                   |     
|Consolidated Statements of Comprehensive Loss                      | 53  
|                                                                   |     
|Consolidated Statements of Changes in Stockholders’
    Deficiency | 54  
|                                                                   |     
|Consolidated Statements of Cash Flows                              | 55  
|                                                                   |     
|Notes to Consolidated Financial Statements                         | 56  







50









INDEPENDENT
AUDITOR’S REPORT



To
the Shareholders of 37 Capital Inc.

We
have audited the accompanying consolidated financial statements of 37 Capital Inc, which comprise the consolidated balance sheets
as at December 31, 2016, and the consolidated statements of comprehensive loss, changes in shareholders’ deficiency and
cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.



Management's
Responsibility for the Consolidated Financial Statements

Management
is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.

Auditor’s
Responsibility

Our
responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit
in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.

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

Opinion

In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of 37 Capital
Inc. as at December 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis
of Matter

Without
qualifying our opinion, we draw attention to Note 2 in the consolidated financial statements which describes certain conditions
that indicate the existence of a material uncertainty that cast significant doubt about 37 Capital Inc.’s ability to continue
as a going concern.

Other
Matter

The
consolidated financial statements of 37 Capital Inc. for the year ended December 31, 2015 were audited by another auditor who
expressed an unmodified opinion on those statements on April 8, 2016.





|                  |  | /s/ DMCL                                 
|----------------- |  | -----------------------------------------
|                  |  | DALE MATHESON CARR-HILTON
    LABONTE LLP
|                  |  | CHARTERED PROFESSIONAL
    ACCOUNTANTS   
|                  |  |                                          
|Vancouver, Canada |  |                                          
|April 28, 2017    |  |                                          













51









37
CAPITAL INC.

Consolidated
Balance Sheets

December
31,

(Expressed
in Canadian Dollars)



|                                                               |  | 2016 |             | 2015
|-------------------------------------------------------------- |  | ---- | ----------- | ----
|                                                               |  |      |             |     
|Assets                                                         |  |      |             |     
|                                                               |  |      |             |     
|Current                                                        |  |      |             |     
|Cash                                                           |  | $    | 1,312       |     
|GST
    receivable                                             |  |      | 4,608       |     
|                                                               |  |      | 5,920       |     
|                                                               |  |      |             |     
|Mineral
    Property Interests (note 6)                        |  |      | 1           |     
|Investment
    (note 7)                                        |  |      | 1           |     
|                                                               |  |      |             |     
|Total
    Assets                                               |  | $    | 5,922       |     
|                                                               |  |      |             |     
|Liabilities                                                    |  |      |             |     
|                                                               |  |      |             |     
|Current                                                        |  |      |             |     
|Accounts
    payable and accrued liabilities (note 8)          |  | $    | 163,240     |     
|Due
    to related parties (notes 9 and 20)                    |  |      | 422,648     |     
|Refundable
    subscription (note 10)                          |  |      | 10,000      |     
|Loan
    payable (note 11)                                     |  |      | 103,924     |     
|Convertible
    debentures (note 12)                           |  |      | 470,215     |     
|                                                               |  |      |             |     
|Total
    Liabilities                                          |  |      | 1,170,027   |     
|                                                               |  |      |             |     
|Stockholders’
    Deficiency                                   |  |      |             |     
|                                                               |  |      |             |     
|Capital
    Stock (note 13)                                    |  |      | 25,372,201  |     
|Equity
    Portion of Convertible Debentures Reserve (note 12) |  |      | 33,706      |     
|Reserves                                                       |  |      | 5,115       |     
|Deficit                                                        |  |      | (26,575,127 | )   
|                                                               |  |      |             |     
|Total
    Stockholders’ Deficiency                             |  |      | (1,164,105  | )   
|                                                               |  |      |             |     
|Total
    Liabilities and Stockholders’ Deficiency             |  | $    | 5,922       |     



Commitments
(note 16)

Subsequent
events (note 19)



On
behalf of the Board:



”Jake
H. Kalpakian” (signed)

.....................................................................
Director

Jake
H. Kalpakian



“Gregory
T. McFarlane” (signed)

.....................................................................
Director

Gregory
T. McFarlane





52







37
CAPITAL INC.

Consolidated
Statements of Comprehensive Loss

Years
Ended December 31,

(Expressed
in Canadian Dollars)



|                                                                   |  | 2016 |           | 2015 |  | 2014
|------------------------------------------------------------------ |  | ---- | --------- | ---- |  | ----
|                                                                   |  |      |           |      |  |     
|Revenues                                                           |  |      |           |      |  |     
|Royalty
    revenues (note 7)                                      |  | $    | —         |      |  | $   
|                                                                   |  |      |           |      |  |     
|Expenses                                                           |  |      |           |      |  |     
|Office
    (note 9)                                                |  |      | 108,617   |      |  |     
|Finance
    and interest (notes 9 and 12)                          |  |      | 55,402    |      |  |     
|Management
    fees (note 9)                                       |  |      | 35,000    |      |  |     
|Legal,
    accounting and audit                                    |  |      | 112,693   |      |  |     
|Rent
    (note 9)                                                  |  |      | 28,298    |      |  |     
|Regulatory
    and transfer fees                                   |  |      | 5,207     |      |  |     
|Consulting                                                         |  |      | —         |      |  |     
|Telephone,
    travel, meals and entertainment                     |  |      | 1,985     |      |  |     
|Shareholder
    communication                                      |  |      | 761       |      |  |     
|Impairment
    of investment (note 7)                              |  |      | —         |      |  |     
|                                                                   |  |      | 347,963   |      |  |     
|                                                                   |  |      |           |      |  |     
|Net
    Loss                                                       |  |      | (347,963  | )    |  |     
|                                                                   |  |      |           |      |  |     
|Other
    Comprehensive Loss                                       |  |      |           |      |  |     
|Items
    that may be reclassified subsequently to profit or loss: |  |      |           |      |  |     
|Fair
    value loss on investment (note 7)                         |  |      | —         |      |  |     
|Transfer
    on impairment of investment                           |  |      | —         |      |  |     
|                                                                   |  |      |           |      |  |     
|                                                                   |  |      | —         |      |  |     
|                                                                   |  |      |           |      |  |     
|Total
    Comprehensive Loss                                       |  | $    | (347,963  | )    |  | $   
|                                                                   |  |      |           |      |  |     
|Basic
    and Diluted Loss per Common Share                        |  | $    | (0.17     | )    |  | $   
|                                                                   |  |      |           |      |  |     
|Weighted
    Average Number of Common Shares Outstanding           |  |      | 2,056,795 |      |  |     





See
notes to consolidated financial statements





53







37
CAPITAL INC.

Consolidated
Statements of Changes in Stockholders’ Deficiency

(Expressed
in Canadian Dollars)



|                                                                                           |  | Capital
    Stock |           |        |  | Reserves                                             |            |          |  |        
|------------------------------------------------------------------------------------------ |  | ----------------- | --------- | ------ |  | ---------------------------------------------------- | ---------- | -------- |  | -------
|                                                                                           |  | Common
    Shares |           | Amount |  | Equity
    Portion of Convertible Debentures Reserve |            | Warrants |  | Options
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2013                                                             |  |                   | 1,067,725 |        |  | $                                                    | 25,272,401 |          |  | $      
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Adjustment
    of common shares due to fractional rounding pursuant to share consolidation |  |                   | (1        | )      |  |                                                      | —          |          |  |        
|Expiry
    of warrants                                                                     |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2014                                                             |  |                   | 1,067,724 |        |  |                                                      | 25,272,401 |          |  |        
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Convertible
    debentures                                                                 |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2015                                                             |  |                   | 1,067,724 |        |  |                                                      | 25,272,401 |          |  |        
|Net
    loss for the year                                                                  |  |                   | —         |        |  |                                                      | —          |          |  |        
|Issue
    of common shares and         warrants, net of share issue costs                  |  |                   | 1,000,000 |        |  |                                                      | 99,800     |          |  |        
|Expiry
    of options                                                                      |  |                   | —         |        |  |                                                      | —          |          |  |        
|Dividend
    upon redemption of reorganization shares (note 5)                             |  |                   | —         |        |  |                                                      | —          |          |  |        
|                                                                                           |  |                   |           |        |  |                                                      |            |          |  |        
|Balance,
    December 31, 2016                                                             |  |                   | 2,067,724 |        |  | $                                                    | 25,372,201 |          |  | $      



See
notes to consolidated financial statements





54







37
CAPITAL INC.

Consolidated
Statements of Cash Flows

Years
Ended December 31,

(Expressed
in Canadian Dollars)



|                                                                     |  | 2016 |          | 2015 |  | 2014
|-------------------------------------------------------------------- |  | ---- | -------- | ---- |  | ----
|                                                                     |  |      |          |      |  |     
|Operating
    Activities                                             |  |      |          |      |  |     
|Net
    loss                                                         |  | $    | (347,963 | )    |  | $   
|Items
    not involving cash                                         |  |      |          |      |  |     
|Finance
    expense                                                  |  |      | —        |      |  |     
|Impairment
    of investment                                         |  |      | —        |      |  |     
|Interest
    expense on convertible debentures                       |  |      | 45,571   |      |  |     
|                                                                     |  |      |          |      |  |     
|                                                                     |  |      | (302,392 | )    |  |     
|Changes
    in non-cash working capital (note 14)                    |  |      | 203,121  |      |  |     
|                                                                     |  |      |          |      |  |     
|Cash
    Used in Operating Activities                                |  |      | (99,271  | )    |  |     
|                                                                     |  |      |          |      |  |     
|Financing
    Activities                                             |  |      |          |      |  |     
|Issue
    of common shares and warrants, net of share issuance costs |  |      | 99,800   |      |  |     
|Issue
    of convertible debentures                                  |  |      | —        |      |  |     
|                                                                     |  |      |          |      |  |     
|Cash
    Provided by Financing Activities                            |  |      | 99,800   |      |  |     
|                                                                     |  |      |          |      |  |     
|Investing
    Activities                                             |  |      |          |      |  |     
|Repayment
    of advances from investment                            |  |      | —        |      |  |     
|                                                                     |  |      |          |      |  |     
|Cash
    Provided by Investing Activities                            |  |      | —        |      |  |     
|                                                                     |  |      |          |      |  |     
|Net
    Increase (Decrease) in Cash                                  |  |      | 529      |      |  |     
|Cash,
    Beginning of Year                                          |  |      | 783      |      |  |     
|                                                                     |  |      |          |      |  |     
|Cash,
    End of Year                                                |  | $    | 1,312    |      |  | $   



Supplemental
information (note 14)



See
notes to consolidated financial statements



55









1.
NATURE OF BUSINESS



37
Capital Inc. (“37 Capital” or the “Company”) was incorporated on August 24, 1984 in British Columbia,
Canada. The principal business of the Company is the acquisition, exploration and, if warranted, the development of natural resource
properties.



