Document:

Exhibit 4.1

 

 

	
     

    QYOU Media
    Inc. 

     

	 

        

 

 

    ANNUAL INFORMATION
    FORM

     

    For the Fiscal
Period Ended

    December 31,
    2021

     

    

 

 

May 20, 2022

 

 

     

    -i- 

    

 

TABLE OF CONTENTS

 

	EXPLANATORY NOTES	1
	 	 	 
	CORPORATE INFORMATION	2
	 	 	 
	OUR BUSINESS	3
	 	 	 
	DESCRIPTION OF CAPITAL structure	9
	 	 	 
	DiVIDENDS AND DISTRIBUTIONS	11
	 	 	 
	Market for Securities	12
	 	 	 
	ESCROWED SECURITIES AND SECURITIES SUBJECT TO RESTRICTION ON TRANSFER	12
	 	 	 
	DIRECTORS AND OFFICERS	13
	 	 	 
	RISK FACTORS	18
	INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	29
	MATERIAL CONTRACTS	29
	LEGAL PROCEEDINGS and regulatory actions	29
	TRANSFER AGENT AND REGISTRAR	29
	INTEREST OF EXPERTS	29
	Additional Information	30

 

     

     

    

 

1

 

EXPLANATORY
NOTES

 

General

 

The fiscal year end of
QYOU Media Inc. is December 31. The Company previously had a year end of June 30, which was changed to December 31 in
February 2022.

 

The information in this Annual
Information Form is stated as at December 31, 2021, unless otherwise indicated.

 

Unless otherwise indicated
or the context otherwise requires, all references in this Annual Information Form to “QYOU”, “the Company”,
 “we”, “us”, “our”, and “our company” refer to QYOU Media Inc. and its predecessors and
material subsidiaries and all references to “$” or “dollars” are to Canadian dollars.

 

Forward-Looking Information

 

This Annual Information Form
contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information
may include, but is not limited to, statements with respect to future events and operating performance; estimates of future expenses,
revenue and profitability; market, social and economic trends affecting the Company’s financial condition and results of operations;
the future outlook of the Company, business plans and strategies; future product, channel and program launches and development; working
capital; the Company’s future cost structure; future demographic makeup and targets; future sales and marketing activities; the
availability and terms of additional capital; strategic partners; industry trends and the competitive
environment; and other factors referenced in this Annual Information Form, including those set forth under the heading “Risk
Factors” in this Annual Information Form.

 

Often, but not always, forward-looking
statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”,
 “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”
or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”,
 “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our
company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Those factors include, among others, general business, economic, competitive, political, regulatory and social uncertainties; as well
as those factors discussed in the section entitled “Risk Factors” in this Annual Information Form.

 

Readers
are cautioned that the foregoing list of factors and those contained elsewhere in this Annual Information Form are not exhaustive.
We have made certain assumptions used in the preparation of the forward-looking information, which include but are not limited to anticipated
events or results, business strategy and strategic goals, general business and economic conditions
including that financial markets will not be adversely impacted in the long term by the COVID-19 pandemic, the expected costs and
results of operations, projected costs and capital expenditures, the ability to raise additional capital as and when required, business
prospects, the impact of the introduction of new products, the ability of management to leverage sales opportunities, characteristics
of the industry, social, economic and demographic trends will continue as anticipated, business prospects, regulatory developments, research
and development activities, financial results, taxes, and plans and objectives of or involving the Company. Some of the assumptions used
in the preparation of this Annual Information Form, although considered reasonable by us at the time of preparation, may prove to be incorrect.

 

Although we have attempted
to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking
information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking statements contained in this Annual Information Form are made as of the date of this Annual Information Form and
we disclaim any obligation to update any forward-looking statements, whether because of new information, future events or results or otherwise,
except as required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate,
as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements due to their inherent uncertainty. All subsequent forward-looking statements, whether
written or oral, attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary
statements.

 

     

    2

    

 

Market Industry Data

 

The market and industry data
contained in this Annual Information Form is based upon information from independent industry and other publications and our knowledge
of, and experience in, the industry in which we operate. Market and industry data is subject to variations and cannot be verified with
complete certainty due to limits on the availability and reliability of raw data at any point in time, the voluntary nature of the data
gathering process or other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness
of this data are not guaranteed. We have not independently verified any of the data from third party sources referred to in this Annual
Information Form or ascertained the underlying assumptions relied upon by such sources. While we are not aware of any misstatements
regarding the market and industry data presented in this Annual Information Form, such data involves risks and uncertainties and is subject
to change based on various factors, including those factors discussed under “Forward-Looking Information” and “Risk
Factors” in this Annual Information Form.

 

CORPORATE
INFORMATION

 

Name and Organization

 

The full corporate name of
the Company is “QYOU Media Inc.” The Company was incorporated pursuant to the Business Corporations Act (Alberta) on
July 30, 1993 under the name “575161 Alberta Inc.” Effective March 13, 2017, the Company completed a reverse takeover
transaction under the policies of the TSX Venture Exchange (the “TSXV”) pursuant to which QYOU Media Holdings Inc.
became a wholly-owned subsidiary of the Company and the security holders of QYOU Media Holdings Inc. became security holders of the Company
(the “Transaction”). QYOU Media Holdings Inc. is the entity resulting from the amalgamation of QYOU Media Inc. (as
it was then called) and 2561287 Ontario Ltd. (then a wholly owned subsidiary of the Company) on March 13, 2017. In connection with
the Transaction, the Company also filed articles of amendment to change its name to “QYOU Media Inc.” and was continued into
Ontario on March 29, 2017 under the Business Corporations Act (Ontario). Subsequently, on March 31, 2017, the Company’s
common shares (the “Common Shares”) resumed trading on the TSXV under the symbol “QYOU”. Following the
Transaction, the Company now carries on the business of QYOU and its subsidiaries. On July 1, 2021, the Company amalgamated with
its subsidiary, QYOU Media Holdings Inc.

 

The
registered and head office of QYOU is located at 154 University Avenue, Unit 601, Toronto, ON M5H 3Y9.

 

Corporate Structure of QYOU

 

The following chart outlines
our corporate structure and identifies the jurisdictions of each of QYOU’s material subsidiaries as at December 31, 2021.

 

 

     

    3

    

 

OUR BUSINESS

 

General Development of the Business

 

QYOU operates in India and
the United States producing and distributing content created by social media stars and digital content creators. In India, through our
flagship brand, The Q India, and our broadcast and digital channels, The Q Marathi, The Q Kahaniyan and The Q Comedistaan,
we curate, produce and distribute premium content including television networks and video on demand (“VOD”) for cable
and satellite television, over-the-top (“OTT”) platforms, connected TVs and mobile platforms. In the United States,
we manage influencer marketing campaigns for major film studios, gaming companies and other consumer brands. Founded and created by industry
veterans from Lionsgate, MTV, Disney and Sony, QYOU’s millennial and Gen Z-focused content reaches more than one billion consumers
around the world. Experience our work at www.qyoumedia.com and www.theq.tv.

 

The Company’s India
business was built on a three-phase strategy: (i) build a product in the form of a linear channel and corresponding VOD offering that
features the best of short form content in India from sources including YouTube, Facebook, Instagram, SnapChat, Chingari and other sources;
(ii) use that product to secure distribution across major television, OTT and mobile partnerships; and (iii) use that distribution and
increased viewership associated with it to drive ad revenues. With respect to Phase 1, the Company currently has secured licenses and
created original shows representing over 1,200 hours of programming from top digital creators and social stars in India. In connection
with Phase 2, the Company now has partnerships in TV with TATA Sky, AirtelDTH, DD Free Dish and SitiNetworks along with other major cable
and satellite television providers. OTT partnerships include MX Player, DishWatcho and ShemarooMe.s. On the mobile side, the Company has
established partnerships with Jio Mobile and Airtel, the two largest mobile providers in India. The commencement of Phase 3 began in late
2020 and accelerated in 2021 when the Company signed ad sales orders with 50 new major advertisers including Amazon, Coca Cola, Facebook,
Google, Airtel, Britannia and FlipKart. Revenue across the Company grew significantly because of this and increased from approximately
$300,000 in Q1 2021 to over $5.6 million in Q4 2021.

 

Prior to COVID-19, the Company’s
US influencer marketing business primarily involved booking customers to use influencers to promote the launch of major theatrical motion
pictures in the United States. With the closure of theaters due to COVID-19, this group pivoted into several new areas of business including
premium VOD (replacing theatrical with major studio releases going direct to consumer), subscription VOD and retail/apparel. Management
believes the Company’s influencer marketing business is well-positioned to grow as brands rely more heavily on influencers to reach
their target audience of millennials and Gen-Z.

 

Three Year History

 

On September 20, 2018,
QYOU Media India Private Ltd. (“QYOU India”) was incorporated to serve the rapidly growing Indian market focusing on
social video and digital creator-driven content offerings targeted at the youth of India. The Company acquired an 82% ownership interest
of QYOU India while the remaining 18% ownership interest was held by non-controlling shareholders.

 

On June 1, 2020, the
Company increased its interest of QYOU India from 82% to 88% in exchange for funding the operations of QYOU India since its inception,
resulting in a decrease of the ownership interest held by non-controlling shareholders from 18% to 12%.

 

On May 31, 2021, the
Company entered into a share purchase agreement (the “Purchase Agreement”) with Chatterbox Technologies Private Limited (“Chtrbox”),
an influencer marketing company based in India, to acquire 100% of its outstanding common shares over a period of three years (the “Chtrbox
Acquisition”). On June 14, 2021, the Company acquired 97% of the issued and outstanding common shares of Chtrbox. As part of
the Chtrbox Acquisition, Pranay Swarup and Julie Kriegshabar continued to act as Chief Executive Officer and Chief Operating Officer of
Chtrbox, respectively.

 

On July 1, 2021, the
Company amalgamated with its subsidiary, QYOU Media Holdings Inc.

 

     

    4

    

 

Impact of COVID-19 on the Company

 

The Company’s immediate
priorities when the COVID-19 pandemic hit was to address the health and safety of its staff and stakeholders and adjust its operations
to the new reality. The Company’s influencer marketing division was materially negatively affected by the immediate closure of movie
theaters in March of 2020. Several influencer marketing contracts for scheduled theatrical motion pictures were canceled, which resulted
in a loss of revenues for the third and fourth quarter for the year ended June 30, 2020. In March 2020, The Q India received
its first material advertising purchase order for approximately US$75,000, which was put on hold pending the end of India’s lockdown.
The Company has moved past these issues from the initial challenges created by the onslaught of the pandemic.

 

The Company has not experienced
a material effect on business operations over the last 6-9 months from the date of this Annual Information Form due to COVID-19.
For the most part, advertisers in India are back to a more normalized state of advertising and the theatrical movie business has returned
to North America. While the future effect of COVID-19 is uncertain, the Company believes it has adjusted and is as prepared as it can
be for any subsequent changes that may be caused via additional outbreaks in the future.

 

The Company has experienced
a growth in viewership on its television channel in India as measured by BARC (Broadcast Audience Research Council). Management believes
the increased viewership could continue in 2022 and drive an increase in ad sales associated with broadcast distribution as measured by
BARC. In addition, with the launch of new digital channels on connected TVs, OTT and mobile platforms the Company continues to see continued
growth in viewership which it also expects will generate increasing ad sales.

 

Financings

 

On October 30, 2019,
the Company completed the final tranche of an offering of an aggregate of 36,000,000 units of the Company as part of a non-brokered private
placement at a price of $0.05 per unit, for aggregate gross proceeds of $1,800,000. Each unit was comprised of one Common Share, one-half
of one Common Share purchase warrant exercisable to purchase one Common Share at a price of $0.06 per share until September 30, 2020
(a “6 Cent Warrant”) and an additional one-half of one Common Share purchase warrant exercisable to purchase one Common
Share at a price of $0.10 per share until September 30, 2021. Additionally, the Company issued a total of 2,266,000 compensation
options exercisable into units at a price of $0.05 per unit until September 30, 2021 as compensation to certain finders in connection
with the offering. On September 14, 2020, the Company extended the term of the 6 Cent Warrants from September 30, 2020 to October 30,
2020.

 

On February 11,
2020, the Company completed an offering of 6,000,000 units of the Company as part of a non-brokered private placement at a price of
$0.06 per unit, for gross proceeds of $360,000. Each unit was comprised of one Common Share and one Common Share purchase warrant.
Each warrant entitled the holder to acquire one Common Share at a price of $0.08 per share until February 11, 2022.
Additionally, the Company issued a total of 420,000 compensation options exercisable into units at a price of $0.06 per unit until
February 11, 2022 as compensation to certain finders in connection with the offering.

 

On July 14, 2020, the
Company completed the final tranche of an offering of an aggregate of 60,666,399 units of the Company as part of a non-brokered private
placement at a price of $0.03 per unit, for aggregate gross proceeds of $1,819,992. Each unit was comprised of one Common Share and one-half
of one Common Share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share at a price of $0.05 per share
until June 30, 2022. Additionally, the Company issued a total of 5,549,973 compensation options exercisable into units at a price
of $0.05 per unit until June 30, 2022 as compensation to certain finders in connection with the offering.

 

On February 25, 2021,
the Company completed a short form prospectus offering on a bought deal basis and issued 41,071,560 units of the Company at a price of
$0.28 per unit, for aggregate gross proceeds of $11,500,037. Each unit was comprised of one Common Share and one-half of one Common Share
purchase warrant. Each whole warrant entitles the holder to acquire one Common Share at a price of $0.45 per share until February 25,
2023. Additionally, the Company issued a total of 3,285,724 compensation options exercisable into units at a price of $0.28 per unit until
February 25, 2023 as compensation to the underwriters in connection with the offering.

 

     

    5

    

 

On
August 16, 2021, Brand Capital International (“BCI”), the strategic investment arm of Bennett, Coleman &
Co. Ltd. (d/b/a The Times of India Group), completed an initial investment of US$2,000,000 ($2,527,000) in Common Shares at
a price of $0.32 per Common Share, for a total issuance of 7,896,875 Common Shares. In addition to the issuance of Common Shares,
the Company also granted BCI a right exercisable between January 1, 2022 and March 31, 2022 to purchase a further US$2,000,000
of Common Shares at a price equal to the greater of: (i) $0.42 per Common Share and (ii) a discounted price based on the volume
weighted-average price of the Common Shares on the TSXV.

 

Director and Management Changes

 

Effective March 30, 2020,
Kyle Sonia resigned as Senior Vice President of Production of QYOU USA Inc. (“QYOU USA”).

 

Effective April 28, 2021,
Simran Hoon was appointed Chief Executive Officer of QYOU India.

 

Following the Chtrbox Acquisition
on May 31, 2021, Pranay Swarup and Julie Kriegshabar continued to act as Chief Executive Officer and Chief Operating Officer of Chtrbox,
respectively.

 

Effective November 22,
2021, Glenn Ginsburg was appointed President of QYOU USA.

 

Description of the Business

 

QYOU operates in India and
the United States producing and distributing content created by social media stars and digital content creators. In India, through our
flagship brand, The Q India, and our broadcast and digital channels, The Q Marathi, The Q Kahaniyan and The Q Comedistaan,
we curate, produce and distribute premium content including television networks and VOD for cable and satellite television, OTT platforms
and mobile platforms. In the United States, we manage influencer marketing campaigns for major film studios and brands. Founded and created
by industry veterans from Lionsgate, MTV, Disney and Sony, QYOU’s millennial and Gen Z-focused content reaches more than one billion
consumers around the world. Experience our work at www.qyoumedia.com and www.theq.tv.

 

In India, the Company targets
the country’s youth population who are among the largest users of social media platforms such as Facebook, WhatsApp and Instagram.
The Company will continue to target India’s youth who will be an essential part of the Company’s growth in India. In addition,
both The Q India and the US influencer marketing division of the Company rely on “influencers” to drive its growth.
Influencer marketing is a rapidly growing segment for all advertisers globally with projected global revenues growing from $9.7 billion
in 2020 to $16.4 billion in 2022.

 

As further described below,
the Company’s two principal operating business units are comprised of QYOU India with headquarters in Mumbai, India and QYOU USA,
which operates out of Los Angeles, California.