On
July 7, 2014, the Company changed its name from High 5 Ventures Inc. (“High 5”) to 37 Capital Inc. and the Company
consolidated its capital stock on the basis of six (old) High 5 shares for one (new) 37 Capital share. The shares of the Company
trade on the Canadian Securities Exchange under the symbol “JJJ”, and trade on the OTCQB tier of the OTC markets in
the United States of America under the symbol “HHHEF”. The Company’s office is located at 300 – 570 Granville
Street, Vancouver, British Columbia, Canada, V6C 3P1 and its registered office is located at 1055 West Georgia Street, Suite 1500,
PO Box 11117, Vancouver, British Columbia, Canada, V6E 4N7.



On
February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns
Capital Inc. (“4 Touchdowns”) in British Columbia, Canada. On April 30, 2015, the Company entered into an arrangement
agreement with 27 Red and 4 Touchdowns (the “Arrangement”). The Arrangement was completed on February 12, 2016 (note
5).



2.
GOING CONCERN



These
consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern",
which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and
discharge its liabilities in the normal course of operations.



Several
adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant operating losses
over the past three fiscal years (2016 - $347,963; 2015 - $334,993; 2014 - $1,046,790). As of December 31, 2016, the Company has
an accumulated deficit of $26,575,127, a working capital deficiency of $1,164,107 and is in default of its convertible debentures.
As the Company has limited resources and no sources of operating cash flow, there can be no assurances that sufficient funding
will be available to continue operations for an extended period of time.



The
application of the going concern concept is dependent upon the Company’s ability to raise sufficient funding to pay creditors
and to satisfy its liabilities as they become due. Management is actively engaged in the review and due diligence on opportunities
of merit and is seeking to raise the necessary capital to meet its funding requirements. There can be no assurance that management’s
plan will be successful.



If
the going concern assumption were not appropriate for these consolidated financial statements then adjustments may be necessary
in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments
could be material.



3.
BASIS OF PRESENTATION



| | (a) | Statement
                                         of compliance
| | --- | ----------------------------------------------------------------



These
consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International
Financial Reporting interpretation Committee (“IFRIC”).





56







3.
BASIS OF PRESENTATION (Continued)



| | (b) | Basis
                                         of presentation
| | --- | --------------------------------------------------------------



These
consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which
are measured at fair value.



In
addition, these consolidated financial statements have been prepared on the accrual basis, except for cash flow information. These
consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency.



| | (c) | Approval
                                         of the consolidated financial statements
| | --- | ------------------------------------------------------------------------------------------



These
consolidated financial statements were approved and authorized for issue by the Board of Directors on April 28, 2017.





| | (d) | Reclassification
| | --- | ----------------





Certain
prior period amounts in these consolidated financial statements have been reclassified to conform to current period’s presentation.
These reclassifications had no net effect on the consolidated results of operations or financial position for any period presented.



| | (e) | Use
                                         of estimates and judgments
| | --- | -----------------------------------------------------------------------



The
preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.

Estimates
and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the
actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future
periods affected.



The
key area of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment
to the carrying amounts of assets and liabilities is as follows:



| | • | assessment
                                         of the Company’s ability to continue as a going concern and whether there are events
                                         or conditions that give rise to significant uncertainty.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
key estimates applied in the preparation of the consolidated financial statements that could result in a material adjustment to
the carrying amounts of assets and liabilities are as follows:



| | • | The
                                         provision for income taxes and recognition of deferred income tax assets and liabilities;
                                         and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         inputs in determining the liability and equity components of the convertible debentures.
| | - | -------------------------------------------------------------------------------------------------------------------------------------





57







4.
SIGNIFICANT ACCOUNTING POLICIES



The
significant accounting policies of the Company include the following:



| | (a) | Principles
                                         of consolidation
| | --- | --------------------------------------------------------------------



Subsidiaries
are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable
are taken into account. The financial statements of the Company’s former wholly-owned subsidiaries, 27 Red and 4 Touchdowns
are included in the consolidated financial statements from the date that control commenced to the date that control ceased.



Intercompany
balances and transactions and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing
the consolidated financial statements.



| | (b) | Financial
                                         instruments
| | --- | --------------------------------------------------------------



| | i) | Financial
                                         assets
| | -- | ---------------------------------------------------------



The
Company classifies its financial assets in the following categories: financial assets at fair value through profit or loss (“FVTPL”),
loans and receivables, held-to-maturity and available for sale (“AFS”). The classification depends on the purpose
for which the financial assets were acquired. Management determines the classification of financial assets at recognition.



Fair
value through profit or loss



Financial
assets are classified as FVTPL when the financial asset is held-for-trading or it is designated as FVTPL. A financial asset is
classified as FVTPL when it has been acquired principally for the purpose of selling in the near future; it is a part of an identified
portfolio of financial instruments that the company manages and has an actual pattern of short-term profit-taking or if it is
a derivative that is not designated and effective as a hedging instrument. Upon initial recognition, attributable transaction
costs are recognized in profit or loss when incurred. Financial instruments at FVTPL are measured at fair value, and changes therein
are recognized in profit or loss. The Company classifies its cash as FVTPL.



Loans
and receivables



Trade
receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables. Loans and receivables are initially recognized at the transaction value and subsequently
carried at amortized cost less impairment losses. The impairment loss on receivables is based on a review of all outstanding amounts
at year-end. Interest income is recognized by applying the effective interest rate method.





58









4.
SIGNIFICANT ACCOUNTING POLICIES(Continued)



(b)       Financial
instruments (Continued)



| | (i) | Financial assets
    (Continued)
| | --- | --------------------------------





Held-to-maturity



Held-to-maturity
financial assets are recognized on a trade-date basis and are initially measured at fair value using the effective interest rate
method.



Available-for-sale



AFS
financial assets are non-derivatives that are either designated as AFS or not classified in any of the other financial assets
categories. Changes in the fair value of AFS financial assets other than impairment losses are recognized as other comprehensive
loss and classified as a component of equity. The Company classifies its investment as AFS.



| | (ii) | Financial
                                         liabilities
| | ---- | --------------------------------------------------------------



The
Company classifies its financial liabilities as FVTPL or other financial liabilities.



Fair
value through profit or loss



Financial
liabilities classified as FVTPL include financial liabilities held-for-trading and financial liabilities designated upon initial
recognition as FVTPL. Fair value changes on financial liabilities classified as FVTPL are recognized in profit or loss.



Other
financial liabilities



Other
financial liabilities are non-derivatives and are recognized initially at fair value, net of transaction costs incurred, and are
subsequently stated at amortized cost using the effective interest rate method. Any difference between the amounts originally
received, net of transaction costs, and the redemption value is recognized in profit or loss over the period to maturity using
the effective interest method. Other financial liabilities are classified as current or non-current based on their maturity date.
The Company classifies accounts payable and accrued liabilities, due to related parties, and convertible debentures as other financial
liabilities.



| | (iii) | Impairment
| | ----- | ----------



The
Company assesses at each reporting date whether there is objective evidence that financial assets, other than those designated
as FVTPL, are impaired. When impairment has occurred, the cumulative loss is recognized to profit or loss. For financial assets
carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. When
an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income
are reclassified to profit or loss in the period the impairment occurred.





59







4.
SIGNIFICANT ACCOUNTING POLICIES(Continued)



| | (c) | Mineral
                                         property interests
| | --- | -------------------------------------------------------------------



Costs
directly related to the acquisition, exploration and evaluation of resource properties are capitalized once the legal rights to
explore the resource properties are acquired.



If
it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable, or the property is abandoned
or management has determined impairment in value, the property is written down to its recoverable amount.



From
time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable
entirely at the discretion of the optionee, and accordingly, are recorded as mineral property costs or recoveries when the payments
are made or received. After costs are recovered, the balance of the payments received is recorded as a gain on option or disposition
of mineral property.



Once
the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable, mineral property interests
attributable to that area of interest are first tested for impairment and then reclassified to mining property and development
assets within property and equipment. To date, none of the Company’s mineral property interests has demonstrated technical
feasibility and commercial viability. The recoverability of the carrying amount of any mineral property interests is dependent
on successful development and commercial exploitation or, alternatively, sale of the respective areas of interest.



| | (d) | Impairment
| | --- | ----------



At
the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those
assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is
determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable
and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced
to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate
largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.



When
an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined
had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss
is recognized immediately in profit or loss.





60









4.
SIGNIFICANT ACCOUNTING POLICIES(Continued)



| | (e) | Decommissioning
                                         liabilities
| | --- | --------------------------------------------------------------------



An
obligation to incur decommissioning and site rehabilitation costs occurs when environmental disturbance is caused by exploration,
evaluation, development or ongoing production.



Decommissioning
and site rehabilitation costs arising from the installation of plant and other site preparation work, discounted to their net
present value, are provided when the obligation to incur such costs arises and are capitalized into the cost of the related asset.
These costs are charged against operations through depreciation of the asset and unwinding of the discount on the provision.



Depreciation
is included in operating costs while the unwinding of the discount is included as a financing cost. Changes in the measurement
of a liability relating to the decommissioning or site rehabilitation of plant and other site preparation work are added to, or
deducted from, the cost of the related asset.



The
costs for the restoration of site damage, which arises during production, are provided at their net present values and charged
against operations as extraction progresses.



Changes
in the measurement of a liability, which arise during production, are charged against operating profit. The discount rate used
to measure the net present value of the obligations is the pre-tax rate that reflects the current market assessment of the time
value of money and the risks specific to the obligation. To date the Company does not have any decommissioning liabilities.



| | (f) | Income
                                         taxes
| | --- | -----------------------------------------------------



Income
tax expense consisting of current and deferred tax expense is recognized to profit or loss. Current tax expense is the expected
tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period-end, adjusted for amendments
to tax payable with regard to previous years.



Deferred
tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences
attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax basis. Deferred
tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset
is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that substantive enactment occurs.



A
deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which
the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority
and the Company intends to settle its current tax assets and liabilities on a net basis.





61







4.
SIGNIFICANT ACCOUNTING POLICIES(Continued)



| | (g) | Share-based
                                         payments
| | --- | -------------------------------------------------------------



The
Company grants stock options to directors, officers, employees and consultants of the Company. The fair value of share-based payments
to employees is measured at grant date, using the Black-Scholes option pricing model, and is recognized over the vesting period
using the graded method. Fair value of share-based payments for non-employees is recognized and measured at the date the goods
or services are received based on the fair value of the goods or services received. If it is determined that the fair value of
goods and services received cannot be reliably measured, the share-based payment is measured at the fair value of the equity instruments
issued using the Black-Scholes option pricing model.



For
both employees and non-employees, the fair value of share-based payments is recognized as either an expense or as mineral property
interests with a corresponding increase in option reserves. The amount to be recognized as expense is adjusted to reflect the
number of share options expected to vest. Consideration received on the exercise of stock options is recorded in capital stock
and the related share-based payment is transferred from the stock option reserve to capital stock. For unexercised options that
expire, the recorded value is transferred to deficit.



| | (h) | Convertible
                                         debentures
| | --- | ---------------------------------------------------------------



The
liability component of convertible debentures is recognized initially at the fair value of a similar liability that does not have
a conversion option. The equity component is recognized initially, as the difference between the fair value of the convertible
debenture as a whole and the fair value of the liability component. Transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of the
convertible debenture is measured at amortized cost using the effective interest method. The equity component is not re-measured
subsequent to initial recognition.



| | (i) | Loss
                                         per share
| | --- | -------------------------------------------------------



Loss
per share is calculated by dividing net loss attributable to common shares of the Company by the weighted average number of common
shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this
method, the dilutive effect on earnings per share is calculated on the use of the proceeds that could be obtained upon exercise
of options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to purchase common shares
at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various
conversions and exercise of options and warrants that would be anti-dilutive.





62







4.
SIGNIFICANT ACCOUNTING POLICIES(Continued)



| | (j) | Capital
                                         stock
| | --- | ------------------------------------------------------



Proceeds
from the exercise of stock options and warrants are recorded as capital stock. The proceeds from the issuance of units of the
Company are allocated between common shares and warrants based on the residual value method. Under this method, the proceeds are
allocated first to capital stock based on the fair value of the common shares at the time the units are issued and any residual
value is allocated to the warrants. When the warrants are exercised, the related value is transferred from the warrant reserve
to capital stock. For unexercised warrants that expire, the recorded value is transferred from the warrant reserves to deficit.



| | (k) | Foreign
                                         currency translation
| | --- | ---------------------------------------------------------------------



Amounts
recorded in foreign currency are translated into Canadian dollars as follows:



| | (i) | Monetary
                                         assets and liabilities, at the rate of exchange in effect as at the balance sheet date;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Non-monetary
                                         assets and liabilities, at the exchange rates prevailing at the time of the acquisition
                                         of the assets or assumption of the liabilities; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Revenues
                                         and expenses (excluding amortization, which is translated at the same rate as the related
                                         asset), at the rate of exchange on the transaction date.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exchange
differences are recognized in profit or loss in the period which they arise.



| | (l) | Accounting
                                         standards issued but not yet applied
| | --- | ----------------------------------------------------------------------------------------



At
the date of the approval of the financial statements, a number of standards and interpretations were issued but not effective.
The Company considers that these new standards and interpretations are either not applicable or are not expected to have a significant
impact on the Company’s financial statements.



5.
PLAN OF ARRANGEMENT



On
February 26, 2015, the Company incorporated two wholly-owned private British Columbia subsidiaries, 27 Red Capital Inc. (“27
Red”) and 4 Touchdowns Capital Inc. (“4 Touchdowns”). On April 30, 2015, the Company entered into an arrangement
agreement with 27 Red and 4 Touchdowns. In respect to the Arrangement, the Company applied for an Interim Order which was granted
on May 6, 2015 by the Supreme Court of British Columbia, and on June 12, 2015 the Company received final court approval for the
Arrangement.



The
Company completed the Arrangement with 27 Red and 4 Touchdowns on February 12, 2016 (“Effective Date”). On the Effective
Date, shareholders of the Company received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization
Share of the Company. On the Effective Date, all of the Class 1 Reorganization Shares were transferred by the shareholders of
the Company to 27 Red in exchange for 2,067,724 common shares of 27 Red on a pro rata basis (resulting in one common share of
27 Red being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed all of the Class
1 Reorganization Shares held by 27 Red by a cash payment of $20,677 and issuance of a promissory note of $20.677. The promissory
note is non-interest bearing, unsecured and due on



63









5.
PLAN OF ARRANGEMENT (Continued)



demand.
The redemption of shares was distributed to the shareholders’ of 27 Red as a capital distribution and recorded as a dividend.



On
the Effective Date, all of the Class 2 Reorganization Shares were transferred by the shareholders of the Company to 4 Touchdowns
in exchange for 2,067,724 common shares of 4 Touchdowns on a pro rata basis (resulting in one common share of 4 Touchdowns being
issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed all of the Class 2 Reorganization
Shares held by 4 Touchdowns by a cash payment of $20,677 and issuance of a promissory note of $20,677. The promissory note is
non-interest bearing, unsecured and due on demand. The redemption of shares was distributed to the shareholders’ of 4 Touchdowns
as a capital distribution and recorded as a dividend.



In
connection with the above transaction, the Company recorded the amount of $82,709 as payable to related parties, 27 Red and 4
Touchdowns.



6.
MINERAL PROPERTY INTERESTS



Extra
High Property



The
Company holds 33% interest in the Extra High Property. The Extra High Property is subject to a 1.5% Net Smelter Royalty (“NSR”),
50% of which, or 0.7%, can be purchased at any time by paying $500,000. The claims making up the Extra High Property expire December
25, 2019.



7.  INVESTMENT



In
April 2013, the Company entered into an agreement with a Mexican gaming company, whereby the Company agreed to purchase a royalty
revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican casino for $800,000.
As of December 31, 2013, the Company invested $800,000 and advanced $49,200 for working capital purposes. The Mexican gaming
company repaid the $49,200 advanced and the Company recognized $4,157 in royalty revenue during the year ended December 31, 2014.
As at December 31, 2014, the Company assessed the fair value of the investment and recorded impairment of $799,999 on the
investment due to nominal royalty payments received by the Company.



8.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



|                        |  | December
    31, 2016 |         | December
    31, 2015
|----------------------- |  | --------------------- | ------- | ---------------------
|Trade
    payables      |  | $                     | 141,930 |                      
|Accrued
    liabilities |  |                       | 21,310  |                      
|                        |  | $                     | 163,240 |                      



64







9.
RELATED PARTY TRANSACTIONS



The
amounts due to related parties are unsecured, payable on demand as at December 31, 2016 and 2015 consist of the following:



|                                                            |  | 2016 |         | 2015
|----------------------------------------------------------- |  | ---- | ------- | ----
|Advances
    from directors (interest at prime plus 1%)     |  | $    | 45,505  |     
|Entities
    controlled by directors (non-interest-bearing) |  |      | 377,143 |     
|                                                            |  |      |         |     
|                                                            |  | $    | 422,648 |     



Included
in convertible debentures is $317,089 (2015 - $286,518) owing to the Chief Executive Officer and a director of the Company (note
12).