 

In 2021, the Company wound
down its operations in Ireland and ceased production work in Canada to focus its business operations in India and the United States. In
Ireland, the Company primarily operated channel and content distribution efforts in Europe, which were terminated as of Q1 2021. In Canada,
revenues were generated from the Company’s Canadian production entity which produced an esports series titled “Heads Up Daily”
(“HUD”). The Company has ceased all production and distribution of HUD and does not anticipate it will resume in the near
future. The Company’s Canadian production will remain active in the event other productions take place in Canada in the future.

 

Principal Products and Services

 

We have two operating segments,
as described below:

 

		1.	India: QYOU Media India Pvt. Ltd. and Chatterbox Technologies Private Limited 

 

QYOU India operates a group of broadcast and digital channels across
India targeting young Indian audiences. All channels are advertiser -supported and deliver hit digital programming from leading social
media stars and digital video creators targeting young Indian audiences. With a
growing library of over 1,200 programs, QYOU India’s channels now reach an audience of over 800 million via 140 million television
homes with partners including TATA Sky, Airtel DTH & SitiNetworks; 380 million OTT users via platforms including ShemarooMe, MX Player
and Dish Watcho; and 300 million users on mobile and digital platforms including JioTV, Airtel Xstream, and SNAP. QYOU India has also
added a growing number of users on connected TVs via distribution agreements with Amazon Fire TV, Samsung TV Plus, Xiaomi Patchwall and
Cloud TV.

 

     

    6

    

 

India Channels Business Unit:

 

This business unit targets
two primary core distribution channels with both a 24/7 linear streaming channel and via VOD (on demand) content offerings. All channels
are ad -supported for revenue generation and include direct sales for ads on the broadcast networks and programmatic served ads with a
revenue share with distribution partners on the digital channels.

 

Broadcast
Channels: QYOU India’s flagship channel, The Q, is a Hindi language channel and we have also newly launched the
vernacular channel, The Q Marathi (for native Marathi speakers). Both channels feature content from top digital creators and social
media stars.

 

Digital
Channels (Connected TV): Includes all-animation channel, The Q Kahaniyan, and all -comedy channel, The Q Comedistaan.
B channels feature content from top digital content creators and social media stars.

 

Both broadcast and digital
channels have extensively contracted with dozens of companies with respect to distribution, content licensing/content creation and advertising.
The Company continues to expand its operations in India through growth of all four channels and anticipates more channels will be launched
in the future.

 

Chtrbox Influencer Marketing Business
Unit (India):

 

Chtrbox is among the leading
influencer marketing businesses in India and operates as a standalone business unit. Increasingly, both the QYOU India channels sales
unit and the Chtrbox sales unit are working on integrated sales efforts via a platform called “Bharatbox”. This 360-degree
full-integrated ad offering from television ads through digital and influencer -led campaigns is a primary growth initiative of the combined
companies going forward. Chtrbox has experienced steady and continuous revenue growth and management believes the Company is well-positioned
for this to continue with further sales integration between the companies along with continued importance for brands to use influencers
for their marketing campaigns.

 

With the combination of the
QYOU India and Chtrbox businesses, the Company currently employs approximately 125 people in India.

 

		2.	USA: QYOU USA Influencer Marketing:

 

QYOU’s
US-based, award-winning influencer marketing business unit has become one of the foremost
authorities on brand engagement on popular short form entertainment platform, TikTok. QYOU
USA’s client portfolio includes Universal Pictures, CAPCOM, 20th Century Fox, Sony Pictures, DreamWorks, Warner Brothers, Paramount
and other leading entertainment and gaming companies. Glenn Ginsburg, who leads the business unit and has played a seminal role for over
a decade in the evolution of the business models that now shape the “Creator Economy”, is responsible for all overall aspects
of the business including sales, operations, talent, creative and business development.

 

Influencer
marketing is often used by brands looking to connect with predominantly Millennial (born between the 1980s and early 2000s) and
Gen-Z (born between the late 1990s or early 2000s and the late 2010s) audiences. Influencer marketing campaigns are typically contracted
with campaigns featuring guaranteed views and engagement rates. The QYOU USA business unit has a consistent track record of delivering
on these KPIs and this has resulted in a growth trajectory, which management believes could continue in 2022 and beyond.

 

     

    7

    

 

Production and Services

 

QYOU
currently retains approximately 110 full-time employees and 40 full-time contractors who help curate, license, catalog, package
and distribute short-form content in India and the United States. QYOU has successfully achieved revenue-generating businesses via this
effort in the two major revenue categories outlined above.

 

QYOU maintains strong relationships
in India and the United States with the creative content community, the technology community and the investment community based upon the
work of the Company’s management and board of directors (the “Board”) in each of these areas.

 

At
present, QYOU has contracted with dozens of different companies in India and the United States with customer reach to over 800
million consumers worldwide.

 

New Products

 

QYOU intends to increase its
customer base and expand its service offering to existing and new customers. The Company is developing several new products and direct-to-consumer services that will leverage many of the distributed networking and “Web 3” technologies in an effort to drive
user engagement and monetization in the future.

 

QYOU India has already begun
to develop two new digital channels which are expected to drive this transition. In addition, the direct-to-consumer activity of what
is now known as “social commerce”, the direct transactional relationship between influencers and their communities to sell
products and services is a significant growth initiative in the company.

 

Specialized Skill and Knowledge

 

QYOU’s senior management
is composed of experienced and knowledgeable professionals in operations, finance, technology, marketing, production and sales, all of
whom have garnered extensive industry experience prior to joining the Company.

 

We provide unique content,
distribution and marketing services, managed by award-winning experts who adapt to the tastes and trends of young viewers in order to
create a unique user experience. The trend of curating social video allows the viewer to feel more connected to the content, therefore
providing a more enjoyable and tailored experience. As a result, management is of the view that content curation expertise leads to stronger
relationships with viewers, who will become increasingly engaged in its product offerings. Management believes that QYOU’s product
offerings demonstrate that it has its viewers’ best interests in mind and this, in turn, is expected to strengthen customer and
brand loyalty.

 

Additionally, the Company
has developed experience in launching and operating high quality but low-cost local language channels driven by the Company’s operations
and channels operated in India. QYOU intends to continue to expand this capability in India going forward to launch new broadcast and
digital vernacular channels in the India market in the future.

 

Marketing Plans and Growth Strategies

 

Management believes the Company
is well-positioned for its India presence to continue to grow. QYOU is building brand awareness through digital marketing, television/media
advertising and trade marketing. Given the scale, scope and reach of QYOU’s operations, we believe we will be able to leverage the
Company’s services into new ad sales platforms and technologies.

 

In the long term, QYOU plans
to aggressively continue working to grow its social video business. QYOU believes that this goal can be achieved by expanding and diversifying
its India client and partner base, particularly through the development of new products and digital platforms, and via the pursuit of
strategic partnerships.

 

     

    8

    

 

Key elements of our growth
strategy include:

 

		a)	localization of content and partnerships in India in other large language segments;

 

		b)	high impact/low-cost productions leveraging our content, production assets and distribution footprint;

 

		c)	integration of brands and advertisers more directly into the content offerings;

 

		d)	growing distribution reach throughout fiscal 2022; and

 

		e)	development of new technologies and direct to consumer products that leverage “Web 3” technologies.

 

Competitive Conditions

 

The different types of companies
that operate in and around the business of QYOU include:

 

		1.	Major established platforms with social videos:

 

This includes Youtube, Facebook, Instagram,
SNAP, TikTok and other large-scale video based social platforms. Management believes their model and strategy is quite different from
our own.

 

		2.	Aggregators:

 

These businesses have some similarities
to those of major platforms and QYOU in that they are curating “best-of-web” content. These types of content aggregators generally
focus on subject-based categories (such as sports, pranks, comedy or fashion) and are in the business of licensing that content to advertisers,
content producers and in some cases, even for the creation of their own shows. As noted above, with respect to major platforms, many of
these aggregators are licensing content directly to QYOU for distribution as well.

 

		3.	Program producers:

 

There are numerous companies creating
television series based on web content (Tosh.0, Ridiculousness, Fail Army and others) that feature content generally sourced from YouTube
and the internet. These companies tend to produce programs in the areas of comedy (prank/fail videos) and are generally more traditional
television production company models where a fee is paid for the programming by the network who is commissioning it.

 

		4.	Software-Driven Programmers/Aggregators:

 

There are several companies that rely
primarily on software to produce content drawn from internet video sources. These companies (e.g. Frequency Networks, Pluto TV) have established
significant distribution and content partnerships and often surface as direct competitors for QYOU.

 

While each of these companies
on an individual basis can be involved in activities that are similar in nature to QYOU, they are not directly in the same business, which
is supported by the fact that QYOU works with and licenses content directly from many of them, including companies that are among the
most prominent in their respective business areas. It is possible that a company could emerge with a business model directly competitive
with QYOU; however, there are none that QYOU is aware of to date with QYOU’s complete model of curation, licensing, and packaging
content for an Indian audience.

 

The Company
faces competition in its pursuit to acquire additional content, which may reduce the amount of content that it is able to acquire or
license and may lead to higher acquisition prices. Increased competition for the acquisition of digital rights to made-for-web video
may result in a reduction in operating margins and may adversely impact the Company’s ability to distinguish itself from
competitors by virtue of its video library. Additionally, see the information under the heading “Risk Factors - The Company
faces competition from other content providers and that competition is likely to increase over time” with respect to the
competitive conditions QYOU encounters while engaging in its principal business activities.

 

Intangible Properties

 

In management’s view,
QYOU has a growing valuable asset in its library of channels and curated premium social video content. QYOU has also secured “Q
India” as a trademark and brand in India.

 

     

    9

    

 

Economic Dependence

 

The Company’s business
is not substantially dependent upon any one contract, but in the six months ended December 31, 2021, a contract with Mindshare Fulcrum
was significant to its revenues.

 

For the six months ended December 31,
2021, the Company’s top ten customers represented approximately 56% of sales, with three customers representing 40% of sales. See
 “Risk Factors”.

 

Foreign Operations

 

The Company operates in two
foreign geographical areas, being the US and India. As at December 31, 2021, the Company had five subsidiaries that were incorporated
in foreign jurisdictions, being QYOU India, Chtrbox and QYOU USA, QYOU Limited and QYOUTV International Limited. QYOU Limited and QYOUTV
International Limited are not currently active. Each of the remaining foreign corporations operate within the same segment of content
curation and distribution as the Company. The Company owns an 88% interest in QYOU India and a 97% interest in Chtrbox.

 

QYOU India was incorporated
under the laws of India to serve the rapidly growing Indian media market. QYOU India is involved in all distribution of The Q India
and other Q India branded programming across traditional cable & satellite, mobile and OTT distribution partners.

 

Chtrbox, an influencer marketing
company based in India, became a subsidiary of the Company in connection with the Chtrbox Acquisition. For more information on the Chtrbox
Acquisition, please see “Three Year History” above.

 

QYOU Limited is incorporated
under the laws of the Republic of Ireland and is no longer active.

 

QYOUTV International Limited
is no longer active. It was incorporated under the laws of the Republic of Ireland. In February 2015, QYOUTV International Limited
entered into a content provision contract with the Broadcasting Authority of Ireland (the “Content Provision Contract”),
which allows QYOUTV International Limited to broadcast its programs within a specified geographical area. On July 14, 2015, QYOUTV
International Limited was acquired by QYOU Limited in connection with the Asset Purchase, and the Content Provision Contract was subsequently
assigned to QYOU Limited.

 

QYOU USA was incorporated
under the laws of the State of Delaware. QYOU USA is involved in the business of influencer marketing.

 

DESCRIPTION
OF CAPITAL structure

 

Share Capital

 

Our authorized share capital
currently consists of an unlimited number of First Preferred Shares, Second Preferred Shares and Common Shares. On December 31, 2021,
there were 401,394,314 Common Shares, nil First Preferred Shares and nil Second Preferred Shares issued and outstanding. As at December 31,
2021, the Company also had issued and outstanding (i) Common Share purchase warrants to acquire an aggregate of up to 35,660,575
Common Shares; (ii) compensation options to acquire an aggregate of up to 4,140,899 units of the Company; (iii) Stock Options
(as hereinafter defined) to acquire an aggregate of up to 35,779,654 Common Shares; and (iv) 17,949,993 RSUs (as hereinafter defined).

 

As
at the date hereof, the Company has the following securities issued and outstanding: (i) 408,293,807 Common Shares; (ii) nil First
Preferred Shares; (iii) nil Second Preferred Shares; (iv) Common Share purchase warrants to acquire an aggregate of up to 33,048,584
Common Shares; (v) compensation options to acquire an aggregate of up to 4,146,306 units of the Company; (vi) Stock Options (as hereinafter
defined) to acquire an aggregate of up to 33,712,053 Common Shares; and (iv) 14,183,321 RSUs (as hereinafter defined).

 

     

    10

    

 

First Preferred Shares, Second Preferred Shares and Common Shares

 

The First Preferred Shares
and the Second Preferred Shares may be issued from time to time in one or more series. The First Preferred Shares of each series rank
equally with the First Preferred Shares of every other series and are entitled to preference over the Second Preferred Shares, the Common
Shares and the shares of any other class ranking junior to the First Preferred Shares with respect to the payment of dividends and the
distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any
other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs (any such dividend or
distribution, a “Distribution”). Subject to the rights of the holders of the First Preferred Shares, the Second Preferred
Shares of each series rank equally with the Second Preferred Shares of every other series and are entitled to preference over the Common
Shares and shares of any other class ranking junior to the Second Preferred Shares with respect to a Distribution.

 

Each of the Common Shares
entitles the holder thereof to receive notice of, attend and vote at all meetings of the shareholders of the Company, and each Common
Share confers the right to one vote at all such meetings. Subject to the rights of the holders of First Preferred Shares and Second Preferred
Shares and any other class of shares ranking senior to the Common Shares, the holders of Common Shares are entitled to receive and participate
rateably in any Distribution of the assets of the Company to all shares at the time outstanding.

 

Holders of First Preferred
Shares, Second Preferred Shares and Common Shares have no pre-emptive rights, conversion rights or rights of redemption in connection
with such shares.

 

As at December 31, 2021,
there were 401,394,314 Common Shares, nil First Preferred Shares and nil Second Preferred Shares issued and outstanding. As of the date
hereof, the Company has 408,293,807 Common Shares, nil First Preferred Shares and nil Second Preferred Shares issued and outstanding.

 

Warrants

 

As at December 31, 2021,
Common Share purchase warrants to acquire an aggregate of up to 35,660,575 Common Shares were issued and outstanding. Of such Common
Share purchase warrants, (i) 2,249,990 were each exercisable to acquire one Common Share at a price of $0.08 until February 11,
2022; (ii) 12,849,804 were each exercisable to acquire one Common Share at a price of $0.05 until June 30, 2022; and (iii) 20,560,780
were each exercisable to acquire one Common Share at a price of $0.35 until February 25, 2023.

 

As at the date hereof, the
Company has Common Share purchase warrants to acquire an aggregate of up to 33,048,584 Common Shares issued and outstanding.

 

Compensation Options

 

As at December 31, 2021,
4,140,899 compensation options were issued and outstanding, of which (i) 17,500 were exercisable at a price of $0.06 per unit until
February 11, 2022, each such unit comprised of one Common Share and one Common Share purchase warrant exercisable to purchase one
Common Share at the price of $0.08 per share; (ii) 910,582 were exercisable at a price of $0.05 per unit until June 30, 2022,
each such unit comprised of one Common Share and one-half of one Common Share purchase warrant exercisable to purchase one Common Share
at a price of $0.05 per share; and (iii) 3,235,724 were exercisable at a price of $0.28 per unit until February 25, 2023, each
such unit comprised of one Common Share and one-half of one Common Share purchase warrant exercisable to purchase one Common Share at
a price of $0.45 per share.

 

As at the date hereof, the
Company has compensation options to acquire an aggregate of up to 4,146,306 units of the Company issued and outstanding.

 

Stock Options

 

QYOU has established rolling
stock option plan (the “Stock Option Plan”), which plan provides that the Company’s Board may from time to time,
in its discretion, grant to directors, officers, employees and consultants of the Company, or any subsidiary of the Company, options to
purchase Common Shares (the “Stock Options”). The Stock Option Plan permits the Board to grant Stock Options to purchase
up to ten percent (10%) of the number of Common Shares issued and outstanding at the date of the Stock Option grant.

 

     

    11

    

 

The Stock Option Plan provides
for a floating maximum limit of Stock Options to purchase ten percent (10%) of the outstanding Common Shares, as permitted by the policies
of the TSXV, provided that the number of Common Shares reserved for issuance under the Stock Option Plan in combination with the aggregate
number of Common Shares issuable under all of the Company’s other equity incentive plans in existence from time to time, including
the RSU Plan (as hereinafter defined), shall not exceed 20% of the issued and outstanding Common Shares. As at December 31, 2021,
Stock Options to purchase an aggregate of up to 35,779,654 Common Shares were held by directors, officers, employees and consultants
of the Company.

 

As at the date hereof, the
Company has Stock Options to acquire an aggregate of up to 33,712,053 Common Shares issued and outstanding.

 

Restricted Share Units

 

QYOU
has established an amended and restated restricted share unit plan (the “RSU Plan”), which plan permits the Board
to grant restricted share units (“RSUs”) to its senior officers, directors, employees, and consultants as a discretionary
payment in consideration for significant contributions to the long-term success of the Company. As of the date hereof, in accordance
with the policies of the TSXV, a maximum of 26,155,604 Common Shares are reserved for issuance pursuant to the redemption of RSUs granted
under the RSU Plan. As at December 31, 2021 there were 17,949,993 RSUs issued and outstanding.

 

As at the date hereof, the Company has 11,972,283
RSUs issued and outstanding.

 

For
additional details regarding our share capital as well as our issued and outstanding Common Shares, Common Share purchase warrants, compensation
options, Stock Options and RSUs, please see the notes to our consolidated financial statements for the fiscal period ended December 31,
2021 and years ended June 30, 2021 and June 30, 2020, copies of which are available for review under the company’s SEDAR
profile at www.sedar.com.

 

DiVIDENDS
AND DISTRIBUTIONS

 

Our Dividend Policy

 

Subject to the solvency restrictions
in the Business Corporations Act (Ontario) and applicable TSXV rules, there are no other restrictions in the Company’s articles
or elsewhere that would prevent the Company from paying dividends. When and if issued, each First Preferred Share will rank equally with
all other First Preferred Shares and will be entitled to preference over all Second Preferred Shares and Common Shares with respect to
the payment of dividends. Similarly, if and when issued, each Second Preferred Share will rank equally with all other Second Preferred
Shares and will be entitled to preference over all Common Shares with respect to the payment of dividends. Subject to the rights of the
holders of any outstanding First Preferred Shares and Second Preferred Shares, all the Common Shares are entitled to an equal share in
any dividends declared and paid. There are currently no First Preferred Shares or Second Preferred Shares outstanding. It is anticipated
that all available funds of the Company will be invested to finance the growth of our business and, accordingly, it is not contemplated
that any dividends will be paid in the immediate or foreseeable future. Our Board will determine if, and when, dividends will be declared
and paid in the future from funds properly applicable to the payment of dividends based on our financial position at the relevant time.
See “Risk Factors - Dividends are Discretionary”.

 

Dividends and Distributions

 

The Company has not declared
or paid any cash dividends or distributions on our outstanding Common Shares within the fiscal period ended December 31, 2021 and
years ended June 30, 2020 and June 30, 2020.

 

     

    12

    

 

Market
for Securities

 

Trading Price and Volume

 

The Common Shares trade over
the facilities of the TSXV under the symbol “QYOU”. The following table sets forth the range of high and low prices per Common
Share and total monthly volumes of shares traded on the TSXV for the fiscal period ended December 31, 2021.

 

	 	 	Price per Common Share	 	 	 	 
	Month	 	High	 	 	Low	 	 	Total Volume	 
	July 2021	 	$	0.355	 	 	$	0.28	 	 	 	10,008,960	 
	August 2021      	 	$	0.29	 	 	$	0.25	 	 	 	6,766,455	 
	September 2021	 	$	0.335	 	 	$	0.23	 	 	 	10,280,191	 
	October 2021	 	$	0.31	 	 	$	0.25	 	 	 	5,761,385	 
	November 2021	 	$	0.305	 	 	$	0.25	 	 	 	7,254,410	 
	December 2021	 	$	0.26	 	 	$	0.20	 	 	 	8,757,443	 

 

Source: TMXMoney.com.

 

Prior Sales

 

Other than as set forth below,
we did not issue any securities in the fiscal period ended December 31, 2021 that were not listed on the TSXV.

 

	Date of Issuance	 	Number of Securities Issued	 	 	Securities Issued	 	Price Per Security / Exercise Price	 	 
	November 22, 2021	 	 	3,150,000	 	 	RSUs(1)	 	 	N/A	 (2) 	 
	November 22, 2021	 	 	3,425,000	 	 	Stock Options(3)	 	$	0.275	 	 

 

Notes:

 

		(1)	RSUs issued to directors, employees and consultants of the Company pursuant to the RSU Plan.

		(2)	Upon vesting, each RSU automatically entitles the holder thereof to one Common Share.

		(3)	Stock Options issued to directors, employees and consultants of the Company pursuant to the Stock Option
Plan exercisable until November 22, 2026.

 

ESCROWED
SECURITIES AND SECURITIES SUBJECT TO RESTRICTION ON TRANSFER

 

As of the date hereof, to
the Company’s knowledge, there are no Company securities held in escrow or that are subject to a contractual restriction on transfer.

 

     

    13

    

 

DIRECTORS
AND OFFICERS

 

Directors and Officers 

 

The information below
relating to the current directors and officers of the Company is based on information received by the Company from such directors and
officers. The following table sets out, for each of our directors and executive officers, the person’s name, province or state,
and country of residence, position with our company, principal occupation for the last five years and the number of Common Shares beneficially
owned, or over which control or direction is exercised, directly or indirectly, as at the date hereof. The term of office for each of
our directors will expire at the time of the next annual meeting of our shareholders or until his or her successor is duly elected or
appointed pursuant to the by-laws of the Company. As at the date hereof, our current directors and executive officers as a group beneficially
owned, or controlled or directed, directly or indirectly, an aggregate of up to 37,543,686 Common Shares representing approximately 9.20%
of our issued and outstanding Common Shares.

 

	Name and Place of Residence	Position with QYOU and Date First Appointed to the Board (if applicable)	Principal Occupation and Positions During the Last Five Years	Number and Percentage of Common Shares Beneficially Owned or Controlled(1)
	
    Curt Marvis

    California, USA
	
    Chief Executive Officer,

    Director

    (March 13, 2017)
	Chief Executive Officer (formerly Co-Chief Executive Officer) of QYOU Media Inc. since December 2016. President of QYOU Media Holdings Inc. (formerly “QYOU Media Inc.”) since June 2015. Prior thereto, President of Digital Media at Lions Gate from April 2008 to June 2013. 	
    4,966,667

    1.22%

	
    Kevin Williams

    Ontario, Canada
	Chief Financial Officer	Chief Financial Officer of Coreio Inc. since May 2020. Prior thereto, Managing Partner and Chief Financial Officer of Paterson Partners from December 2018 to April 2020; Vice President of Enterprise Commercial Strategy at Rogers Communication from May 2016 to July 2017 and Business Planning and Board Management at Rogers Communication from June 2014 to May 2016.	
    1,306,950

    0.32%

	
    Steven Beeks

    California, USA
	
    Director

    (November 1, 2018)
	Currently an entertainment consultant and previously the Chief Operating Officer and President, Motion Picture Group of Lions Gate.	
    680,577
    (2)

    0.17%

	Damian Lee(3) 

Ontario, Canada 	
    Director

    (May 3, 2017)
	Has been a director, writer and producer in the film and television industry for over thirty years.	
    871,666

    0.21%

	G. Scott Paterson(3)

Ontario, Canada	
    Chairman of the Board,

    Director

    (March 13, 2017)
	President, Paterson Partners, a venture capital entity focused on media and Fintech since 2002. 	
    28,689,492(4)

    7.03%

	
    Catherine Warren(3)

    British Columbia,

    Canada

     
	
    Director

    (March 13, 2017)
	
    President of FanTrust Entertainment Strategies since
    2001.

     

    Chief Executive Officer of Innovate Edmonton since
    December 2020.

     

    Chief Executive Officer of Vancouver Economic Commission
    2018-2020.
	
    1,028,334

    0.25%

 

Notes:

 

		(1)	Percentages
are based on 408,293,807 Common Shares issued and outstanding as the date hereof. Information
as to the number of Common Shares beneficially owned, or over which control or direction is exercised, directly or indirectly, not being
within the direct knowledge of the Company, has been furnished by the respective directors individually or obtained from the System for
Electronic Disclosure by Insiders and may include Common Shares owned or controlled by spouses and/or children of such individuals and/or
companies controlled by such individuals or their spouses and/or children.

		(2)	297,243
                                            of such Common Shares held in the name of Beeks Revocable Trust, over which Mr. Beeks exercises
                                            control.

		(3)	Member of the Audit Committee.

		(4)	2,939,764
                                            of such Common Shares held in the name of Patstar Inc., a company controlled by Mr. Paterson.

 

     

    14

    

 

Biographical information regarding the foregoing
is set forth below.

 

Biographies of Directors and Executive Officers 

 

Curt Marvis

 

Curt Marvis is the Chief Executive
Officer of the Company and Co-Founder of QYOU, is employed full time with the Company and is responsible for day-to-day business operations
including strategy, marketing initiatives, financing and developing key industry partnerships.

 

Mr. Marvis previously
served as Lionsgate’s President of Digital Media, helping the company evolve into a leading next-generation film entertainment studio.
Reporting to Lionsgate’s top management team, Mr. Marvis was responsible for guiding the company’s portfolio of digital
businesses including Lionsgate’s broad spectrum of digital delivery agreements for its filmed entertainment content. In addition,
Mr. Marvis successfully launched original content channels on YouTube, original series in partnership with Hulu and Machinima and
several social and mobile games based on iconic Lionsgate properties such as Dirty Dancing and Weeds.

 

Prior to joining Lionsgate,
Mr. Marvis was Co-Founder and Chief Executive Officer of CinemaNow Inc., a leader in digital distribution and technology with investors
including Microsoft Corporation, Cisco Systems, Lionsgate, Dish Network Corp and Menlo Ventures.

 

Mr. Marvis previously
served as President of publicly held game developer 7th Level, Inc. (Nasdaq: SEVL), leading its successful restructuring into delivery
of web-based technology applications. At 7th Level, he helped create and implement leading web-based business partnerships with Microsoft,
Real Networks, GeoCities, broadcast.com, IBM and MTV and helped orchestrate a merger to create Learn2.com. Mr. Marvis was also
co-founder of multimedia startup Powerhouse Entertainment and served one year on the IBM Multimedia Task Force creating strategic plans
for IBM in its continued development of interactive software. From 1984 to 1994, Mr. Marvis was Co-Founder and Chief Executive Officer
of The Company, an award winning and highly successful production company for music videos and commercials. Mr. Marvis is a recipient
of the Michael Jackson Video Vanguard award from MTV.

 

Kevin Williams

 

Mr. Williams,
CPA CA in Canada, has spent 20 years as a senior leader of both finance and commercial strategy teams across various industries.
Mr. Williams led Commercial Strategy for a large telecom operator overseeing customer facing strategy for $2 billion in revenue and
has expertise as a business leader driving financial growth across start-ups, mid-sized businesses, and large public corporations.

 

Most recently, Mr. Williams
was the Chief Financial Officer for a venture capital firm where he responsible for the day-to-day operations and the investment strategy
across high-tech and media industries. Mr. Williams previously served as the Vice-President of Commercial Strategy of Rogers Communications
B2B division where he was responsible for customer facing strategy of a $2 billion business unit. Prior to this, from 2006 to 2013, Mr. Williams
oversaw several finance organizations in various businesses ranging up to $5 billion in revenue.

 

Steven Beeks

 

Steve Beeks has over 35 years
of experience in the entertainment industry, most recently spending 20 years with Lionsgate, until December 2017 (including 6 years
with a predecessor company, Artisan Entertainment), where he served as COO of the corporation as well as President, Motion Picture Group.

 

Mr. Beeks was a key strategist
in executing Lionsgate’s growth initiatives, both organic and through acquisition. He coordinated all aspects of film production,
acquisition and distribution, and oversaw film portfolio investment, production, acquisition and distribution (over $1 billion in investment
each year) and oversaw an operation of over 400 employees. In just over five years, Lionsgate’s film slate grossed approximately
$10 billion at the global box office and every annual film slate in the 14 years was significantly profitable. Mr. Beeks
acquired and distributed substantial libraries of content, amassing a library of over 16,000 titles, one of the largest in the industry,
over his time with Lionsgate.

 

     

    15

    

 

In addition to motion picture
responsibilities, he directly managed worldwide home entertainment and television licensing and distribution operations.
The home entertainment box-office-to-home-entertainment conversion rate was consistently the top of the industry, and despite Lionsgate
maintaining a domestic theatrical box office market share of approximately 7-8% on average, Lionsgate’s home entertainment
market share averaged 10-12%. This was due to a focus on library management as well as being known as the best third-party distributor
in the industry.

 

Mr. Beeks also directly
oversaw international expansion in the UK through acquisition of an existing distributor and managed the UK and Latin American operations.

 

From 1998 to 2003, Mr. Beeks
served as EVP and President, Home Entertainment at Artisan Entertainment, as an integral member of the management group that was recruited
for a “turn-around” situation by Bain Capital, which had acquired what was then known as LIVE Entertainment and took it private.
He was part of the team that restructured the company, managed it for growth and positioned for a transaction; acquired by Lionsgate in
2003.

 

He previously held positions
of President, Home Entertainment, Hallmark Entertainment from 1994 to 1998, EVP and President, Home Entertainment at Republic Pictures
from 1987 to 1994 and Director, Studio Operations for the Walt Disney Company from 1985 to 1987.

 

He holds an MBA from The Harvard
Business School and a BS Industrial Engineering from Cal Poly, San Luis Obispo.

 

Damian Lee

 

Damian Lee is a thirty-year
veteran of the film and television industry. He produced and directed over one hundred television sports specials before commencing a
career in feature films. To date, Mr. Lee has written, produced and/or directed over fifty feature films, some of which have spawned
profitable and entertaining sequels. Ski School, a perennial teen favorite, went into sequel, Watchers went into four sequels, and he
took over the Death Wish franchise.

 

Each such film produced requires
a full audit, and Mr. Lee has worked with each of the major accounting firms and many accountants in the process and preparation
of such audits. The films Mr. Lee has produced have an aggregate budget in excess of $200 million and Mr. Lee has supervised
and worked with a number of financiers, from large lending institutions to private investors, in financing these budgets.

 

Mr. Lee has cast many
notable actors in their first feature film roles including Jim Carrey, Hayden Christensen, Jason Priestly, Kim Coates and Nina Dobrev.
As a producer, career highlights include Woman Wanted starring Holly Hunter and Kiefer Sutherland, which won Best Feature Film at the
Slamdunk Film Festival and Best Independent Feature Film at the Ajjiic International Film Festival; Fun, which won two Special Jury Awards
at the Sundance Film Festival; King of Sorrow starring Kim Coates, which premiered at the World Film Festival in Montreal; The Poet, which
won Best Director at the Staten Island Film Festival and Best Cinematography at the Boston International Film Festival; and Sacrifice,
starring Cuba Gooding Jr., Christian Slater and Kim Coates.

 

In the past nine years Mr. Lee
has written and directed three films for Sony, including A Dark Truth, starring Andy Garcia, Forest Whitaker, Eva Longoria and Kim Coates,
which won Best Picture at the Boston International Film Festival; Breakout, starring Brendan Fraser, Dominic Purcell and Ethan Suplee;
and A Fighting Man starring Dominic Purcell, James Caan, Famke Janssen and Lou Gossett Jr.

 

Mr. Lee has also been
involved in various capacities with a number of junior companies. He is the former President and Chief Executive Officer of Noble House
Entertainment Inc., a former Audit Committee member of Bontan Corporation, a former member of the Directors Guild of Canada and a former
member of the board of directors of Findore Gold Resources Ltd. Mr. Lee has a BA from the University of Guelph.