During
the years ended December 31, 2016, 2015 and 2014, the following amounts were charged by related parties.



|                                                                         |  | 2016 |         | 2015 |  | 2014
|------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | ----
|Interest
    charged on amounts due to related parties                   |  | $    | 978     |      |  | $   
|Rent
    charged by entities with common directors (note 16)             |  |      | 28,298  |      |  |     
|Office
    expenses charged by an entity with common directors (note 16) |  |      | 86,044  |      |  |     
|                                                                         |  | $    | 115,320 |      |  | $   



The
remuneration of directors and key management personnel during the years ended December 31, 2016, 2015 and 2014 is as follows:



|                              |  | 2016 |        | 2015 |  | 2014
|----------------------------- |  | ---- | ------ | ---- |  | ----
|Management
    fees (note 16) |  | $    | 35,000 |      |  | $   



10.
REFUNDABLE SUBSCRIPTION



During
the year ended December 31, 2016, the Company cancelled subscription agreements of a non-brokered private placement totalling
$45,000. As at December 31, 2016, the Company has refunded $35,000 and the remaining $10,000 is owing.





11.
LOAN PAYABLE



During
the year ended December 31, 2016, the Company entered into an agreement with an arm’s length party whereby the party would
pay certain debts owed by the Company. The loan is non-interest bearing, unsecured and due on demand. As of December 31, 2016,
the balance payable is $103,924.





65







12.
CONVERTIBLE DEBENTURES FINANCING

Convertible
Debentures Financing 2015



On
January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000.
The convertible debentures matured on January 6, 2016, and bear interest at the rate of 12% per annum payable on a quarterly basis.
The convertible debentures are convertible into common shares of the Company at a conversion price of $0.30 per share. The liability
component of the convertible debentures was recognized initially at the fair value of a similar liability with no equity conversion
option, which was calculated based on the application of a market interest rate of 20%. On the initial recognition of the convertible
debentures, the amount of $222,006 was recorded under convertible debentures and the amount of $27,994 has been recorded under
the equity portion of convertible debenture reserve.



As
of December 31, 2016, the convertible debentures are in default; however, the Company has not been served with a default notice.

Convertible
Debentures Financing 2013



During
the year ended December 31, 2013, the Company issued several convertible debentures for a total amount of $975,000 to several
arm’s length parties. The convertible debentures have a maturity date of 18 months from the date of closing, and bear interest
at the rate of 15% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the
Company at a conversion price of $1.50 per share. The liability component of the convertible debenture was recognized initially
at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a
market interest rate of 20%. The difference between the $975,000 face value of the debentures and the fair value of the liability
component was recognized in equity. On the initial recognition of the convertible debentures, the amount of $913,072 has been
recorded under convertible debentures and the amount of $61,928 has been recorded under the equity portion of convertible debentures.



Pursuant
to the financing, the Company has made cash payments of $48,000 and issued 2,000 common shares of the Company and 3,333 agent
warrants of the Company with fair value of $8,115 as finders’ fees. Each warrant entitles the holder to purchase one additional
common share of the Company at a price of $1.50 per share until July 23, 2018. The amount of transaction costs directly attributable
to the financing of $56,115 were allocated to the liability and equity components of the debenture proportionately at $52,551
and $3,564, respectively. The discount on the debentures is being accreted such that the liability component will equal the face
value of the debentures at maturity plus accrued interest.



On
September 4, 2013, the amount of $858,118 which comprised of certain convertible debentures and their corresponding accrued interest
was converted into 610,724 common shares of the Company. The equity portion of the convertible debentures was reduced in the amount
of $52,562.



As
of December 31, 2016, one of the convertible debentures is in default, however, the Company has not been served with a default
notice.





66







12. CONVERTIBLE
DEBENTURES FINANCING (Continued)



The
following table reconciles the fair value of the debentures to the carrying amount.



|                                      |  | Liability
    Component |         | Equity
    Component |  | Total
|------------------------------------- |  | ----------------------- | ------- | -------------------- |  | -----
|Balance,
    December 31, 2013        |  | $                       | 95,438  |                      |  | $    
|Accretion
    of discount             |  |                         | 19,746  |                      |  |      
|Amortization
    of transaction costs |  |                         | 6,297   |                      |  |      
|Interest
    accrued                  |  |                         | 1,644   |                      |  |      
|Balance,
    December 31, 2014        |  |                         | 123,125 |                      |  |      
|Gross
    proceeds to allocate        |  |                         | 222,006 |                      |  |      
|Accretion
    of discount             |  |                         | 34,924  |                      |  |      
|Interest
    accrued                  |  |                         | 44,589  |                      |  |      
|Balance,
    December 31, 2015        |  |                         | 424,644 |                      |  |      
|Interest
    accrued                  |  |                         | 45,571  |                      |  |      
|Balance,
    December 31, 2016        |  | $                       | 470,215 |                      |  | $    



13.
CAPITAL STOCK



| | (a) | Authorized
| | --- | ----------



Unlimited
number of common and preferred shares without par value.



As
of December 31, 2016, there are no preferred shares issued.



| | (b) | Issued
| | --- | ------



As
of December 31, 2016, there are 2,067,724 common shares issued and outstanding.



On
July 7, 2014, the Company consolidated its common shares on the basis of six pre-consolidation common shares for one post-consolidation
common share. The numbers of common shares, stock options, warrants, as well as loss per share in these consolidated financial
statements have been retroactively restated to reflect the consolidation.



During
the year ended December 31, 2016, the Company completed the following financing:



·        
On January 4, 2016, the Company closed a non-brokered private placement issuing 1,000,000 units at $0.10 per unit for gross proceeds
to the Company of $100,000. Each unit consists of one common share of the Company and one share purchase warrant exercisable for
one additional common share of the Company at an exercise price of $0.135 per common share until January 4, 2021.



There
were no shares issued during the years ended December 31, 2015 and 2014.





67







13.
CAPITAL STOCK(Continued)



(c)       Warrants



Warrants
activity is as follows:



|                                        |  | Number
    of Warrants |           | Weighted
    Average Exercise Price
|--------------------------------------- |  | ---------------------- | --------- | -----------------------------------
|Balance,
    January 1, 2014            |  |                        | 293,983   |                                    
|Expired                                 |  |                        | (23,148   | )                                  
|Balance,
    December 31, 2014 and 2015 |  |                        | 270,835   |                                    
|Expired                                 |  |                        | (267,502  | )                                  
|Issued                                  |  |                        | 1,000,000 |                                    
|Balance,
    December, 2016             |  |                        | 1,033,333 |                                    



As
of December 31, 2016, the following warrants were outstanding:



|Expiry
    Date     |  | Exercise
    Price |       | Number
    of Warrants Outstanding
|------------------- |  | ------------------ | ----- | ----------------------------------
|July 23,
    2018   |  |                    | 1.50  |                                   
|January
    4, 2021 |  |                    | 0.135 |                                   
|                    |  |                    |       |                                   



The
weighted average remaining contractual life for warrants outstanding at December 31, 2016 is 4.01 years.



(d)       Stock
options



The
Company’s 2015 Stock Option Plan provides that the Board of Directors of the Company may grant to directors, officers, employees
and consultants of the Company options to acquire up to 20% of the issued and outstanding common shares of the Company calculated
from time to time on a rolling basis. The terms of the options are determined at the date of grant.



Options
activity is as follows:



|                                        |  | Number
    of Options |  | Weighted
    Average Exercise Price
|--------------------------------------- |  | --------------------- |  | -----------------------------------
|Balance,
    December 31, 2014 and 2015 |  |                       |  | 33,334                             
|Expired                                 |  |                       |  | (33,334                            
|Balance,
    December 31, 2016          |  |                       |  | —                                  





68







13.
CAPITAL STOCK(Continued)



(d)       Stock
options (continued)



As
of December 31, 2016, there were no stock options outstanding.



14.
CHANGES IN NON-CASH WORKING CAPITAL



|                                                          |  | 2016 |         | 2015 |  | 2014
|--------------------------------------------------------- |  | ---- | ------- | ---- |  | ----
|GST
    receivable                                        |  | $    | (2,116  | )    |  | $   
|Accounts
    payable and accrued liabilities              |  |      | 112,924 |      |  |     
|Due
    to related parties                                |  |      | 92,313  |      |  |     
|                                                          |  |      |         |      |  |     
|                                                          |  | $    | 203,121 |      |  | $   
|                                                          |  |      |         |      |  |     
|Supplemental
    information                              |  |      |         |      |  |     
|Non-cash
    items                                        |  |      |         |      |  |     
|Repayment
    of advances from investment in lieu of cash |  | $    | —       |      |  | $   
|Interest
    expense included in convertible debt         |  | $    | 15,000  |      |  | $   
|Interest
    expense included in due to related parties   |  | $    | 30,978  |      |  | $   



15.
INCOME TAXES



Income
tax expense differs from the amount that would be computed by applying the Canadian statutory income tax rate of 26.00% to income
before income taxes.



|                                                 |  | 2016 |         | 2015 |  | 2014
|------------------------------------------------ |  | ---- | ------- | ---- |  | ----
|Loss
    before income taxes                     |  | $    | 347,963 |      |  | $   
|Statutory
    income tax rate                    |  |      | 26.00   | %    |  |     
|                                                 |  |      |         |      |  |     
|Expected
    income tax benefit                  |  |      | 90,470  |      |  |     
|Items
    not deductible for income tax purposes |  |      | —       |      |  |     
|Change
    in timing differences                 |  |      | —       |      |  |     
|Underprovided
    in prior years                 |  |      | 783     |      |  |     
|Effect
    of change in tax rate                 |  |      | —       |      |  |     
|Unrecognized
    benefit of deferred tax assets  |  |      | (89,688 | )    |  |     
|                                                 |  |      |         |      |  |     
|Income
    tax expense                           |  | $    | —       |      |  | $   