 

     

    16

    

 

G. Scott Paterson

 

Mr. Paterson, 58, is
a well-known investor focused on Media and Fintech.

 

In
the ‎media space, Mr. Paterson was the second investor in Lionsgate Entertainment (NYSE:LGF.A) when the company was founded
in 1997. He served as a member of the Board of Directors for 21 years including as Chair of the Audit & Risk Committee and today
serves as a Director of Lions Gate Entertainment Canada Corp. Mr. Paterson co-founded JumpTV in 2005, orchestrated, as
Chair & CEO, the company’s $71 million 2006 IPO led by Morgan Stanley, merged the company with NeuLion in 2008, becoming
Vice Chair at the time. NeuLion/JumpTV was sold to Endeavour in 2018 for US $250 million. Mr. Paterson earned a Certificate in Entertainment
Law from Osgoode Hall Law School in 2014 and holds an active ACTRA membership. He also serves as a Board member of the Canadian Film
Centre’s Idea Boost Program and previously served as a Trustee of the Art Gallery of Ontario. He is currently the Lead Director
of Giftagram Inc., a rapidly growing e-commerce mobile gifting app and corporate gifting solution.

 

Mr. Paterson
was a Top 40 Under 40, has been a TedTalk speaker, had a chapter dedicated to him in Peter C. Newman‎’s Titans,
has been profiled in Time Magazine as ‘One of Canada’s 21st Century Leaders’, has been profiled in Newsweek
as ‘One of 17 People to Watch Globally’, was awarded Western University’s Purple & White top Alumni
Award and has been a speaker on behalf of countless organizations such as Mastercard, EY Entrepreneur of the Year and the
National Angel Capital Organization.

 

In
the financial services arena, in the mid-1990s, as Chair & CEO, Mr. Paterson built Yorkton Securities into Canada’s
leading technology and media investment bank raising over $3 billion, as lead underwriter, and an additional $9 billion, as managing underwriter,
for technology, Internet, and media, film & entertainment companies. Mr. Paterson has also served as Chair of
the Toronto Venture Stock Exchange, Vice Chair of the Toronto Stock Exchange, a Governor of the Investment Dealers Association, a Director
of the Canadian Investor Protection Fund and a Director of the Canadian Securities Institute. Mr. Paterson co-founded Symbility Solutions
in 2004 which was sold to Corelogic, Inc (NYSE:CLGX) in 2018 for $161 million. In 2015, he co-founded FutureVault Inc., a leader
in the development of ‘Personal Life Management’ digital vaults, where he serves as Executive Board Chair. In 2021, Mr. Paterson
joined the Board of Directors of CoinSmart Financial Inc. (NEO:SMRT), a leading Canadian headquartered crypto asset trading platform.

 

Mr. Paterson
obtained, in 2014, his ICD.D designation as a graduate of the Institute of Corporate Director’s at Rotman School of Management,
University of Toronto.

 

Catherine Warren

 

As president of FanTrust Entertainment
Strategies, Catherine Warren provides growth strategies for the entertainment and media technology sectors. Founded in 2001, her business
helps global clients to captivate audiences, build revenues, close strategic deals, and secure financing. A pioneer in digital FanBuilding,
Ms. Warren has created the fan strategies for mega-hits such as Homeland and the CSI television franchise, for eOne TV and Lionsgate
films as well as for top YouTube multi-channel networks and videogame companies, including for Sony AAA titles and eSports broadcasters.
Catherine’s work includes mergers and acquisitions for digital distribution and digital intellectual property, raising capital and
liquidity events for media company clients and advising media funds, hedge funds and media executives on strategic growth.

 

From 2018 to 2020, Ms. Warren
also served as Chief Executive Officer of Vancouver Economic Commission and in December 2020, she was appointed Chief Executive Officer
of Innovate Edmonton, the municipal innovation authority.

 

Earlier in her career, Ms. Warren
was Chief Operating Officer of a broadcast tech company that she and colleagues took public on the Nasdaq, growing it to a $300 million
market capitalization, with clients including CTV Television Network and FOX Broadcasting Company. Ms. Warren is a member of the
international Academy of Television Arts & Sciences, serving on the Nominating Committee and as an Emmy judge; and is a longstanding
Executive Board director of the United Nations flagship program, World Summit Awards for digital media, which represents the best media
from 160 countries. For close to two decades, she served on the board of the national Bell Fund, Canada’s largest private fund for
digital broadcasting, with over $200 million invested to date in media for all platforms.

 

     

    17

    

 

Ms. Warren has a physics
degree from Reed College and an MS from Columbia University’s Graduate School of Journalism, where she did her original digital
work at MIT’s Media Lab and won the Correspondent Fund Award to report at CERN, the European Centre for Particle Physics Research.

 

Cease Trade Orders

 

To the best of the knowledge
of the Company, no director or executive officer of our company is, as at the date of this Annual Information Form, or was within ten
years before the date of this Annual Information Form, a director or chief executive officer or chief financial officer of any company
(including our company) that: (a) was the subject of an order that was issued while the director or executive officer was acting
in the capacity as director, chief executive officer or chief financial officer; or (b) was subject to an order that was issued after
the director or executive officer ceased to be a director, chief executive officer or chief financial officer, and which resulted from
an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer.
For the purposes of this paragraph, “order” means a cease trade order, an order similar to a cease trade order or an order
that denied the relevant corporation access to any exemption under securities legislation, in each case that was in effect for a period
of more than 30 consecutive days.

 

Bankruptcy and Insolvency

 

To the best of the
knowledge of the Company, no director or executive officer of our company: (a) is, as at the date of this Annual Information
Form, or within 10 years before the date of this Annual Information Form, has been a director or executive officer of a corporation
(including our company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that
capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or
instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to
hold its assets; or (b) has within the 10 years before the date of this Annual Information Form, become bankrupt, made a
proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement
or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or
executive officer.

 

Penalties or Sanctions

 

Except as described below,
to the best of the knowledge of the Company, no director or executive officer of our company has been subject to: (a) any penalties
or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered
into a settlement agreement with a Canadian securities regulatory authority; or (b) any other penalties or sanctions imposed by a
court or regulatory body that would be likely to be considered important to a reasonable security holder in making an investment decision.

 

Mr. Paterson reached
a voluntary settlement with the Ontario Securities Commission twenty one years ago in December 2001 in respect to administrative
proceedings which included a suspension of his registration for two years and a one-million-dollar voluntary payment. There were no allegations
that Mr. Paterson had violated any securities law, statute, regulation or policy statement.

 

Conflicts of Interest

 

Some of our existing directors
or officers are also directors and officers of other companies and have other business interests which may prove to be of interest to
us, which may be competitive to the interests of QYOU or which may be current or future strategic partners. It is possible, therefore,
that a conflict may arise between their duties as directors or officers of our company and their duties as directors or officers of such
other companies. We require that such individuals disclose all such conflicts in accordance with the requirements of the Business Corporations
Act (Ontario) and that they govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed
upon them by law.

 

     

    18

    

 

RISK
FACTORS

 

An investment in our securities
is subject to several risks which involve a high degree of uncertainty and must be considered highly speculative due to the nature of
the Company’s business. These risks, including those described below, could have a material adverse effect upon, among other things,
the future operating results, potential earnings, business prospects and condition (financial or otherwise) of the Company. A prospective
purchaser of such securities should carefully consider the risks and uncertainties described below as well as the other information contained
in this Annual Information Form, including the information set forth under the heading “Cautionary Note Regarding Forward-Looking
Information”. The risks described herein are not the only risk factors facing the Company and should not be considered exhaustive.
Additional risks and uncertainties not currently known to the Company, or that the Company currently considers immaterial, may also materially
and adversely affect the business, operations and condition (financial or otherwise) of the Company.

 

Should one or more of the
risks or uncertainties described below materialize or should the underlying assumptions of the Company’s business prove incorrect,
actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned and the market price
of our shares could decline causing you to lose all or part of your investment.

 

Risks Related to the Company

 

The Company’s securities may experience
price volatility and investors may lose all or part of their investment.

 

There can be no assurance
that an active market for our securities will be sustained. Securities of small and mid-cap companies have experienced substantial volatility
in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include
global economic developments and market perceptions of the attractiveness of certain industries. There can be no assurance that continuing
fluctuations in price will not occur. Those fluctuations could be based on various factors in addition to those otherwise described in
this Annual Information Form, including:

 

		●	our operating performance and the performance of our competitors;

 

		●	the COVID-19 pandemic;

 

		●	the military conflict between Ukraine and Russia;

 

		●	the public’s reaction to our press releases, our other public announcements and our filings with
Canadian securities regulatory authorities;

 

		●	changes in earnings estimates or recommendations by research analysts who follow us or other companies
in our industry;

 

		●	the number of shares available for future sale;

 

		●	the passage of legislation or other regulatory developments affecting us or our industry;

 

		●	the arrival or departure of key personnel;

 

		●	general economic, political and market conditions; and

 

		●	other developments affecting us, our industry or our competitors.

 

As a result of
any of these factors, the market price of the securities of the Company at any given point in time may not accurately reflect the long-term
value of the Company. A decline in the value of our Common Shares could cause investors to lose some or all their investment and may adversely
impact our ability to attract and retain employees and raise capital. In addition, shareholders may initiate securities class action lawsuits
if the market price of our Common Shares drops significantly, which may cause us to incur substantial costs and could divert the time
and attention of our management.

 

     

    19

    

 

The Company pays a fee for video content and
may be adversely affected if access to such titles are restricted or if such fees are increased; its business may be influenced by the
pricing models of content owners.

 

If license fees are increased,
there can be no assurance that the Company will be able to pass through such increased rates to generate consequential increases in advertising
revenues. . Consequently, results of operations, financial performance and the condition of the Company may be adversely affected. There
is no assurance that the Company will be able to secure such rights, licenses, and content in the future on commercially reasonable terms,
if at all.

 

The Company’s business depends in large
part upon Pay-TV and Free-TV providers, whose payments are dependent on the number of Pay-TV and Free-TV subscribers

 

The majority of the Company’s
current revenue base comes from television advertising. This subscriber base is reached through a relatively small number of significant
Pay-TV and Free-TV (DD Free Dish) providers who are all under contracts lasting generally from one to two years and renewed accordingly.
The value of its Common Shares may be adversely affected should the Company lose the advertising revenue generated from such distribution
relationships. . The Company’s success is ultimately dependent on packaging decisions made by Pay-TV and Free-TV providers and how
many of their subscribers opt to view The Q channel content. The obligations of Pay-TV providers under the Company’s agreements
are typically subject to changes in rules and policies of Indian broadcast authorities.

 

The extent to which the foregoing
subscriber base will be maintained, or grow is uncertain and dependent upon the ability of Pay-TV and Free-TV providers to deploy and
expand their digital technologies, their marketing efforts and the packaging of their services’ offerings. While the Company has
entered into agreements with these Pay-TV providers for the distribution of its products and services, there can be no assurance that
the Company will be able to renew all of the contracts with these Pay-TV providers or that such contracts will be renewed on terms as
favorable as the existing contracts, and, as a result, that the Company will be able to continue to rely on these Pay-TV and Free-TV providers
to generate an important source of revenue for the Company in the future. Moreover, under certain of the Company’s agreements, the
revenues generated may vary depending on the number of services distributed by Pay-TV and Free-TV providers and the viewership rate of
The Q channels with the subscriber base having access to Company’s services.

 

The video entertainment industry is a rapidly
evolving market, which makes it difficult to evaluate the Company’s current business and future prospects

 

The market for online video
content is undergoing rapid and continuous change and is subject to significant challenges. As a result, the future revenue and income
potential of the Company’s business is uncertain. Investors should consider the Company’s business and prospects in light
of the risks and difficulties encountered in this rapidly evolving market, which risks and difficulties include, among others:

 

		●	evolving business model;

 

		●	ability to build and retain viewership and increase viewer hours;

 

		●	ability to maintain relationships with customers;

 

		●	operation under an evolving digital media and entertainment industry licensing structure; and

 

		●	ability to continue to secure the rights to content that attract viewers to the service on fair and reasonable
economic terms.

 

Failure to successfully address
these risks and difficulties, and other challenges associated with operating in a rapidly evolving market, could inhibit the implementation
of the Company’s business plan, significantly harm the Company’s financial condition, operating results and liquidity and
prevent the Company from sustaining profitability.

 

     

    20

    

 

The Company faces competition from other content
providers and that competition is likely to increase over time

 

The Company faces competition
from other content providers in its pursuit to acquire additional content, which may reduce the amount of video content that the Company
is able to acquire or license and may lead to higher acquisition prices. The Company’s competitors may from time to time offer better
terms of acquisition to content owners. Increased competition for the acquisition of digital rights to made-for-web video may result in
a reduction in operating margins and may reduce the Company’s ability to distinguish itself from competitors by virtue of its video
library.

 

The Company competes for the
time and attention of viewers with other content providers on the basis of a number of factors, including quality of experience, relevance,
acceptance and perception of content quality, ease of use, price, accessibility, perception of ad load, brand awareness and reputation.

 

Competitors may leverage their
existing infrastructure, brand recognition and content collections to augment comparable content offerings featuring content from social
media stars and digital content creators. The growth of social media could facilitate other forms of new entries that will compete with
the Company.

 

In addition, the Company also
competes with providers of on-demand video media and entertainment which are purchased or available for free and playable on mobile devices,
automobiles and in households and offer viewers an interactive experience. These forms of media may be purchased, downloaded and owned
or accessed from subscription or free online on-demand offerings (e.g. YouTube, TikTok, Snapchat).

 

The Company’s current
and future competitors may have more well-established brand recognition, greater financial, technical and other resources, more sophisticated
technologies or more experience in the markets, both domestic and international, in which the Company competes.

 

To compete effectively, the
Company must continue to invest significant resources in the development of its service to enhance the user experience of its viewers.
There can be no assurance that the Company will be able to compete successfully for viewers in the future against existing or new competitors,
and failure to do so could result in loss of existing or potential viewers, reduced revenue, increased marketing expenses or diminished
brand strength, any of which could harm the Company’s business.

 

The Company faces many risks associated with
its long-term plan to expand its operations in India and the United States

 

A key element of the Company’s
growth strategy is to continue to expand its operations into India and the United Stated . Operating in India requires significant resources
and management attention and will subject the Company to regulatory, economic and political risks that are different from those in Canada.
As a result, there can be no assurance that the Company’s India expansion efforts will be successful. In addition, it will face
risks in doing business in India that could adversely affect its business, including:

 

	 	●	the need to modify its technology and sell its solutions in accordance with India laws; 
	 	●	the ability to comply with differing regulatory and technical requirements in India;
	 	●	difficulties in integrating India operations and maintaining an enterprise-wide consistent corporate culture;
	 	●	potentially greater difficulty collecting accounts receivable and enforcing contracts;
	 	●	longer payment cycles;
	 	●	unexpected changes in regulatory requirements;
	 	●	difficulties and costs associated with understanding and complying with local laws, regulations and customs
in India;
	 	●	political, economic and social instability;
	 	●	increased costs of adapting products and services in India;
	 	●	difficulties and costs related to eventual implementation of new infrastructures in India;
	 	●	the need to expand localization of its service to other Indian language groups and those customers’
preferences and customs;
	 	●	barriers such as quotas and local content rules;
	 	●	differing degrees of protection for intellectual property rights in India;
	 	●	potential adverse tax consequences associated with India operations and revenue;
	 	●	fluctuations in currency exchange rates;
	 	●	restrictions on the transfer of funds; and
	 	●	new and different sources of competition and pricing pressure.

 

     

    21

    

 

Furthermore, some of the Company’s
operations and sales in India might experience corruption to some degree. Violations of anti-corruption laws or regulations by the Company’s
partners or other sales channels participants, or allegations of such violations, could have a material adverse effect on its business,
prospects, financial condition, results of operations and cash flows.

 

The Company’s failure
to successfully manage any of these risks could harm its existing and future international operations and could have a material adverse
effect on its business, prospects, financial condition, results of operations and cash flows.

 

Indian and other international operations

 

A substantial portion of the
Company’s business and employees are in jurisdictions outside of Canada, and the Company intends to continue to develop and expand
its business in these jurisdictions. In particular, the Company has expanded its operations in India. Consequently, the Company’s
operations, financial performance and the market price of the Common Shares are affected by changes in exchange rates and controls, interest
rates, changes in government policies, including taxation policies, social and civil unrest, and other political, social and economic
developments in or affecting the international jurisdictions in which the Company operates. Additionally, the performance and growth of
the Company’s business is dependent on economic conditions prevalent in the international jurisdictions in which it operates, which
may be materially and adversely affected by political instability or regional conflicts, including, but not limited to, the duration of
hostilities stemming from Russia’s invasion of Ukraine, a general rise in interest rates, inflation, economic slowdown elsewhere
in the world or otherwise.

 

International operations are
subject to political, economic and social uncertainties, including, among others, risk of war, risk of terrorist activities, revolution,
border disputes, expropriation, renegotiations or modification of existing contracts, freezing of bank accounts and other assets, restrictions
on repatriation of funds, import, export and transportation regulations and tariffs, taxation policies, including royalty and tax increases
and retroactive tax claims, exchange controls, currency fluctuations, labour disputes, sudden changes in laws and other uncertainties
arising out of foreign government sovereignty over the Company’s international operations. In addition, the global markets are experiencing
volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and
Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and
impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significantly
impacting the Company’s expansion into international operations, financial performance and the market price of the Common Shares.

 

Some international jurisdictions
also regulate foreign ownership of domestic companies and resources. These regulations and restrictions may apply to acquisitions by the
Company or its affiliates of shares in companies in international jurisdictions or the provision of funding by the Company to such companies.
There can be no assurance that the Company will be able to obtain any required approvals for acquisitions or investments in international
jurisdictions, or that it will be able to obtain such approvals on satisfactory terms.

 

The Company is seeking to grow its business.
If the Company does not effectively maintain and manage growth, its business, results of operations and financial condition could be adversely
affected

 

The Company’s success
depends in part on its ability to implement its growth strategy and manage growth effectively. To manage the expected growth of the Company’s
operations and personnel, it will need to continue to improve its operational, financial and management controls and its reporting systems
and procedures. Failure to effectively manage growth could result in difficulty in launching new products or enhancing existing products,
declines in quality or user satisfaction, increases in costs or other operational difficulties, and any of these difficulties could have
a material adverse effect on the Company’s business, prospects, financial condition, results of operations and cash flows.

 

     

    22

    

 

Furthermore, the Company’s
expansion and acquisitions may require it to incur significant costs or divert significant resources and may limit its ability to pursue
other strategic and business initiatives, which could have an adverse effect on its business, financial condition, prospects or results
of operations.

 

There are risks associated with various acquisitions,
business combinations and joint ventures

 

There can be no assurance
that appropriate acquisitions or expansion opportunities will be identified or available, that the Company will have to or be able to
obtain sufficient financing on acceptable terms to fund any such acquisition or expansion, that any such acquisition or expansion will
be consummated, or, if consummated, the timing thereof, or that any such acquisition or expansion can be successfully integrated into
or with the Company’s existing operations and business strategy. Any of the foregoing could have a material adverse effect on the
Company’s business, results of operations or financial condition.

 

The Company relies on third parties to provide
hardware, software and related services necessary for the operation of its business

 

The Company relies on hardware,
software and related services provided by third parties. The Company also incorporates and includes certain third-party hardware or software
into and with its applications and service offerings and expects to continue to do so. The operation of its applications and service offerings
could be impaired if errors occur in the third-party software that it uses. It may be more difficult for the Company to correct any defects
in third-party hardware or software because the development and maintenance of the hardware and software is not within its control. Accordingly,
the Company’s business could be adversely affected in the event of any errors in this hardware or software. There can be no assurance
that any third-party hardware suppliers or software licensors will continue to make their products available to the Company on acceptable
terms, to invest the appropriate levels of resources in their products to maintain and enhance the Company’s capabilities, or to
remain in business. Any impairment in the Company’s relationship with these third-party suppliers or licensors could harm its ability
to maintain and expand the reach of the Company’s service, which could harm its operating results, cash flow and financial condition.

 

The Company depends on key personnel to operate
its business, and if the Company is unable to retain, attract and integrate qualified personnel, its ability to develop and successfully
grow the business could be harmed

 

The Company’s success
depends largely upon the continued services of its executive officers and other key employees who have specialized technical knowledge
regarding the online digital media business, IT systems and music and videos systems. If the Company loses the services of one or
more of these employees, or fails to attract qualified replacement personnel, it could harm the Company’s business and prospects.
In addition, from time to time, there may be changes in the executive management team resulting from the hiring or departure of executives,
which could disrupt business. The Company’s success is also highly dependent on its continuing ability to identify, hire, train,
retain and motivate highly qualified personnel who have specialized technical knowledge regarding the online media business, IT systems
and music and video systems.

 

Competition for highly skilled
technical, management, marketing, sales, and other employees is high in the industry in which the Company operates, and the Company may
not be successful in attracting and retaining such personnel. Failure to attract and retain qualified executive officers and other key
employees could have a material adverse effect on the Company’s business, prospects, financial condition, results of operations
and cash flows.

 

The Company may be adversely affected by liquidity
risk

 

Liquidity risk is the risk
that the Company will not be able to meet its financial obligations as they become due resulting in a working capital deficiency. The
Company may not be able to raise additional capital to offset the working capital deficiency. The Company manages liquidity risk by continuously
monitoring actual and budgeted cash flows under both normal and stressed conditions. In addition, the Board will review and approve the
Company’s operating and capital budgets, as well as any material transactions out of the ordinary course of business, including
proposals on mergers, acquisitions, or other major investments. The Company’s objective in managing liquidity risk is to maintain
sufficient readily available reserves in order to meet the Company’s liquidity requirements at any point in time.

 

     

    23

    

 

The Company may be adversely affected by currency
risk and exchange rate fluctuations

 

Currency risk is the risk
to the Company’s earnings that arises from fluctuations of foreign exchange rates. The Company is exposed to foreign currency exchange
risk as it has sales and contracts denominated in currencies other than the functional currency of the Company and its subsidiaries.

 

Since the Company’s
reporting currency is Canadian dollars and the Company has significant US operations and Indian operations with US dollars and Indian
Rupees as the functional currency, the Company is exposed to foreign currency fluctuations on its reported amounts of US and India assets
and liabilities. As at December 31, 2021, the Company had net liabilities of US$1,140,182 (excluding intercompany balances) denominated
in US dollar and net liabilities of ₹135,842,048 (excluding intercompany balances) denominated in Indian Rupees. A 10% change in
exchange rates between US dollars, Indian rupees and Canadian dollar would result in $375,891 of additional net liabilities recorded
on the consolidated statements of financial position. All such changes are recorded to other comprehensive income (loss).

 

Currency exchange rates are
determined by market factors beyond the control of the Company and may vary substantially during a financial reporting period. For the
purposes of financial reporting, additional earnings variability arises from the translation of monetary assets and liabilities denominated
in currencies other than the US dollar at the rate of exchange at each balance sheet date, the impact of which is reported as a foreign
exchange gain or loss in the consolidated statement of comprehensive income of the Company. The Company’s objective in managing
foreign currency risk is to minimize net exposure to foreign currency cash flows, by transacting with third parties in US dollars and
Indian Rupees to the maximum extent possible and practical, given that such transactions will act as natural economic hedges for each
of these currencies. However, these hedging transactions could, in certain circumstances, prove economically ineffective and may not be
successful in protecting the Company against exchange rate fluctuations, or the Company may in the future be required to provide cash
and other collateral to secure its obligations with respect to such hedging transactions or be unable to enter such transactions on favorable
terms, or at all.

 

The Company may be adversely affected by economic
and political instability in emerging countries where it operates

 

A significant portion of the
Company’s revenue comes from operations in India with the potential of economic and political instability. As such, the Company
is subject to political, economic, and other uncertainties, all of which may be caused by many different factors, including high interest
rates, changes in currency values, high levels of inflation and exchange controls. The Indian government may adopt monetary policies which
include restrictions on the free disposition of funds deposited with banks, restrictions on the exchange of domestic currency and restrictions
on transferring funds outside of these countries. There can be no assurance that the existing currency restrictions or future economic
developments in these countries, over which the Company has no control, will not impair the Company’s financial condition, ability
to access revenues generated in such countries, results of operations and business prospects.

 

Rapid technological and industry changes could
make the Company’s products and services obsolete; the Company’s success depends, in part, on its ability to develop and sell
new products and services

 

The social video industry
is characterized by rapid technological change, frequent new product innovations, changes in customer requirements and expectations, and
evolving industry standards. There is no assurance that one or more of the technologies utilized by the Company may not become obsolete,
or that its products or services will be in demand when they are offered. Furthermore, the Company may not be able to successfully identify,
develop and market new products and services opportunities in a timely manner. Competing products using new technologies, or emerging
industry standards, could make the Company’s technology obsolete. Further, the Company’s competitors may have access to technologies
not available to the Company, which may enable them to produce products of greater interest to consumers, or at a more competitive cost.
Competitive or technological developments may require the Company to make substantial, unanticipated investments in new products and technologies
despite the possibility of having insufficient resources to make such investments.

 

     

    24

    

 

In addition, the Company’s
success depends in part on the ability of its personnel to develop cutting-edge media products and services and the ability to cross sell
visual media to existing clients. The Company’s business and operating results will be harmed if it fails to cross sell its products
and services or fails to develop products and services that achieve widespread market acceptance or that fail to generate significant
revenues or gross profits to offset development and operating costs.

 

The Company may need additional funding for
its business plan and additional financing might not be available

 

The Company may need additional
financing due to future acquisitions, changes in its business plan or failure of its business plan to succeed, including increasing marketing,
distribution, or programming costs or to refinance debt when due. The Company’s actual funding requirements could vary materially
from current estimates. Given the sensitivity of capital markets worldwide, there is a risk that the Company may not be able to obtain
additional equity or debt financing on favorable terms or at all. While management believes that the Company possesses sufficient cash
resources, access to capital markets and other liquidity sources to execute the Company’s business plan, an inability to access
financing at a reasonable cost could affect its ability to grow. In addition, in instances where the Company issues equity, such issuance
will result in the then-existing shareholders of the Company sustaining dilution to their relative proportion of the equity in the Company.
If the Company fails to obtain any necessary financing on a timely basis, its ability to execute its current business plan may be limited,
and its business could be adversely affected. As a result, the Company could default on its commitments to creditors or others and may
have to seek a purchaser for its business or assets.

 

Failure to generate sufficient cash revenues could materially adversely
affect the Company’s business

 

The Company’s ability
to be profitable and to have positive cash flow is dependent upon the ability to maintain broadcast and commercial customers who purchase
its products and use its services and who therefore generate its cash revenues. See “Risk Factors – The Company’s business
depends in large part upon Pay-TV and Free-TV providers, whose payments are dependent on the number of subscribers”. A material
reduction in revenue would negatively impact the Company’s financial position.

 

In addition, if the Company’s
revenue declines or grows more slowly than anticipated, or if its operating expenses are higher than expected, the Company may not be
able to sustain or increase profitability, in which case the Company’s financial condition will suffer and its value could decline.
Failure to generate sufficient cash revenues could also cause the Company to go out of business.

 

If the Company cannot maintain its corporate
culture as it grows, it could lose the innovation, teamwork and focus that significantly contribute to its business

 

The Company believes that
a critical component of its success is its corporate culture, which the Company believes fosters innovation, encourages teamwork, cultivates
creativity and promotes focus on execution. The Company has invested substantial time, energy and resources in building a highly collaborative
team that works together effectively in a non-hierarchical environment designed to promote openness, honesty, mutual respect and pursuit
of common goals. As the Company continues to develop the infrastructure of a public company and grow, it may find it difficult to maintain
these valuable aspects of its corporate culture. Any failure to preserve the Company’s culture could negatively impact its future
success, including its ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue
its corporate objectives.

 

Unfavourable economic conditions may affect
the Company’s business and financial results

 

The Company’s operating
results may vary based on changes in its industry or the global economy. Unfavorable economic conditions, including the impact of COVID-19,
the impact of the Russia’s invasion in Ukraine, the impact of recessions, slow economic growth, economic and pricing instability,
decrease of employment levels, increase of interest rates and credit market volatility, may affect the Company’s business and financial
results. As a result of such unfavorable economic conditions, entertainment services such as the Company’s may be considered discretionary
on the part of some of its current and prospective customers or viewers who may choose to use a competing free service. To the extent
that overall economic conditions reduce spending on discretionary activities, the Company’s ability to retain current customers
and obtain new customers and viewers could be hindered, which could negatively impact its business, growth revenue and potential profitability.
If economic conditions deteriorate, this could have a material adverse effect on the Company’s business, prospects, financial condition,
results of operations and cash flows.

 

     

    25

    

 

The outbreak of COVID-19 could result in unforeseeable
consequences

 

The outbreak of the novel
coronavirus, or COVID-19, continues to adversely impact global commercial activity and has contributed to significant volatility in financial
markets and economies. The global impact of the outbreak has been rapidly evolving, and many countries have reacted by instituting or
reinstituting quarantines, restrictions on travel and other measures to mitigate the impact of this pandemic. While many of these measures
have been relaxed in certain jurisdictions, spread of the virus continues and some of these restrictions remain in place. Such actions
have created disruption in global supply chains, and have adversely impacted several industries, including, among others, transportation,
hospitality and entertainment. The outbreak has triggered a period of global economic slowdown and continued volatility and could have
a continued adverse impact on economic and market conditions even after restrictive measures are relaxed or removed. The rapid development
and continued fluidity of this situation precludes any prediction as to the duration and extent of this pandemic and its impact on the
business, financial condition, and results of operations of the Company and its subsidiaries, as well as the business, financial condition
and results of operations of their portfolio companies. Nevertheless, the novel coronavirus presents material uncertainty and risk with
respect to our and our subsidiaries’ performance and financial results, including following the relaxation or removal of restrictive
measures. The Company continues to actively monitor developments with respect to this pandemic and its impact as part of the Company’s
overall investment objective and strategy. To the extent the Company continues to be adversely impacted by the effects of COVID-19, it
may have a material adverse impact on the Company’s future net investment income, the fair value of its portfolio investments, its
financial condition and the results of its operations and financial condition.

 

The locations of the Company’s users
expose it to foreign privacy and data security laws and may increase its liability, subject it to non-uniform standards and require it
to modify its practices

 

The Company’s users
are in Canada, the US and India.. As a result, the Company collects and processes the personal data of individuals who live in several
different countries. Privacy regulators in certain of those countries have publicly stated that foreign entities (including entities based
in Canada and the US) may render themselves subject to those countries’ privacy laws and the jurisdiction of such regulators by
collecting or processing the personal data of those countries’ residents, even if such entities have no physical or legal presence
there. Consequently, the Company may be obligated to comply with the privacy and data security laws of certain foreign countries.

 

The Company’s exposure
to Canadian, American, Indian and other foreign territories’ privacy and data security laws impacts its ability to collect
and use personal data and increases its legal compliance costs and may expose the Company to liability. As such laws proliferate, there
may be uncertainty regarding their application or interpretation, which consequently increases the Company’s potential liability.
Even if a claim of non-compliance against the Company does not ultimately result in liability, investigating or responding to a claim
may present a significant cost. Future legislation may also require changes in the Company’s data collection practices which may
be expensive to implement.

 

Piracy is likely to have a negative impact on the potential revenue
of the Company

 

A portion of the Company’s
revenue comes from the sale of its digital content over the Internet and wireless, cable and mobile networks, which is subject to unauthorized
consumer copying and widespread dissemination without an economic return to the Company. Global piracy is a significant threat to the
entertainment industry generally and to the Company. Unauthorized copies and piracy have contributed to the decrease in the volume of
legitimate sales of music and video content and have put pressure on the price of legitimate sales. This may result in a reduction in
the Company’s revenue.