15. INCOME
TAXES(Continued)



The
Company recognizes tax benefits on losses or other deductible amounts where it is probable the Company will generate sufficient
taxable income to utilize deferred tax assets. The Company’s unrecognized deductible temporary differences and unused tax
losses for which no deferred tax asset is recognized consist of the following amounts:



|                                                                                                |  | 2016 |           | 2015
|----------------------------------------------------------------------------------------------- |  | ---- | --------- | ----
|Excess
    of unused exploration expenditures over carrying value of mineral property interests |  | $    | 2,656,167 |     
|Excess
    of undepreciated capital cost over carrying value of fixed assets                    |  |      | 650,381   |     
|Non-refundable
    mining investment tax credits                                                |  |      | 988       |     
|Long-term
    investment                                                                        |  |      | 400,000   |     
|Share
    issue cost                                                                            |  |      | 9,600     |     
|Non-capital
    losses carried forward                                                          |  |      | 3,664,085 |     
|Capital
    losses carried forward                                                              |  |      | 993,649   |     
|                                                                                                |  |      |           |     
|Unrecognized
    deductible temporary differences                                               |  | $    | 8,374,870 |     



The
Company’s unrecognized unused non-capital tax losses have the following expiry dates:



| |      | 
| | ---- | 
| | 2027 | 
| | 2028 | 
| | 2029 | 
| | 2030 | 
| | 2031 | 
| | 2032 | 
| | 2033 | 
| | 2034 | 
| | 2035 | 
| | 2036 | 
| |      | 



The
Company has available approximate net capital losses of $994,000 that may be carried forward indefinitely. The Company has available
resource-related deductions of approximately $2,656,000 that may be carried forward indefinitely.



16.
COMMITMENTS



a)   
The Company had an agreement for management services (the “Management Services Agreement”) with Kalpakian Bros. of
B.C. Ltd. (“Kalpakian Bros.”), a private company owned by two directors of the Company whereby as of July 1, 2014
Kalpakian Bros. provided management services to the Company at a monthly rate of $5,000 plus applicable taxes. Effective as of
August 1, 2016, the Management Services Agreement has been terminated by mutual consent.



69









16. COMMITMENTS(Continued)



b)
The Company, together with Jackpot Digital Inc. (“Jackpot”) and Green Arrow Resources Inc. (“Green Arrow”),
companies with certain common directors, had entered into an office lease agreement with an arm’s length party for office
space effective as of August 1, 2014 for a one-year period which was extended until July 31, 2016. The office lease agreement
has been further extended for a period of one year until July 31, 2017. Under the office lease agreement, as of August 1, 2016,
the three companies are required to pay a monthly base rent of $7,194 plus property and operating expenses for the leased premises.
A lease deposit of $10,000 has been made by Jackpot. As of December 1, 2016, Green Arrow is no longer obligated and required to
pay its proportionate share of the office rent.



c)
The Company has an agreement for office support services with Jackpot, a company with common directors. Under the agreement, the
Company is entitled to receive office support services from Jackpot at a monthly rate of $7,000 plus applicable taxes. The agreement
expires April 30, 2017. The agreement can be terminated by either party upon giving three months’ written notice.



17.
CAPITAL MANAGEMENT



The
Company considers its capital to be comprised of stockholders’ deficiency and convertible debenture.



The
Company’s objective when managing capital is to maintain adequate levels of funding to support the acquisition, exploration
and, if warranted, the development of mineral properties, to invest in non-mining related projects and to maintain the necessary
corporate and administrative functions to facilitate these activities. This is done primarily through equity and debt financing.
Future financings are dependent on market conditions and there can be no assurance that the Company will be able to raise funds
in the future. There were no changes to the Company’s approach to capital management during the year ended December 31,
2016. The Company is not subject to externally imposed capital requirements.



18.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT



| | (a) | Risk
                                         management overview
| | --- | -----------------------------------------------------------------



The
Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. This note
presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes
for measuring and managing risk, and the Company's management of capital. The Company employs risk management strategies and policies
to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the
Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the
responsibility to administer and monitor these risks.



| | (b) | Fair
                                         value of financial instruments
| | --- | ----------------------------------------------------------------------------



The
fair values of cash, accounts payable and accrued liabilities and due to related parties approximate their carrying values due
to the short-term maturity of these instruments.



70









18.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT(Continued)



| | (b) | Fair
                                         value of financial instruments (continued)
| | --- | ----------------------------------------------------------------------------------------



Fair
value hierarchy



IFRS
7 Financial Instruments: Disclosures requires classification of fair value measurements using a fair value hierarchy that
reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:



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

Level
2:	 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly

Level
3: Inputs for assets or liabilities that are not based on observable market data.



The
Company’s cash, accounts payable and due to related parties are considered Level 1, convertible debentures and investments
are considered Level 2 and Level 3, respectively, of the fair value hierarchy.



| | (c) | Credit
                                         risk
| | --- | ----------------------------------------------------



Credit
risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations.



The
financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The
Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.



| | (d) | Liquidity
                                         risk
| | --- | -------------------------------------------------------



Liquidity
risk is the risk that the Company will not be able to meets its financial obligations as they are due. The Company's approach
to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.



At
December 31, 2016, the Company had cash of $1,312 (2015 - $783) available to apply against short-term business requirements
and current liabilities of $1,170,027 (2015 - $836,510). All of the current liabilities, except for convertible debentures, are
due within 90 days. Amounts due to related parties are due on demand.



| | (e) | Market
                                         risk
| | --- | ----------------------------------------------------



Market
risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net
earnings or the value of financial instruments. As at December 31, 2016, the Company is not exposed to significant interest
rate risk, currency risk or other price risk on its financial assets and liabilities due to the short term maturity of its financial
liabilities and fixed interest rate on the convertible

debentures.







71







19.
SUBSEQUENT EVENTS



a)   
On January 13, 2017, a Notice of Civil Claim was filed in the Supreme Court of British Columbia by 310047 B.C. Ltd. against the
Company for the sum of $53,024 being the amount due by the Company to 310047 B.C. Ltd. pursuant to an assignment by the Company’s
solicitor Clark Wilson LLP. On February 21, 2017, an Assignment of Debt Agreement has been entered into among Clark Wilson LLP,
310047 B.C. Ltd., and JAMCO Capital Partners Inc. (“JAMCO”) whereby the outstanding balance has been assigned to JAMCO.
The Company has acknowledged this assignment to JAMCO and has agreed to adjust the Company’s financial accounts and records
to reflect this assignment. JAMCO is an arm’s length party to the Company. As a result of this Assignment of Debt Agreement,
a Notice of Discontinuance was filed in the Supreme Court of British Columbia on March 21, 2017 by 310047 B.C. Ltd. and Clark
Wilson LLP whereby the Civil Claim against the Company has been discontinued.



| | b) | On
                                         April 25, 2017, the Company made a payment to Green Arrow in the amount of $27,227 which
                                         was included in Due to related parties as of December 31, 2016.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | Effective
                                         as of April 1, 2017, Mr. Bedo H. Kalpakian has stepped down as the Company’s President,
                                         CEO & CFO and remains as a director of the Company. In replacement to Mr. Bedo H.
                                         Kalpakian, effective as of April 1, 2017 Mr. Jacob H. Kalpakian has become the President
                                         & CEO of the Company, and Mr. Neil Spellman has become the CFO of the Company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





72







Form
51-102F1



37
CAPITAL INC.



Management’s
Discussion & Analysis

Audited
Consolidated Financial Statements for the

Year
ended December, 2016



The
following discussion and analysis of the financial condition and financial position and results of operations of 37 Capital Inc.
(the “Company” or “37 Capital”) should be read in conjunction with the annual audited consolidated financial
statements for the years ended December 31, 2016 and 2015 and notes thereto.



The
consolidated financial statements, including comparatives, have been prepared using accounting policies in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The Company’s consolidated financial statements are expressed in Canadian (CDN) Dollars which is the Company’s functional
currency. All amounts in this MD&A are in CDN dollars unless otherwise stated.



The
following information is prepared as at April 28, 2017.





Forward-Looking
Statements



Certain
statements contained herein are “forward-looking” and are based on the opinions and estimates of management, or on
opinions and estimates provided to and accepted by management. Forward-looking statements may include, among others, statements
regarding future plans, costs, objectives or economic performance, or the assumptions underlying any of the foregoing. In this
MD&A, words such as “may”, “would”, “could”, “will”, “likely”,
“seek”, “project”, “predict”, “potential”, “should”, “might”,
“hopeful”, “objective”, “believe”, “expect”, “anticipate”, “intend”,
“plan”, “estimate”, and similar words are used to identify forward-looking statements, Forward-looking
statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to
differ materially from those expressed or implied. Readers, shareholders and investors are therefore cautioned not to place reliance
on any forward-looking statements as the plans, assumptions, intentions, estimations or expectations upon which they are based
might not occur. The Company does not undertake to update or revise any forward-looking statements, except in accordance with
applicable securities laws.

Description
of Business



The
Company is a junior mineral exploration company.



The
Company was incorporated on August 24, 1984 in British Columbia, Canada. The principal business of the Company is the acquisition,
exploration and, if warranted, the development of natural resource properties.



37
Capital is a reporting issuer in the Provinces of British Columbia, Alberta, Quebec and Ontario and files all public documents
on www.Sedar.com . The Company is a foreign private issuer in the United States of America and in this respect files, on EDGAR,
its Annual Report on Form 20-F and other reports on Form 6K. The following link, http://www.sec.gov/cgi-bin/browse-edgar•action=getcompany&CIK=825171will give you direct access to the Company’s filings with the United States Securities and Exchange Commission
(“U.S. SEC”).





73







Selected
Annual Information



Selected
annual information from the consolidated financial statements (audited) for the three years ended December 31, 2016, 2015 and
2014 is shown in the following table:



|                                                               |  | Year
    Ended December 31, 2016 |          | Year
    Ended December 31, 2015 |  | Year
    Ended December 31, 2014
|-------------------------------------------------------------- |  | -------------------------------- | -------- | -------------------------------- |  | --------------------------------
|Revenue                                                        |  |                                  | 0        |                                  |  |                                 
|Interest
    income                                            |  |                                  | 0        |                                  |  |                                 
|Expenses                                                       |  |                                  | (347,963 | )                                |  |                                 
|Basic
    and diluted loss per common share before other items |  |                                  | (0.17    | )                                |  |                                 
|Comprehensive
    loss                                         |  |                                  | (347,963 | )                                |  |                                 
|Total
    assets                                               |  |                                  | 5,922    |                                  |  |                                 
|Long-term
    financial obligations                            |  |                                  | 0        |                                  |  |                                 
|Cash
    dividends                                             |  |                                  | 0        |                                  |  |                                 



Results
of Operations



Effective
July 7, 2014, the Company changed its name from High 5 Ventures Inc. (“High 5”) to 37 Capital Inc. (“37 Capital”)
and consolidated its share capital on the basis of six (6) old High 5 common shares for one (1) new 37 Capital common share. The
common shares of the Company trade on the Canadian Securities Exchange (CSE) under the symbol “JJJ”, and in
theUSA, the Company's common shares trade on the OTCQB tier of the OTC markets under the trading symbol “HHHEF”.
The Cusip number of the Company’s common shares is 88429G102. The Company’s office is located at 300 – 570 Granville
Street, Vancouver, British Columbia, Canada, V6C 3P1 and its registered office is located at 1055 West Georgia Street, Suite 1500,
PO Box 11117, Vancouver, BC V6E 4N7. The Company’s registrar and transfer agent is Computershare Investor Services Inc.
located at 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9.



All
common shares and per share amounts have been restated to give retroactive effect to the 6:1 share consolidation, which took effect
on July 7, 2014.



In
April 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed to
purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican
land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200
for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty
revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment
and recorded impairment of $799,999 on the investment due to nominal royalty payments received by the Company. As of the date
of this MD&A, the Company does not expect to recover its investment in the Mexican gaming company.



74









For
the year ended December 31, 2016:



| | • | The
                                         Company’s operating expenses were $347,963 as compared to $334,993 for the corresponding
                                         period in 2015 and as compared to $1,050,947 for the corresponding period in 2014.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company recorded a comprehensive loss of $347,963 as compared to a comprehensive loss
                                         of $334,993 during the corresponding period in 2015 as compared to a comprehensive loss
                                         of $1,046,790 during the corresponding period in 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s basic and diluted loss per common share was $0.17 as compared to a basic
                                         and diluted loss of $0.31 during the corresponding period in 2015 and as compared to
                                         a basic and diluted loss of $0.98 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total assets were $5,922 as compared to $3,277 during the corresponding
                                         period in 2015 and as compared to $3,530 during the corresponding period in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company’s total liabilities were $1,170,027 as compared to $836,510 during the
                                         corresponding period in 2015 and as compared to $529,764 during the corresponding period
                                         in 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The
                                         Company had a working capital deficiency of $1,164,107 as compared to a working capital
                                         deficiency of $ $833,235 during the corresponding period in 2015 and as compared to a
                                         working capital deficiency of $526,236 during the corresponding period in 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Plan
of Arrangement



On
February 26, 2015, the Company incorporated two wholly-owned private British Columbia subsidiaries, 27 Red Capital Inc. (“27
Red”) and 4 Touchdowns Capital Inc. (“4 Touchdowns”). On April 30, 2015, the Company entered into an arrangement
agreement (the “Arrangement Agreement”) with 27 Red and 4 Touchdowns.



In
respect to the Plan of Arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court
of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement.



At
the Company’s annual and special meeting which was held on June 4, 2015, the Company’s shareholders passed all the
resolutions presented including the re-election of the board of directors, re-appointment of the Company’s auditor, approval
of the Company’s stock option plan, and the proposed Plan of Arrangement with 27 Red and 4 Touchdowns.



The
Company completed the plan of arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2). The effective date of the Arrangement
was on February 12, 2016 (the “Effective Date”). Shareholders of record on the Effective Date received one new common
share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. On the Effective Date, and pursuant
to the Arrangement, all of the Class 1 Reorganization Shares were automatically transferred by Shareholders to Spinco1 in exchange
for 2,067,724 common shares of Spinco1 and issued to Shareholders on a pro rata basis (resulting in one common share of Spinco1
being issued for every one Class 1 Reorganization Share). Immediately following this, the Company redeemed all of the Class 1
Reorganization Shares by the transfer to Spinco1 of $20,677 and a promissory note in the principal amount of $20,677. The promissory
note is non-interest bearing, unsecured and due on demand. The redemption of shares was distributed to the shareholders’
of 27 Red as a capital distribution and recorded as a dividend.



75









Furthermore
on the Effective Date, all of the Class 2 Reorganization Shares were automatically transferred by Shareholders to Spinco2 in exchange
for 2,067,724 common shares of Spinco2 and issued to Shareholders on a pro rata basis (resulting in one common share of Spinco2
being issued for every one Class 2 Reorganization Share). Immediately following this, the Company redeemed all of the Class 2
Reorganization Shares by the transfer to Spinco2 of $20,677 and a promissory note in the principal amount of $20,677. The promissory
note is non-interest bearing, unsecured and due on demand. The redemption of shares was distributed to the shareholders’
of 4 Touchdowns as a capital distribution and recorded as a dividend.



In
connection with the above transaction, the Company recorded the amount of $82,709 as payable to related parties, 27 Red and 4
Touchdowns.



As
of the date of this MD&A, both 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) have not started conducting any business, and
are seeking business opportunities to get involved in. A copy of the Arrangement Agreement is available on SEDAR.



During
2016, the Company tried to raise up to $1,125,000 by issuing up to 15,000,000 Units at $0.075 per Unit by way of a non-brokered
private placement financing, however the Company was unsuccessful in its endeavours.



On
August 23, 2016, Mr. Neil Spellman of Carlsbad, California, joined the Board of Directors of the Company.



On
January 13, 2017, a Notice of Civil Claim was filed in the Supreme Court of British Columbia by 310047 B.C. Ltd. against the Company
for the sum of $53,024.40 being monies due by the Company to 310047 B.C. Ltd. pursuant to an assignment by the Company’s
solicitor Clark Wilson LLP. On February 21, 2017, an Assignment of Debt Agreement has been entered into between Clark Wilson LLP,
and 310047 B.C. Ltd., and JAMCO Capital Partners Inc. (“JAMCO”) whereby the outstanding debt in the amount of $53,024.40
has been assigned to JAMCO. The Company has acknowledged this assignment to JAMCO and has agreed to adjust the Company’s
financial accounts and records to reflect this assignment. JAMCO is an arm’s length party to the Company. As a result of
this Assignment of Debt Agreement, a Notice of Discontinuance was filed in the Supreme Court of British Columbia on March 21,
2017 by 310047 B.C. Ltd. and Clark Wilson LLP whereby the Civil Claim that was filed by 310047 B.C. Ltd. against the Company has
been discontinued.

Effective
as of April 1, 2017, Mr. Bedo H. Kalpakian has stepped down as the Company’s President, CEO & CFO and remains as a director
of the Company. In replacement to Mr. Bedo H. Kalpakian, effective as of April 1, 2017 Mr. Jacob H. Kalpakian has become the President
& CEO of the Company, and Mr. Neil Spellman has become the CFO of the Company.





76









Mineral
Properties



1.  Extra
High Property



As
at the date of this MD&A, the Company holds 33% interest and Colt Resources Inc. (“Colt”) holds 67% interest in
the Extra High Property. Colt is the operator of the Extra High Property. If any party fails to contribute its share of future
property related expenditures, then its interest will be diluted on a straight-line basis. If any party’s interest is diluted
to less than 10%, then that party’s interest in the Extra High Property will be converted to a 0.5% NSR. The Extra High
Property is subject to a 1.5% net smelter returns royalty to a third party, 50% of which, or 0.75%, can be purchased at any time
by paying $500,000 to the third party.



Neither
the Company nor the operator of the Extra High Property has incurred any significant exploration or evaluation expenditures in
recent years with respect to the Extra High Property. Accordingly, during the fiscal year ended 2011, the Company has recognized
an impairment provision of $151,339 to reduce the carrying amount to $1. The Company did not incur any expenditures on the Extra
High Property during the years 2015 and 2014, however during 2016 the Company transferred from its PAC account with the Mineral
Titles Office of the Province of British Columbia credits totalling $4,096 to Colt’s PAC account to enable Colt to use the
credits towards assessment filing on the Extra High Property.



On
March 31, 2016, the Company together with Colt have extended to December 25, 2019 the expiry date of certain mineral claims totalling
650 hectares which comprise the Extra High Property. During 2016, the Company together with Colt have abandoned a total of 427
hectares of mineral claims which were previously part of the Extra High Property. A 2016 Assessment Report on Preliminary Metallurgical
Testing on the Extra High Property was prepared by J.W. Murton on May 20, 2016 on behalf of Colt.