 

     

    26

    

 

The Company’s business is subject to
the risks of natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism

 

The Company’s systems
and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist
attacks, acts of war, human errors, break-ins, or similar events. For example, a significant natural disaster, such as an earthquake,
fire, or flood, could have a material adverse impact on the Company’s business, operating results and financial condition, and insurance
coverage may be insufficient to compensate the Company for losses that may occur. In addition, acts of terrorism could cause disruptions
in the Company’s business or the economy. The Company’s servers may also be vulnerable to computer viruses, break-ins, and
similar disruptions from unauthorized tampering with IT systems, which could lead to interruptions, delays, loss of critical data or the
unauthorized disclosure of confidential customer data. The Company’s business interruption insurance may be insufficient to compensate
the Company for losses that may occur because of natural catastrophic events, computer viruses or terrorism. As the Company relies heavily
on servers, IT and communications systems, the Internet and the Cloud to conduct its business and provide high quality service to
its viewers, such disruptions could negatively impact the Company’s ability to run its business, result in loss of existing or potential
viewers and increased maintenance costs, which would adversely affect the Company’s operating results and financial condition.

 

Customer concentration risk

 

For the fiscal period ended
December 31, 2021, the Company’s top ten customers represented approximately 99% of sales, with three customers representing
40% of sales. This concentration of sales creates customer concentration risk to the business, and any changes to the agreements between
the Company and such customers or the loss of such customers’ business could have a materially adverse impact on the business, operations,
and results of the Company.

 

The Company could be subject to additional
income tax liabilities

 

The Company is subject to
provincial and federal income taxes in Canada and in numerous foreign jurisdictions. Significant judgment is required in evaluating and
estimating worldwide income tax provision and accruals for these taxes. For example, the Company effective tax rates could be adversely
affected by earnings being lower than anticipated in countries where it has lower statutory tax rates and higher than anticipated in countries
where it has higher statutory tax rates, by losses incurred in jurisdictions for which it is not able to realize the related tax benefit,
by changes in foreign currency exchange rates, by changes in the valuation of its deferred tax assets and liabilities, or by changes in
the relevant tax, accounting and other laws, regulations, principles and interpretations. The Company will also be subject to tax audits
in various jurisdictions, and such jurisdictions may assess additional income tax liabilities against it.

 

The Company’s reputation may be negatively
impacted, which could have a material adverse effect on its business, financial condition and results of operations

 

The Company has generally
enjoyed a good reputation among the public. The Company’s ability to maintain existing customer relationships and to attract new
customers depends to a large extent on its reputation. While the Company has put in place certain mechanisms to mitigate the risk that
its reputation may be tarnished, the Company cannot be assured that it will continue to enjoy a good reputation, nor can it be assured
that events that are beyond its control will not cause its reputation to be negatively impacted. The loss or tarnishing of the Company’s
reputation could have a material adverse effect on its business, prospects, financial condition, and results of operations.

 

The Company may be adversely affected by litigation
and other claims

 

Defense and settlement costs
of legal claims can be substantial, even with respect to claims that have no merit. Like most companies, during its business the Company
could be subject to the threat of litigation and may be involved in disputes with other parties in the future, which may result in litigation
or other proceedings. The results of litigation or any other proceedings cannot be predicted with certainty. The Company is not currently
involved in any disputes with other parties which it believes might result in litigation. Management is committed to conducting business
in an ethical and responsible manner which it believes will reduce the risk of conflict and legal disputes with third parties. However,
if the Company is unable to resolve future legal disputes favorably, it could have material adverse effects on its business, financial
condition, and results of operations.

 

     

    27

    

 

The Company may be adversely affected by credit risk

 

Credit risk is the risk of
financial loss associated with a counterparty’s inability to fulfill its contractual payment obligations and arises principally
from deposits with banks and outstanding receivables. The Company’s primary credit risk relates to its bank accounts. The Company
minimizes credit risk on cash by dealing only with recognized, creditworthy third parties, whom management believes to be financially
sound counterparties and by depositing only with reputable financial institutions. Additionally, the Company performs credit checks for
all customers who wish to trade on credit terms. While the Company believes that it has limited credit risk on accounts receivable, business
prospects, financial condition, results of operations and cash flows could be materially affected if a deterioration of economic or business
conditions resulted in a weakening of the financial condition of a material number of its customers, causing them to default on their
balances owing.

 

The Company’s business is subject to
broadcast regulations in the jurisdictions in which it operates

 

Regulatory parameters over
television broadcasting in North America and India are constantly being revised and changes could have a material adverse impact on the
Company’s procedures, costs and revenues. To mitigate these risks, the Company monitors industry developments very closely through
industry advisors.

 

The Company is a niche company with a first
to market narrow product offering

 

As a niche Web video content
provider with a narrow product offering, the Company at this time does not have the full diversification in services compared to other
larger Web content companies. Therefore, the Company could be exposed to unforeseen changes in the Web content market which could adversely
affect its future financial results.

 

Conflicts of interest

 

Certain of the directors and
officers of the Company also serve as directors and/or officers of other companies involved in the industries in which the Company operates,
and consequently there exists the possibility for such directors and officers to be in a position of conflict. Any decision made by any
of such directors and officers will be made in accordance with their duties and obligations to deal fairly and in good faith with a view
to the best interests of the Company and its shareholders. In addition, each director is required to declare and refrain from voting on
any matter in which such director may have a conflict of interest in accordance with the procedures set forth in the Business Corporations
Act (Ontario) and other applicable laws. See “Directors and Officers – Conflicts of Interest”.

 

Dividends are discretionary

 

The Company is not obligated
to pay dividends on its First Preferred Shares, Second Preferred Shares or Common Shares. The payment of dividends is at the sole discretion
of the Company’s Board and as at the date hereof, the Company has not paid dividends. In addition, in the future should the Company
obtain credit facilities to finance its operations, such credit facilities may restrict its ability to pay dividends, and thus the Company’s
ability to pay dividends on its shares will depend on, among other things, its level of indebtedness at the time of the proposed dividend
and whether it is in compliance with such facilities. Any reduction or elimination of dividends could cause the market price of the Common
Shares to decline and could further cause the Common Shares to become less liquid, which may result in losses to shareholders.

 

Future sales of Common Shares by the Company

 

The Company may issue additional
Common Shares in the future, which may dilute a shareholder’s holdings in the Company. The Company’s articles permit the issuance
of an unlimited number of Common Shares and shareholders will have no pre-emptive rights in connection with such further issuances. The
Company’s Board has the discretion to determine the terms of issue of further issuances of Common Shares. Also, additional Common
Shares may be issued by the Company upon the exercise of Common Share purchase warrants, compensation options, Stock Options issued under
the Stock Option Plan and the redemption of RSUs issued under the Company’s amended and restated RSU Plan.

 

     

    28

    

 

The Company may be adversely affected by securities
or industry research and reports

 

If securities or industry
analysts do not publish research or reports about the Company, if they change their recommendations regarding the Company adversely, or
if the Company’s operating results do not meet their expectations, the share price and trading volume could decline.

 

The trading market for the
Company Shares could be influenced by the research and reports that industry or securities analysts publish about the Company. If one
or more of these analysts cease coverage or fail to regularly publish reports, the Company could lose visibility in the financial markets,
which in turn could cause the trading price or volume of the Common Shares to decline. Moreover, if one or more of the analysts downgrade
the Company or its shares or if the Company’s operating results do not meet their expectations, the trading price of the Common
Shares could decline.

 

Legal and accounting requirements and risk
of non-compliance

 

As a publicly listed company,
the Company is subject to numerous legal and accounting requirements that do not apply to private companies. The cost of compliance with
many of these requirements is material. Failure to comply with these requirements can have numerous adverse consequences including, but
not limited to, the Company’s inability to file required periodic reports on a timely basis, loss of market confidence, delisting
of its securities and/or governmental or private actions against the Company. There can be no assurance that the Company will be able
to comply with all these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage
vis-à-vis privately held and larger public competitors.

 

The Company may be adversely affected by interest
rate risk

 

Interest rate risk is the
risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. However,
a variation of interest rates would not significantly affect results or equity of the Company as it does not have any interest-bearing
financial instruments. The Company is not exposed to interest rate risk as at December 31, 2021.

 

Accounting policies and internal controls

 

The Company prepares its financial
reports in accordance with International Financial Reporting Standards. In preparation of its financial reports, management may need to
rely upon assumptions, make estimates or use their best judgment in determining the financial condition of the Company. Significant accounting
policies are described in more detail in the Company’s audited financial statements. To have a reasonable level of assurance that
financial transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly
recorded and reported, the Company has implemented and continues to analyze its internal control systems for financial reporting. Although
the Company believes its financial reporting and financial statements are prepared with reasonable safeguards to ensure reliability, the
Company cannot provide absolute assurance in this regard.

 

It may be difficult for shareholders
to enforce within Canada any judgments obtained against the Company and to effect service of process against the Company’s directors
and officers who are not resident in Canada

 

The majority
of the Company’s subsidiaries and most of its assets are located outside of Canada. Accordingly, it may be difficult for shareholders
to enforce within Canada any judgments obtained against the Company, including judgments predicated upon the civil liability provisions
of applicable Canadian securities laws or otherwise. Consequently, shareholders may be effectively prevented from pursuing remedies against
the Company under Canadian securities laws.

 

     

    29

    

 

The Company
has subsidiaries incorporated in the US, Ireland and India, and certain directors and officers reside outside of Canada and substantially
all of the assets of these persons are located outside of Canada. It may not be possible for shareholders to effect service of process
against the Company’s directors and officers who are not resident in Canada. In the event a judgment is obtained in a Canadian court
against one or more of the directors or officers for violations of Canadian securities laws, it may not be possible to enforce such judgment
against those directors and officers not resident in Canada. Additionally, it may be difficult for an investor, or any other person or
entity, to assert Canadian securities law claims or otherwise in original actions instituted in the US, Ireland, India or another
foreign jurisdiction. Courts in these jurisdictions may refuse to hear a claim based on a violation of Canadian securities laws on the
grounds that such jurisdiction is not the most appropriate forum to bring such a claim. Even if a court in a foreign jurisdiction agrees
to hear a claim, it may determine that the local law, and not Canadian law, is applicable to the claim. If Canadian law is found to be
applicable, the content of applicable Canadian law must be proven as a fact, which can be a time-consuming and costly process. Certain
matters of procedure will also be governed by foreign law.

 

A significant number of Common Shares are owned
by a limited number of existing shareholders

 

The Company’s management,
directors and employees own a substantial number of the outstanding Common Shares (on a non-diluted and partially diluted basis). As such,
the Company’s management, directors, and employees, as a group, are in a position to exercise influence over matters requiring shareholder
approval, including the election of directors and the determination of corporate actions. As well, these shareholders could delay or prevent
a change in control of the Company that could otherwise be beneficial to the Company’s shareholders.

 

INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

Except as otherwise disclosed
in this AIF and within the Company’s financial statements, no director or executive officer of QYOU and, to the knowledge of the
directors and executive officers of QYOU, none of their respective associates or affiliates, nor any person who beneficially owns or exercises
control or direction, directly or indirectly, over more than 10% of the Company’s outstanding Common Shares, nor their respective
associates or affiliates, has had any material interest, direct or indirect, in any transaction within our three most recently completed
financial years or in any proposed transaction which has materially affected or is reasonably expected to materially affect QYOU or any
of its subsidiaries on a consolidated basis.

 

MATERIAL
CONTRACTS

 

QYOU did not enter into any
material contracts during the fiscal period ended December 31, 2021 or before the fiscal period ended December 31, 2021 that
are still in effect, other than in the ordinary course of business.

 

LEGAL
PROCEEDINGS and regulatory actions

 

There are no legal proceedings
material to QYOU to which we are a party, or that any of our property is or was the subject of, during our company’s most recent
financial year.

 

To the best of our company’s
knowledge, we are not currently a party to any regulatory investigation or proceeding or subject to any potential penalty, individually
or in the aggregate, which is likely to have a material adverse effect on the business, operations, or financial condition of our company
as a whole.

 

TRANSFER
AGENT AND REGISTRAR

 

The transfer agent and registrar
for our Common Shares is Computershare Investor Services Inc. at its principal office in Calgary, Alberta.

 

INTEREST
OF EXPERTS

 

MNP LLP, the external auditors
of the Company, reported on the fiscal period ended December 31, 2021 audited consolidated financial statements. MNP LLP has advised
the Company that they are independent of the Company within the meaning of the Rules of Professional Conduct of Chartered Professional
Accountants of Ontario (registered name of The Institute of Chartered Accountants of Ontario).

 

     

    30

    

 

None of the aforementioned
firms or persons, nor any directors, officers or employees of such firms, are currently expected to be elected, appointed or employed
as a director, officer or employee of the Company or of any of associate or affiliate of the Company.

 

Additional
Information

 

Additional information relating
to our company may be found under our company’s SEDAR profile at www.sedar.com.

 

Additional information, including
directors’ and officers’ remuneration and indebtedness, principal holders of our securities and securities authorized for
issuance under our equity compensation plans is contained in our management information circular dated May 19, 2022 prepared and filed
in connection with our annual and special meeting of shareholders held on June 29, 2022.

 

Additional financial information
is provided in our financial statements and management’s discussion and analysis for the fiscal period ended December 31, 2021.Exhibit 4.2

 

QYOU Media Inc.

CONSOLIDATED FINANCIAL STATEMENTS

 

For the six months ended December 31,
2021 and twelve months ended June 30, 2021 and 2020

[expressed in Canadian dollars]

 

    

    

    

 

	Independent Auditor's Report	
	 	 

 

To the Shareholders of QYOU Media Inc.:

 

Opinion

 

We have audited the
consolidated financial statements of QYOU Media Inc. and its subsidiaries (the "Company"), which comprise the consolidated
statements of financial position as at December 31, 2021 and June 30, 2021, and the consolidated statements of loss and
comprehensive loss, changes in shareholders' equity and cash flows for the six month period ended December 31, 2021 and the
years ended June 30, 2021 and June 30, 2020, and notes to the consolidated financial statements, including a summary of
significant accounting policies.

 

In our opinion, the
accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Company as at December 31, 2021 and June 30, 2021, and its consolidated financial performance and its consolidated cash
flows for the six month period ended December 31, 2021 and the years ended June 30, 2021 and June 30, 2020, in
accordance with International Financial Reporting Standards.

 

Basis for Opinion

 

We conducted our audits in
accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Other Information

 

Management is responsible
for the other information. The other information comprises Management’s Discussion and Analysis.

 

Our opinion on the consolidated
financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

In connection with our audits
of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise
appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s
report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

 

	1122 International Blvd, 6th floor, Burlington ON, L7L 6Z8	Tel: (905) 333-9888   Fax: (905) 333-9583

 

    

    

    

 

Responsibilities of Management
and Those Charged with Governance for the Consolidated Financial Statements

 

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

 

In preparing the consolidated
financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Company’s
financial reporting process.

 

Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements

 

Our objectives are to
obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these consolidated financial statements.

 

As part of an audit in
accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

 

	 	·	Identify
and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
	 	·	Obtain
an understanding of internal control relevant to the audit 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 Company’s internal control.
	 	·	Evaluate
the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
	 	·	Conclude
on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
	 	·	Evaluate
the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
	 	·	Obtain
sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.

 

    

    

    

 

We communicate with those
charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including
any significant deficiencies in internal control that we identify during our audits.

 

The engagement partner on the audit resulting in this independent auditor's
report is Giacomo Angelini.

 

	 	MNP llp
	Burlington, Ontario	Chartered Professional Accountants
	 	 
	April 30, 2022	Licensed Public Accountants

 

    

    

    

 

QYOU
Media Inc.

Consolidated
statements of financial position

[expressed
in Canadian dollars]

 

	 	 	December 31, 2021	 	 	June 30, 2021	 
	As at	 	$	 	 	$	 
	Assets	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	 	6,548,890	 	 	 	9,026,915	 
	Trade receivables	 	 	4,131,459	 	 	 	2,156,016	 
	Other receivables	 	 	1,623,131	 	 	 	332,569	 
	Prepaid expenses [note 12]	 	 	2,723,612	 	 	 	150,341	 
	 	 	 	15,027,092	 	 	 	11,665,841	 
	Non-current assets	 	 	 	 	 	 	 	 
	Property and equipment, net [note 5]	 	 	104,698	 	 	 	50,011	 
	Capitalized programming asset, net [note 6]	 	 	189,453	 	 	 	—	 
	Right-of-use assets, net [note 7]	 	 	753,267	 	 	 	351,300	 
	Security deposit	 	 	139,818	 	 	 	47,340	 
	Intangible assets, net [notes 4 & 10]	 	 	997,939	 	 	 	1,007,232	 
	Goodwill [notes 4 & 11]	 	 	3,399,639	 	 	 	3,247,096	 
	 	 	 	20,611,906	 	 	 	16,368,820	 
	 	 	 	 	 	 	 	 	 
	Liabilities	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Trade and other payables	 	 	4,700,239	 	 	 	2,400,459	 
	Contingent consideration [note 4]	 	 	861,697	 	 	 	765,498	 
	Deferred revenue	 	 	257,921	 	 	 	19,420	 
	Lease liabilities [note 8]	 	 	242,489	 	 	 	133,362	 
	Borrowings  [note 9]	 	 	7,756	 	 	 	10,872	 
	 	 	 	6,070,102	 	 	 	3,329,611	 
	Non-current liabilities	 	 	 	 	 	 	 	 
	Contingent consideration [note 4]	 	 	1,777,215	 	 	 	1,432,008	 
	Deferred tax liabilities [note 17]	 	 	227,659	 	 	 	233,473	 
	Lease liabilities [note 7]	 	 	558,344	 	 	 	257,155	 
	Borrowings  [note 9]	 	 	52,857	 	 	 	52,008	 
	 	 	 	8,686,177	 	 	 	5,304,255	 
	 	 	 	 	 	 	 	 	 
	Shareholders’ equity	 	 	 	 	 	 	 	 
	Share capital [note 12]	 	 	44,758,863	 	 	 	41,450,812	 
	Warrants [note 12]	 	 	3,700,682	 	 	 	3,763,942	 
	Share-based payment reserve [note 13]	 	 	9,907,637	 	 	 	7,701,263	 
	Foreign exchange translation reserve	 	 	120,235	 	 	 	(69,271	)
	Accumulated deficit	 	 	(46,118,245	)	 	 	(41,230,375	)
	Equity attributable to shareholders' of the Company	 	 	12,369,172	 	 	 	11,616,371	 
	Non-controlling interests [note 14]	 	 	(443,443	)	 	 	(551,806	)
	 	 	 	11,925,729	 	 	 	11,064,565	 
	 	 	 	20,611,906	 	 	 	16,368,820	 

 

	Contingencies [note 15]	 	 	 	 
	Subsequent events [note 21]	 	 	 	 
	 	 	 	 	 
	The accompanying notes are an integral part of these consolidated financial statements.	 	 

 

	On behalf of the Board:	 	 	 	 
	 	 	 	 	 
	"Signed"	 	 	"Signed"
	 

 

    - 1 -

    

    

 

QYOU Media Inc.

 

Consolidated statements of loss and comprehensive loss

[expressed in Canadian dollars, except number of shares]

 

	 	 	For the six months ended
 December 31, 2021	 	 	For the twelve months
 ended
 June 30, 2021	 	 	For the twelve months
 ended
 June 30, 2020	 
	 	 	$	 	 	$	 	 	$	 
	REVENUE [note 20]	 	 	10,311,104	 	 	 	4,182,539	 	 	 	2,802,252	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	OPERATING EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 
	Content and productions costs	 	 	6,274,275	 	 	 	4,621,827	 	 	 	3,860,207	 
	Sales and marketing	 	 	2,464,748	 	 	 	1,203,702	 	 	 	1,501,674	 
	Legal and consulting	 	 	983,114	 	 	 	1,463,109	 	 	 	1,283,165	 
	Salaries and benefits	 	 	2,007,804	 	 	 	1,292,689	 	 	 	639,132	 
	Share-based compensation	 	 	2,284,236	 	 	 	2,342,425	 	 	 	862,675	 
	Impairment loss	 	 	—	 	 	 	—	 	 	 	295,254	 
	General and administrative	 	 	657,258	 	 	 	426,510	 	 	 	603,289	 
	Depreciation and amortization	 	 	132,313	 	 	 	191,755	 	 	 	269,561	 
	Gain on loan forgiveness	 	 	—	 	 	 	(211,472	)	 	 	—	 
	Loss on remeasurement of contingent consideration [note 4]	 	 	393,950	 	 	 	—	 	 	 	—	 
	Gain on remeasurement of derivatives [note 12]	 	 	(114,532	)	 	 	—	 	 	 	—	 
	Foreign exchange (gain) loss	 	 	(86,214	)	 	 	5,530	 	 	 	(10,674	)
	Interest and other expenses	 	 	47,870	 	 	 	108,676	 	 	 	45,666	 
	Total operating expenses	 	 	15,044,822	 	 	 	11,444,751	 	 	 	9,349,949	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss before income taxes	 	 	(4,733,718	)	 	 	(7,262,212	)	 	 	(6,547,697	)
	Income tax expense [note 17]	 	 	45,789	 	 	 	45,240	 	 	 	—	 
	NET LOSS	 	 	(4,779,507	)	 	 	(7,307,452	)	 	 	(6,547,697	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other comprehensive gain (loss)	 	 	 	 	 	 	 	 	 	 	 	 
	Item that may be reclassified subsequently to income:	 	 	 	 	 	 	 	 	 	 	 	 
	Exchange gain (loss) on translation of foreign operations	 	 	189,506	 	 	 	24,253	 	 	 	(64,691	)
	Total other comprehensive gain (loss)	 	 	189,506	 	 	 	24,253	 	 	 	(64,691	)
	COMPREHENSIVE LOSS	 	 	(4,590,001	)	 	 	(7,283,199	)	 	 	(6,612,388	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss attributable to:	 	 	 	 	 	 	 	 	 	 	 	 
	Equity owners of the Company	 	 	(4,887,870	)	 	 	(6,965,733	)	 	 	(6,270,459	)
	Non-controlling interests [note 14]	 	 	108,363	 	 	 	(341,719	)	 	 	(277,238	)
	 	 	 	(4,779,507	)	 	 	(7,307,452	)	 	 	(6,547,697	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss per share - basic and diluted	 	 	(0.01	)	 	 	(0.02	)	 	 	(0.04	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Weighted average number of shares outstanding - basic and diluted	 	 	394,204,814	 	 	 	296,277,879	 	 	 	167,264,419	 

 

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

 

    - 2 -

     

    

 

QYOU Media Inc.

 

Consolidated statements of changes in shareholders’
equity (deficiency)

For the six months ended December 31, 2021
and twelve months ended June 30, 2021 and 2020

[expressed in Canadian dollars, except number of
shares]

 

	 	 	Common shares	 	 	Share capital	 	 	Warrants	 	 	Share-based

 payment reserve	 	 	Non-controlling

 interests	 	 	Foreign exchange

 translation reserve	 	 	Accumulated deficit	 	 	Total	 
	 	 	#	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance, June 30, 2019	 	136,819,060	 	 	22,312,422	 	 	1,819,172	 	 	5,825,151	 	 	(31,119	)	 	(28,833	)	 	(27,895,913	)	 	2,000,880	 
	Issuance of common shares and warrants, net of issuance costs [note 12]	 	42,000,000	 	 	1,582,330	 	 	346,531	 	 	49,573	 	 	—	 	 	—	 	 	—	 	 	1,978,434	 
	Share-based compensation [note 13]	 	4,315,832	 	 	129,475	 	 	—	 	 	733,200	 	 	—	 	 	—	 	 	—	 	 	862,675	 
	Warrants exercised	 	500,000	 	 	36,292	 	 	(6,292	)	 	—	 	 	—	 	 	—	 	 	—	 	 	30,000	 
	Change in ownership interest in subsidiaries [note 14]	 	-	 	 	0	 	 	—	 	 	—	 	 	98,270	 	 	—	 	 	(98,270	)	 	-	 
	Exchange difference on translating foreign operations	 	—	 	 	0	 	 	—	 	 	—	 	 	—	 	 	(64,691	)	 	—	 	 	(64,691	)
	Comprehensive loss	 	—	 	 	0	 	 	—	 	 	—	 	 	(277,238	)	 	—	 	 	(6,270,459	)	 	(6,547,697	)
	Balance, June 30, 2020	 	183,634,892	 	 	24,060,519	 	 	2,159,411	 	 	6,607,924	 	 	(210,087	)	 	(93,524	)	 	(34,264,642	)	 	(1,740,399	)
	Issuance of common shares and warrants, net of issuance costs [note 12]	 	101,737,959	 	 	7,986,843	 	 	2,140,394	 	 	1,083,052	 	 	—	 	 	—	 	 	—	 	 	11,210,289	 
	Share-based compensation	 	83,333	 	 	38,750	 	 	—	 	 	2,303,675	 	 	—	 	 	—	 	 	—	 	 	2,342,425	 
	Compensation options and warrants exercised [note 12]	 	79,529,929	 	 	6,986,425	 	 	(535,863	)	 	(200,284	)	 	—	 	 	—	 	 	—	 	 	6,250,278	 
	Restricted share units redeemed [note 12]	 	11,258,338	 	 	1,908,500	 	 	 	 	 	(1,908,500	)	 	—	 	 	—	 	 	—	 	 	-	 
	Options exercised [note 12]	 	5,193,268	 	 	469,775	 	 	 	 	 	(184,604	)	 	—	 	 	—	 	 	—	 	 	285,171	 
	Exchange difference on translation foreign operations	 	—	 	 	0	 	 	—	 	 	—	 	 	—	 	 	24,253	 	 	—	 	 	24,253	 
	Comprehensive loss	 	—	 	 	0	 	 	—	 	 	—	 	 	(341,719	)	 	—	 	 	(6,965,733	)	 	(7,307,452	)
	Balance, June 30, 2021	 	381,437,719	 	 	41,450,812	 	 	3,763,942	 	 	7,701,263	 	 	(551,806	)	 	(69,271	)	 	(41,230,375	)	 	11,064,565	 
	Issuance of common shares, net of issuance costs [note 12]	 	7,896,875	 	 	2,160,891	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	2,160,891	 
	Share-based compensation	 	—	 	 	0	 	 	—	 	 	2,284,236	 	 	—	 	 	—	 	 	—	 	 	2,284,236	 
	Compensation options and warrants exercised [note 12]	 	10,713,883	 	 	1,063,340	 	 	(63,260	)	 	(7,374	)	 	—	 	 	—	 	 	—	 	 	992,706	 
	Restricted share units redeemed [note 12]	 	1,216,669	 	 	60,833	 	 	—	 	 	(60,833	)	 	—	 	 	—	 	 	—	 	 	-	 
	Share options exercised [note 12]	 	129,168	 	 	22,987	 	 	—	 	 	(9,655	)	 	—	 	 	—	 	 	—	 	 	13,332	 
	Exchange difference on translation foreign operations	 	—	 	 	0	 	 	—	 	 	—	 	 	—	 	 	189,506	 	 	—	 	 	189,506	 
	Comprehensive loss	 	—	 	 	0	 	 	—	 	 	—	 	 	108,363	 	 	—	 	 	(4,887,870	)	 	(4,779,507	)
	Balance, December 31, 2021	 	401,394,314	 	 	44,758,863	 	 	3,700,682	 	 	9,907,637	 	 	(443,443	)	 	120,235	 	 	(46,118,245	)	 	11,925,729	 

 

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

 

    - 3 -

     

    

 

QYOU Media Inc.

 

Consolidated statements of cash flows

[expressed in Canadian dollars]

 

	 	 	For the six months ended
 December 31, 2021	 	 	For the twelve months ended
 June 30, 2021	 	 	For the twelve months ended
 June 30, 2020	 
	 	 	$	 	 	$	 	 	$	 
	Operating activities	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss	 	 	(4,779,507	)	 	 	(7,307,452	)	 	 	(6,547,697	)
	Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	 	 
	Impairment loss	 	 	—	 	 	 	—	 	 	 	295,254	 
	Gain on lease termination	 	 	—	 	 	 	(19,297	)	 	 	—	 
	Gain on loan forgiveness	 	 	—	 	 	 	(211,472	)	 	 	—	 
	Loss on remeasurement of contingent consideration	 	 	393,950	 	 	 	—	 	 	 	—	 
	Gain on remeasurement of derivatives	 	 	(114,532	)	 	 	—	 	 	 	 	 
	Unrealized foreign exchange loss	 	 	(106,801	)	 	 	—	 	 	 	—	 
	Depreciation and amortization	 	 	132,313	 	 	 	191,755	 	 	 	945,515	 
	Share-based compensation	 	 	2,284,236	 	 	 	2,342,425	 	 	 	862,675	 
	Government grant recognized	 	 	—	 	 	 	—	 	 	 	—	 
	Income tax expense	 	 	45,789	 	 	 	—	 	 	 	(192,903	)
	Interest expense	 	 	20,380	 	 	 	89,406	 	 	 	34,555	 
	 	 	 	(2,124,172	)	 	 	(4,914,635	)	 	 	(4,602,601	)
	Changes in non-cash working capital items	 	 	 	 	 	 	 	 	 	 	 	 
	Trade receivables	 	 	(1,802,748	)	 	 	(1,030,593	)	 	 	473,315	 
	Other receivables	 	 	(1,370,851	)	 	 	48,350	 	 	 	562,850	 
	Prepaid expenses	 	 	(2,548,572	)	 	 	(122,637	)	 	 	419,488	 
	Security deposit	 	 	(90,318	)	 	 	6,232	 	 	 	(47,498	)
	Trade and other payables	 	 	2,288,739	 	 	 	(289,452	)	 	 	708,130	 
	Deferred revenue	 	 	185,683	 	 	 	(11,802	)	 	 	(101,313	)
	Cash used in operating activities	 	 	(5,462,239	)	 	 	(6,314,537	)	 	 	(2,587,629	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investing activities	 	 	 	 	 	 	 	 	 	 	 	 
	Acquisition of Chatterbox	 	 	(106,837	)	 	 	(1,882,560	)	 	 	—	 
	Capitalized programming asset	 	 	(211,501	)	 	 	—	 	 	 	—	 
	Purchase of property and equipment	 	 	(62,174	)	 	 	(28,470	)	 	 	(38,814	)
	Cash used in investing activities	 	 	(380,512	)	 	 	(1,911,030	)	 	 	(38,814	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financing activities	 	 	 	 	 	 	 	 	 	 	 	 
	Repayment of lease obligation [note 8]	 	 	(86,173	)	 	 	(150,208	)	 	 	(126,815	)
	Proceeds from borrowings	 	 	—	 	 	 	—	 	 	 	545,102	 
	Repayment of loan [note 9]	 	 	(2,763	)	 	 	(101,784	)	 	 	—	 
	Proceeds from exercise of options	 	 	13,333	 	 	 	285,172	 	 	 	—	 
	Proceeds from exercise of compensation options and warrants [note 12]	 	 	993,019	 	 	 	6,250,276	 	 	 	30,000	 
	Issuance of shares and warrants, net of issuance costs [note 12]	 	 	2,275,423	 	 	 	11,210,300	 	 	 	1,978,434	 
	Cash provided by financing activities	 	 	3,192,839	 	 	 	17,493,756	 	 	 	2,426,721	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net change in cash and cash equivalents	 	 	(2,649,912	)	 	 	9,268,189	 	 	 	(199,722	)
	Effect of foreign exchange on cash	 	 	171,887	 	 	 	(304,778	)	 	 	(41,869	)
	Cash and cash equivalents, beginning of period	 	 	9,026,915	 	 	 	63,504	 	 	 	305,095	 
	Cash and cash equivalents, end of period	 	 	6,548,890	 	 	 	9,026,915	 	 	 	63,504	 

 

    - 4 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		1.	BUSINESS AND ORGANIZATION

 

QYOU Media Inc. (“QYOU” or the “Company”) was
incorporated pursuant to the Business Corporations Act (Alberta) on July 30, 1993 under the name “575161 Alberta Inc.”.
The registered and head office of the Company is 154 University Avenue, Suite 601, Toronto, ON M5H 3Y9. The Company is a global media
company that, through its subsidiaries, curate, produce and distributes content created by social media stars and digital content creators.