2.
Ontario Lithium Properties (Mineral Leases)



During
the year ended December 31, 2008, the Company sold all of its Mineral Leases. In the event that at a future date the Mineral Leases
are placed into commercial production, then the Company is entitled to receive a 0.5% gross receipts royalty after six months
from the date of commencement of commercial production.



Fourth
Quarter (December 31, 2016)



During
the three months [fourth quarter] period ended December 31, 2016:



|• |  | The
                                         Company had a comprehensive loss of $142,396 or $0.07 per share as compared to a comprehensive
                                         loss of $90,042 or $0.08 per share during the same period three month (fourth period)
                                         ended December 31, 2015 and as compared to a net and comprehensive loss of $892,875 or
                                         $0.84 per share during the same three month [fourth period] ended December 31, 2014
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

|• |  | The
                                         Company’s Operating costs were $142,396 as compared to $90,042 for the same period
                                         in 2015 and as compared to $897,032 for the same period in 2014.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





77







Summary
of Quarterly Results



|For the
    Quarterly Periods ended: |  | December
    31, 2016                                                                                                                   |          | September
    30, 2016                                                                                                                                             |  | June
    30, 2016                                       |         | March
    31, 2016                                                                                                                                            
|------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------- | -------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------- | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Total
    Revenues                   |  |                                                                                                                                         | 0        |                                                                                                                                                                    |  |                                                         | 0       |                                                                                                                                                               
|Net
    loss and comprehensive loss  |  |                                                                                                                                         | (142,396 | )                                                                                                                                                                  |  |                                                         | (50,133 | )                                                                                                                                                             
|Loss
    per common share            |  |                                                                                                                                         | (0.07    | )                                                                                                                                                                  |  |                                                         | (0.02   | )                                                                                                                                                             
|For
    the Quarterly Periods ended: |  | December
                                         31,
                                                                             2015 |          | September
                                         30,
                                                                                                       2015 |  | June
                                         30,

2015 |         | March
                                         31,
                                                                                                       2015
|Total
    Revenues                   |  |                                                                                                                                         | 0        |                                                                                                                                                                    |  |                                                         | 0       |                                                                                                                                                               
|Net
    loss and comprehensive loss  |  |                                                                                                                                         | (90,042  | )                                                                                                                                                                  |  |                                                         | (70,172 | )                                                                                                                                                             
|Loss
    per common share            |  |                                                                                                                                         | (0.08    | )                                                                                                                                                                  |  |                                                         | (0.07   | )                                                                                                                                                             



The
Company’s business is not of a seasonal nature.



Risks
related to our Business



The
Company, and the securities of the Company, should be considered a highly speculative investment. The following risk factors should
be given special consideration when evaluating an investment in any of the Company's securities:-.



- The
Company does not anticipate to generate any revenue in the foreseeable future. In the event that the Company generates any revenues
in the future, then the Company intends to retain its earnings in order to finance growth.



- There
are a number of outstanding securities and agreements pursuant to which common shares of the Company may be issued in the future.
This will result in further dilution to the Company's shareholders.



- Governmental
regulations, including those regulations governing the protection of the environment, taxes, labour standards, occupational health,
waste disposal, mine safety and other matters, could have an adverse impact on the Company.



- Trading
in the common shares of the Company may be halted or suspended or may be subject to cease trade orders at any time and for any
reason, including, but not limited to, the failure by the Company to submit documents to the Regulatory Authorities within the
required time periods.



- The
exploration of mineral properties involves significant risks which even experience, knowledge and careful evaluation may not be
able to avoid. The prices of metals have fluctuated widely, particularly in recent years as it is affected by numerous factors
which are beyond the Company’s control including international, economic and political trends, expectations of inflation
or deflation, currency exchange fluctuations, interest rate fluctuations, global or regional consumptive patterns, speculative
activities and increased production due to new extraction methods. The effect of these factors on the price of metals, and therefore
the economic viability of the Company’s interests in mineral exploration properties cannot be accurately predicted. Furthermore,
changing conditions in the financial markets, and Canadian Income Tax legislation may have a direct adverse impact on the Company’s
ability to raise funds for its interests in mineral exploration properties. A drop in the availability of equity financings will
likely impede spending on mineral properties. As a result of all these significant risks, it is quite possible that the Company
may lose its investment in the Company’s interest in the Extra High Property.



78









- Due
to the current difficult market conditions for junior mineral exploration companies, the Company may not be able to raise sufficient
funds to meet its ongoing obligations.



- The
Company has outstanding debts, has working capital deficiency, has no revenues, has incurred operating losses, and has no assurances
that sufficient funding will be available to the Company to continue its operations for an extended period of time.



- In
respect to the Company’s investment in the Mexican gaming company, there are no assurances whatsoever that in the future
the Company can recover its investment or that the Company can receive any royalty revenues.



- The
market price of the Company’s common shares has experienced considerable volatility and may continue to fluctuate in the
future. Furthermore, there is a limited trading market for the Company’s common shares and as such, the ability of investors
to sell their shares cannot be assured.



Liquidity
and Capital Resources



The
Company has incurred operating losses over the past three fiscal years, has limited resources, and does not have any source of
operating cash flow.



During
2017, the Company shall require at least $400,000 so as to conduct its operations uninterruptedly. In order to meet this requirement,
the Company intends to seek equity and/or debt financings through private placements and/or public offerings and/or loans. In
the past, the Company has been successful in securing equity and debt financings in order to conduct its operations uninterruptedly.
While the Company does not give any assurances whatsoever that in the future it will continue being successful in securing equity
and/or debt financings in order to conduct its operations uninterruptedly, it is the Company’s intention to pursue these
methods for future funding of the Company.



As
at December 31, 2016:



| | • | the
                                         Company’s total assets were $5,922 as compared to $3,277 for the year ended December
                                         31, 2015 and as compared to $3,530 for the year ended December 31, 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | the
                                         Company’s total liabilities were $1,170,027 as compared to $836,510 for the year
                                         ended December 31, 2015 and as compared to $529,764 for the year ended December 31, 2014.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | the Company had
    $1,312 in cash as compared to $783 in cash as for the year ended December 31, 2015 and as compared to $426 in cash for the
    year ended December 31, 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | • | the
                                         Company had GST receivable in the amount of $4,608 as compared to $2,492 for the year
                                         ended December 31, 2015 and as compared to $3,102 for the year ended December 31, 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



79









Private
Placement Financing



On
January 4, 2016 the Company closed the first and last tranche of the non-brokered private placement which was announced on July
31, 2015 and the Company issued an aggregate of 1,000,000 Units at $0.10 per Unit for total proceeds to the Company of $100,000.
Each Unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional
common share in the capital of the Company at an exercise price of $0.135 per common share until January 4, 2021. All securities
issued in connection with this financing include a hold period in accordance with applicable securities law. A director of the
Company and a family member subscribed to this non-brokered private placement.



There
were no share financings during the year ended December 31, 2015 and 2014.



Warrants



As
at December 31, 2016, a total of 1,033,333 warrants with a weighted average exercise price of $0.14 per warrant share were outstanding.



If
any warrants are exercised in the future, then any funds received by the Company from the exercising of warrants shall be used
for general working capital purposes. However, there are no assurances whatsoever that any warrants will be exercised before their
expiry.



Loan
2016



The
Company has borrowed the sum of $103,924 from an arm’s length party to pay certain amounts that were owed by the Company
to some of its creditors. The borrowed amount of $103,924 is non-interest bearing, unsecured and is payable on demand.



Refundable
Subscription



During
the twelve months ended December 31, 2016, the Company cancelled subscription agreements from a non-brokered private placement
financing which was announced on July 31, 2015 from three subscribers totalling $45,000. The Company has refunded $35,000 to two
subscribers. The refundable subscription of $10,000 is included in Accounts Payable.



Convertible
Debentures Financing 2015



On
January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000.
The convertible debentures matured on January 6, 2016, and bear interest at the rate of 12% per annum payable on a quarterly basis.
The convertible debentures are convertible into common shares of the Company at a conversion price of $0.30 per share. The liability
component of the convertible debentures was recognized initially at the fair value of a similar liability with no equity conversion
option, which was calculated based on the application of a market interest rate of 20%. On the initial recognition of the convertible
debentures, the amount of $222,006 was recorded under convertible debentures and the amount of $27,994 has been recorded under
the equity portion of convertible debenture reserve.



As
of December 31, 2016, the convertible debentures are in default; however, the Company has not been served with a default notice.



80









Convertible
Debentures Financing 2013



During
the year ended December 31, 2013, the Company issued several convertible debentures for a total amount of $975,000 to several
arm’s length parties. The convertible debentures have a maturity date of 18 months from the date of closing, and bear interest
at the rate of 15% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the
Company at a conversion price of $1.50 per share. The liability component of the convertible debenture was recognized initially
at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a
market interest rate of 20%. The difference between the $975,000 face value of the debentures and the fair value of the liability
component was recognized in equity. On the initial recognition of the convertible debentures, the amount of $913,072 has been
recorded under convertible debentures and the amount of $61,928 has been recorded under the equity portion of convertible debentures.



Pursuant
to the financing, the Company has made cash payments of $48,000 and issued 2,000 common shares of the Company and 3,333 agent
warrants of the Company with fair value of $8,115 as finders’ fees. Each warrant entitles the holder to purchase one additional
common share of the Company at a price of $1.50 per share until July 23, 2018. The amount of transaction costs directly attributable
to the financing of $56,115 were allocated to the liability and equity components of the debenture proportionately at $52,551
and $3,564, respectively. The discount on the debentures is being accreted such that the liability component will equal the face
value of the debentures at maturity plus accrued interest.



On
September 4, 2013, the amount of $858,118 which comprised of certain convertible debentures and their corresponding accrued interest
was converted into 610,724 common shares of the Company. The equity portion of the convertible debentures was reduced in the amount
of $52,562.



As
of December 31, 2016, one of the convertible debentures is in default, however, the Company has not been served with a default
notice.



Stock
Options



As
at December 31, 2016, there were no outstanding stock options (December 31, 2015 – 33,334 stock options).



Significant
Accounting Policies



The
Annual Audited Consolidated Financial Statements for the year ended December 31, 2016 have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”)
and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”).



The
Significant Accounting Policies are detailed in Note 4 of the Company’s Annual Audited Consolidated Financial Statements
for the year ended December 31, 2016.



Off-Balance
Sheet Arrangements



The
Company does not have any off-balance sheet arrangements.



Trends



During
the last several years commodity prices have fluctuated significantly, and should this trend continue or should commodity prices
remain at current levels, then companies such as 37 Capital will have difficulty in raising funds and/or acquiring mineral properties
of merit at reasonable prices.



81









Related
Party Transactions



The
Company shares office space and certain employees with Jackpot Digital Inc. (“Jackpot”) and Green Arrow Resources
Inc. (“Green Arrow”), companies related by certain common key management personnel.



The
Company together with Jackpot and Green Arrow had entered into an office lease agreement with an arm’s length party for
office space effective as of August 1, 2014 for a one year period which was extended until July 31, 2016. The office lease agreement
has been further extended for a period of one year until July 31, 2017. Under the office lease agreement, the three companies
are required to pay a monthly base rent of $7,194 plus property and operating expenses for the leased premises. A lease deposit
of $10,000 has been made by Jackpot. As of December 1, 2016, Green Arrow is no longer required or obligated to pay its proportionate
share of the office rent.



The
amounts due to related parties are unsecured, payable on demand as at December 31, 2016 and 2015 consist of the following:



|                                                             |  | 2016 |         | 2015
|------------------------------------------------------------ |  | ---- | ------- | ----
|Advances
    from directors (interest at prime plus 1%)      |  | $    | 45,505  |     
|Entities
    controlled by directors (non-interest-bearing)* |  |      | 377,143 |     
|                                                             |  | $    | 422,648 |     

*Includes
promissory notes issued as part of the Plan of Arrangement



During
the years ended December 31, 2016, 2015 and 2014, the following amounts were charged by related parties.



|                                                               |  | 2016 |         | 2015 |  | 2014
|-------------------------------------------------------------- |  | ---- | ------- | ---- |  | ----
|Interest
    charged on amounts due to related parties         |  | $    | 978     |      |  | $   
|Rent
    charged by entities with common directors             |  |      | 28,298  |      |  |     
|Office
    expenses charged by an entity with common directors |  |      | 86,044  |      |  |     
|                                                               |  | $    | 115,320 |      |  | $   



The
remuneration of directors and key management personnel during the years ended December 31, 2016, 2015 and 2014 is as follows:



|                    |  | 2016 |        | 2015 |  | 2014
|------------------- |  | ---- | ------ | ---- |  | ----
|Management
    fees |  | $    | 35,000 |      |  | $   





82







On
January 6, 2015, the Company closed convertible debentures financing with two directors of the Company for the Principal amount
of $250,000. The convertible debentures have a maturity date of twelve months from the date of closing, and bear interest at the
rate of 12% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company
at a conversion price of $0.30 per share. The liability component of the convertible debentures was recognized initially at the
fair value of a similar liability that does not have an equity conversion option, which was calculated based on the application
of a market interest rate of 20%. The amount of $222,006 has been recorded under convertible debentures and the amount of $27,994
has been recorded under the equity portion of convertible debenture reserve. The Principal amount of $250,000 together with the
accrued interest of the convertible debentures became due and payable on January 6, 2016 (the “Due Date”). However,
on the Due Date the Company was unable to repay the Principal amount and the accrued interest to the two directors. As of the
date of this MD&A, the Company has not repaid to the two directors the Principal amount of $250,000 together with the accrued
interest. As of December 31, 2016, the convertible debentures are in default, however, the Company has not been served with a
default notice.



On
January 4, 2016, a director of the Company and a family member acquired 1,000,000 units of the Company at the price of $0.10 per
unit. For further particulars please see Liquidity and Capital Resources of this MD&A.



The
Company has an agreement for office support services with Jackpot. Under the agreement, the Company is entitled to receive office
support services from Jackpot at a monthly rate of $7,000 plus applicable taxes. The agreement expires April 30, 2017. The
agreement can be terminated by either party upon giving three months’ written notice.



The
Company had an agreement for management services (the “Management Services Agreement”) with Kalpakian Bros. of B.C.
Ltd. (“Kalpakian Bros.”), a private company owned by two directors of the Company whereby as of July 1, 2014 Kalpakian
Bros. provided management services to the Company at a monthly rate of $5,000 plus applicable taxes. Effective as of August 1,
2016, the Management Services Agreement has been terminated by mutual consent.



Jackpot
is related to the Company by virtue of the fact that Jackpot’s CEO and President, namely Jacob H. Kalpakian, is the President
& CEO of the Company, and the Chairman and CFO of Jackpot namely Bedo H. Kalpakian, is a director of the Company. Furthermore,
Gregory T. McFarlane and Neil Spellman, CFO of the Company, are directors of both the Company and Jackpot.



Green
Arrow is related to the Company by virtue of the fact that Green Arrow’s CEO and President, namely Jacob H. Kalpakian, is
the President & CEO of the Company, and the CFO of Green Arrow namely Neil Spellman, is the CFO of the Company. Furthermore,
Fred A.C. Tejada is a director of both the Company and Green Arrow.



FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT



| | (a) | Risk
                                         management overview
| | --- | -----------------------------------------------------------------



The
Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. This note
presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes
for measuring and managing risk, and the Company's management of capital. The Company employs risk management strategies and policies
to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the
Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the
responsibility to administer and monitor these risks.



The
fair values of cash, accounts payable and accrued liabilities and due to related parties approximate their carrying values due
to the short-term maturity of these instruments.



Fair
value hierarchy



IFRS
7 Financial Instruments: Disclosures requires classification of fair value measurements using a fair value hierarchy that
reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:



83









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

Level
2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly

Level
3: Inputs for assets or liabilities that are not based on observable market data.



The
Company’s cash, accounts payable and due to related parties are considered Level 1, convertible debentures and investments
are considered Level 2 and Level 3, respectively, of the fair value hierarchy.



| | (b) | Credit
                                         risk
| | --- | ----------------------------------------------------



Credit
risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations.



The
financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The
Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.



| | (c) | Liquidity risk
| | --- | --------------





Liquidity
risk is the risk that the Company will not be able to meets its financial obligations as they are due. The Company's approach
to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.



At
December 31, 2016, the Company had cash of $1,312 (2015 - $783) available to apply against short-term business requirements
and current liabilities of $1,170,027 (2015 - $836,510). All of the current liabilities, except for convertible debentures, are
due within 90 days. Amounts due to related parties are due on demand.



| | (d) | Market
                                         risk
| | --- | ----------------------------------------------------



Market
risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net
earnings or the value of financial instruments. As at December 31, 2016, the Company is not exposed to significant interest
rate risk, currency risk or other price risk on its financial assets and liabilities due to the short-term maturity of its financial
liabilities and fixed interest rate on the convertible debentures.



Analysis
of expenses



For
a breakdown of general and administrative expenditures, please refer to the Statements of Comprehensive Loss in the Company’s
Annual Audited Consolidated Financial Statements for the years ended December 31, 2016 and 2015.



Capital
Stock





|Authorized share capital: | Unlimited number of common
    shares without nominal or par value   
|------------------------- | ---------------------------------------------------------------------
|                          | Unlimited number of preferred shares without
    nominal or par value







84









|Outstanding
                                         Share Data                                      | No.
                                         of
        Common
        Shares | No.
                                         of
        Preferred
        Shares | Exercise
                                         Price
        per
        Share | Expiry
    Date                                         
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------
|Issued
                                         and Outstanding
        as
        at April 28, 2017 | 2,067,724                                                                     | Nil                                                                              | N/A                                                                               | N/A                                                     
|Warrants
                                         as at
        April
        28, 2017               | 1,000,000                                                                     | Nil                                                                              | Cdn
                                         $0.135                               | January
                                         4, 2021
|Agent’s
                                         Warrants as at
        April
        28, 2017       | 3,333                                                                         | Nil                                                                              | Cdn
                                         $1.50                                | July
                                         23, 2018  
|Fully
                                         Diluted as at
        April
        28, 2017          | 3,071,057                                                                     | Nil                                                                              |                                                                                   |                                                         



Director
Approval



The
contents of this MD&A and the sending thereof to the Shareholders of the Company have been approved by the Company’s
Board of Directors.



Outlook



Management’s
efforts are directed towards pursuing opportunities of merit for the Company, and Management is hopeful that, in due course, the
Company shall be able to acquire an opportunity of merit. However, there are no assurances whatsoever that Management’s
efforts shall succeed.



85









SIGNATURE
PAGE





Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements
for filing on Form 20-F (2016) and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.





|                    |  | 37 CAPITAL INC.                    
|------------------- |  | -----------------------------------
|                    |  |                                    
|Dated: May 11, 2017 |  | /s/ Jacob
    H. Kalpakian         
|                    |  | Jacob H Kalpakian                  
|                    |  | President & Chief Executive Officer





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