 

The Company has the following subsidiaries:

 

		 		 	Ownership percentage	 	 	Ownership percentage

 June 30, 2021	 	Ownership percentage

 June 30, 2020
	Entity name	 	Country	 	December 31, 2021	 	 	%	 	%
	QYOU Media Inc.	 	Canada	 	 	100	 	 	 	100	 	100
	QYOU Productions Inc.	 	Canada	 	 	100	 	 	 	100	 	100
	QYOU Limited	 	Ireland	 	 	100	 	 	 	100	 	100
	QYOUTV International Limited	 	Ireland	 	 	100	 	 	 	100	 	100
	QYOU USA Inc.	 	USA	 	 	100	 	 	 	100	 	100
	QYOU Media India Private Ltd.	 	India	 	 	88	 	 	 	88	 	88
	Chatterbox Technologies Private Ltd.	 	India	 	 	97	 	 	 	97	 	—

 

Effective July 1, 2021, the Company amalgamated
QYOU Media Inc. and a wholly-owned subsidiary QYOU Media Holdings Inc. into QYOU Media Inc.

 

Impact of COVID-19

 

During the sixth months ended December 31,
2021 and the years ended June 30, 2021 and 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19,”
has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the
implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally
resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central
banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The extent to which COVID-19
and any other pandemic or public health crisis impacts the Company’s business, affairs, operations, financial condition, liquidity,
availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted
with any meaningful precision, including new information which may emerge concerning the severity of the COVID-19 virus and the actions
required to contain the COVID-19 virus or remedy its impact, among others.

 

Change of Fiscal Year-end

 

Effective in 2021, the Company changed its fiscal
year end from June 30 to December 31 in order to align the Company’s year-end with that of comparative media companies.
Accordingly, the consolidated financial statements present the statements of financial position as at December 31, 2021 and June 30,
2021, and the results of operations for the six months ended December 31, 2021 and twelve months ended June 30, 2021 and 2020.

 

		2.	BASIS OF PRESENTATION

 

		[a]	Statement of Compliance

 

These consolidated financial statements (“financial
statements”) have been prepared by management in accordance with generally accepted accounting principles in Canada for publicly
accountable enterprises, as set out in the CPA Canada Handbook – Accounting, which incorporates International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The policies set out below
have been consistently applied to all periods presented, unless otherwise noted.

 

These financial statements were approved and authorized
for issuance by the Board of Directors of the Company on April 29, 2022.

 

    	 	- 5 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[b]	Basis of Measurement

 

These financial statements have been prepared
on a historical cost basis. Historical costs are generally based upon the fair value of the consideration given in exchange for goods
and services.

 

Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset
or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these
financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share-based
Payment (“IFRS 2”) and measurements that have some similarities to fair value, but are not fair value, such as value in
use in IAS 36 Impairment of Assets.

 

		[c]	Basis of Presentation

 

The accompanying financial statements include
the accounts of QYOU Media Inc. and its subsidiaries, QYOU Productions Inc., QYOU Media Holdings Inc. (“QYOU Media”), QYOU
Limited Ltd. (“QYOU Limited”), QYOU USA Inc. (“QYOU USA”), QYOUTV International Limited, QYOU Media India Private
Ltd (“QYOU India”) and Chatterbox Technologies Private Limited (“Chatterbox”). The financial statements incorporate
the assets and liabilities of the Company and its subsidiaries except for Chatterbox as at December 31, 2021, June 30, 2021
and 2020 and the results of these subsidiaries for the years then ended.

 

On June 14, 2021, the Company acquired 97%
of Chatterbox, a company incorporated in India. The financial statements incorporate the assets and liabilities of Chatterbox as at June 14,
2021, June 30, 2021, December 31, 2021 and the results for the period ended June 30, 2021 and December 31, 2021.

 

Subsidiaries are all those entities over which
the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Company. All intra-entity assets and liabilities, revenue, expenses and cash flows relating
to transactions between subsidiaries of the Company are eliminated in full on consolidation.

 

		[d]	Functional Currency and Presentation currency

 

These financial statements are presented in Canadian
dollars, which is the functional currency of QYOU Media Inc.

 

		[e]	Use of Estimates and Judgments

 

The preparation of financial statements in conformity
with IFRS requires the use of judgements and/or estimates that affect the application of accounting policies and the amounts reported
and disclosed in the consolidated financial statements and related notes. These judgements and estimates are based on management’s
best knowledge of the relevant facts and circumstances, but actual results may differ materially from the amounts included in the financial
statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods
if the revision affects both current and future periods.

 

The following are the critical judgments, apart
from those involving estimations, that management has made in the process of applying the Company’s accounting policies and that
have the most significant effect on the amounts recognized in the financial statements:

 

		[i]	Estimated Useful Lives, Residual Values and Depreciation of Property and Equipment

 

Depreciation of property and equipment is dependent
upon estimates of useful lives and residual values, which are determined through the exercise of judgement. The assessment of any impairment
of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions
and the useful lives of assets.

 

    	 	- 6 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[ii]	Impairment of Property and Equipment, Intangible Assets and Goodwill

 

Impairment testing requires management to make
estimates related to future cash flow projections, discount rates, contingent consideration and market trends. Impairment of property
and equipment, intangible assets and goodwill are influenced by judgment in defining a cash generating unit (“CGU”) and determining
the indicators of impairment and estimated used to measure impairment losses.

 

		[iii]	Capitalization of Internally Generated Intangible Assets, the Estimated Useful Life and Amortization of
Intangible Assets

 

The Company employs significant estimates to determine
the estimated useful lives of intangible assets, considering the nature of the assets, industry trends, contractual rights, past experience,
expected use and review of asset useful lives. The Company reviews amortization methods and useful lives annually or when circumstances
change and adjusts its amortization methods and assumptions prospectively.

 

Initial capitalization of development cost is
based on management’s judgement that economic and technological feasibility is confirmed. In determining the amounts to be capitalized,
management makes assumptions using the expected future cash generation of the assets, discount rates to be applied and the expected period
of benefit to determine the amount to be capitalized.

 

		[iv]	Valuation of Share-based Payments and Warrants

 

Management measures the costs for share-based
payments and warrants using market-based option valuation techniques. Assumptions are made and estimates are used in applying the valuation
techniques. These include estimating the future volatility of the share price, expected dividend yield, and expected risk-free interest
rate and the rate of forfeiture. Such estimates and assumptions are inherently uncertain. Changes in these assumptions affect the fair
value estimates of share-based payments and warrants.

 

		[v]	Income Taxes

 

The Company computes an income tax provision in
each of the tax jurisdictions in which it operates. Actual amounts of income tax expense only become final upon filing and acceptance
of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the financial statements. Additionally,
estimation of income taxes includes evaluating the recoverability of deferred tax assets against future taxable income based on an assessment
of the ability to use the underlying future tax deductions before they expire. To the extent that estimates of future taxable income differ
from the tax return, income would be affected in a subsequent period.

 

		[vi]	Leases

 

At inception of a contract, the Company assesses
whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of identified asset for
a period of time in exchange for consideration. The Company recognized a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of the costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use
assets are depreciated to the earlier of the end of useful life of the right-of-use asset or the lease term using the straight-line method
as this most closely reflects the expected pattern of the consumption of the future economic benefits. The lease term includes periods
covered by an option to extend if the Company is reasonably certain to exercise that option which requires judgement. In addition, the
right-of-use asset can be periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, and the Company’s incremental borrowing
rate.

 

The lease liability is measured at amortized cost
using the effective interest method. It is remeasured when there is a change in future lease payments arising from the change in an index
or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or
if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability
is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, unless it has been reduced
to zero.

 

    	 	- 7 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[vii]	Business Combinations

 

In a business combination, substantially all identifiable
assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of
the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities,
including the fair value of contingent consideration, if applicable. Assets include cash, trade and other receivables, prepaid, property
and equipment and right-of-use assets; while liabilities consist of trade and other payables, lease obligations and deferred revenue.
If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, the
Company determines the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected
future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the
assets concerned and any changes in the discount rate applied.

 

		[viii]	Going Concern

 

At each reporting period, management assesses
the basis of preparation of the financial statements. These financial statements have been prepared on a going concern basis in accordance
with IFRS. The going concern basis of presentation assumes that the Company will continue its operations for the foreseeable future and
be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

 

		3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

		[a]	Cash and Cash Equivalents

 

Cash and cash equivalents consists of cash and
cash held in trust accounts. As a result, the carrying amount of cash approximates fair value. There were $nil cash equivalents outstanding
at December 31, 2021 (June 30, 2021 - $6,668; June 30, 2020 - $nil).

 

		[b]	Trade Receivables

 

The Company’s standard terms of credit on
trade receivables are due in full in 30 days. These customers have specific contracts that detail the payments expected under their contract
terms. Trade receivables are customer obligations due under these contract terms. Management reviews trade receivables on a regular basis,
based on contracted terms and how recently payments have been received, to determine if any such amounts will potentially be uncollected.

 

		[c]	Property and Equipment

 

Property and equipment are stated at historical
cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the
assets. The costs of normal maintenance and repairs are charged to expense when incurred.

 

The estimated useful lives of the assets are as follows:

 

	Computer hardware and equipment	3 years
	Furniture and fixtures	3 years  

 

An item of property and equipment and any significant
part initially recognized are derecognized upon disposal or when no future economic benefits are expected from their use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated statements of loss and comprehensive loss when the asset is derecognized. The assets’
residual values, useful lives and methods of depreciation and the depreciation charge are adjusted prospectively, if appropriate.

 

    	 	- 8 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[d]	Intangible Assets

 

Expenditures on research activities are recognized
as an expense in the period in which they are incurred. Externally and internally generated intangibles are recognized only if they meet
strict criteria, relating in particular to technical feasibility, probability that a future economic benefit associated with the asset
will flow to the entity and the cost of the asset can be measured reliably.

 

Intangible assets with finite useful lives are
stated at cost and are amortized over their useful economic lives when the asset is ready for its intended use. Upon the commencement
of amortization, the asset is carried at cost less accumulated amortization and impairment losses. Intangible assets are tested for impairment
as required (see impairment, below).

 

Intangible assets acquired are measured on initial
recognition at cost. Intangible assets acquired consist of QYOU and Chatterbox brand names with an indefinite useful life that is not
amortized, but subject to an annual impairment test. The Company intends to use the brand name indefinitely. Other intangible assets acquired
consist of customer relationships, amortized over their useful lives and subject to an annual impairment test, or when indicators of potential
impairment are identified.

 

The estimated useful lives of the acquired intangible assets are as
follows:

 

	QYOU brand	Indefinite
	Chatterbox brand	Indefinite
	Customer relationships	6 years  

 

Indefinite useful lives – The Company
does not amortize intangible assets with indefinite useful lives because there is no foreseeable limit to the period that these assets
are expected to generate net cash inflows for the Company. The Company uses judgment to determine the indefinite useful lives of these
assets, analyzing all relevant factors, including the expected usage of the asset, the typical life cycle of the asset and anticipated
changes in the market demand for the products and services that the asset helps generate.

 

Finite useful lives – The Company
amortizes intangible assets with finite useful lives into depreciation and amortization in the consolidated statements of loss and comprehensive
loss on a straight-line basis over six years. The Company reviews their useful lives, residual values and the amortization methods at
least once a year.

 

An intangible asset that was initially recognized
is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the
consolidated statements of loss and comprehensive loss when the asset is derecognized. The assets' residual values, useful lives, methods
of amortization and the amortization charge is adjusted prospectively, if appropriate.

 

		[e]	Goodwill

 

Goodwill represents the excess of consideration
over the fair value of the net identifiable assets acquired in a business combination. Goodwill is recorded at cost less accumulated impairment
losses, if any. Goodwill is not amortized. For the purpose of impairment testing, goodwill is allocated to each of the Company’s
CGUs that benefit from the acquisition, irrespective of whether other assets or liabilities acquired are assigned to those units. Goodwill
is tested annually for impairment, or more frequently when there is an indication that goodwill may be impaired. If the recoverable amount,
representing the higher of its fair value less cost to sell and its value in use, of the CGU is less than its carrying amount, any resulting
impairment loss is first allocated to goodwill and subsequently to other assets on a pro rata basis for the CGU. Any goodwill impairment
loss is recorded to the consolidated statements of loss and comprehensive loss in the period of impairment. Previously recognized impairment
losses for goodwill are not reversed in subsequent periods. The Company completes its annual impairment test as at December 31.

 

		[f]	Foreign Currency Translation

 

The Company’s financial statements are presented
in Canadian dollars, which is also the functional currency of QYOU Media Inc. Each subsidiary entity determines its own functional currency
and items included in the financial statements of each entity are measured using that functional currency.

 

    	 	- 9 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The financial statements comprise the financial
statements of the Company and the following subsidiaries:

 

	Name of Subsidiary	 	Jurisdiction of incorporation	 	Functional currency
	QYOU Media Inc.	 	Canada	 	Canadian dollar
	QYOU Productions Inc.	 	Canada	 	Canadian dollar
	QYOU Limited	 	Ireland	 	Euro
	QYOUTV International Limited	 	Ireland	 	Euro
	QYOU USA Inc. 	 	USA	 	US dollar
	QYOU Media India Private Ltd. 	 	India	 	Indian rupee
	Chatterbox Technologies Private Ltd.	 	India	 	Indian rupee

 

The financial statements of entities that have
a functional currency different from that of QYOU Media Inc. (foreign operations) are translated into Canadian dollars as follows: assets
and liabilities – at the closing rate as at the dates of the consolidated statements of financial position; income and expenses
 – at the average rate of the period (as this is considered a reasonable approximation of actual rates). All resulting changes are
recognized in other comprehensive income (loss) as currency translation adjustments.

 

Transactions and balances: Foreign currency transactions
are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in currencies other than an operation’s functional currency are recognized in operating expenses
as foreign exchange loss in the consolidated statements of loss and comprehensive loss.

 

		[g]	Revenue Recognition

 

The Company recorded revenue from contracts with
customers in accordance with five steps:

 

		1.	Identify the contract with customer

		2.	Identify the performance obligations in the contract

		3.	Determine the transaction price, which is the total consideration provided by the customer

		4.	Allocate the transaction price among the performance obligations in the contract based on the relative
fair value

		5.	Recognize revenue when the revenue criteria are met for each performance obligation

 

Advertising and Influencer Marketing Revenue

 

The Company contracts with its customers for the
development and delivery of commercials or contents through fixed price agreements. Each episode of commercial or content is generally
a performance obligation. The Company has concluded that the revenue from advertising and influencer marketing should be recognized at
the point in time when control of the asset is transferred to the customer, generally on delivery of the episode.

 

Licensing revenue

 

The Company also generates subscriber revenue
from pay television distributors. The Company revenue is recognized at the point in time when the control of the asset is transferred
to the customers, generally on delivery of programming.

 

The Company disaggregated revenue recognized from contracts with customers
into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
The Company has determined that revenue by geography best depicts how the nature, amount, timing and uncertainty of revenue and cash
flows are affected by economic factors. Refer to segment note for the disclosure on disaggregated revenue by geography.

 

    	 	- 10 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[h]	Income Taxes

 

Income tax expense includes both current and deferred
taxes. The Company uses judgment to interpret tax rules and regulations to calculate the expense recorded in each period. The Company
recognizes income tax expense in net loss unless it relates to an item recognized directly in equity or other comprehensive income (loss).

 

Current tax expense is tax the Company expects
to pay or receive based on its taxable income or loss during the year. The Company calculates the current tax expense using tax rates
enacted or substantively enacted as at the reporting date, and including any adjustment to income taxes payable or recoverable related
to previous years.

 

Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to the extent it is probable taxable profits will be available against which those
deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference
arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.

 

The carrying amount of deferred tax assets is
reviewed at the end of each year and reduced to the extent it is not probable sufficient taxable profits will be available to allow all
or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in
the year in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the year.

 

The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the year, to recover
or settle the carrying amount of its assets and liabilities.

 

Current and deferred taxes are recognized in profit
or loss, except when they relate to items that are recognized in other comprehensive loss or directly in equity, in which case the current
and deferred taxes are also recognized in other comprehensive loss or directly in equity, respectively.

 

The Company relies on estimates and assumptions
when determining the amount of current and deferred taxes, and take into account the impact of uncertain tax positions and whether additional
taxes and interest may be due. If new information becomes available and changes the Company’s judgment on the adequacy of existing
tax liabilities, these changes would affect the income tax expense in the period that the Company makes this determination.

 

		[i]	Share-based Compensation

 

Share options and warrants awarded to non-employees
are accounted for using the fair value of the instrument awarded or service provided, unless it cannot be determined reliably. Share options,
restricted share units (“RSU”) and warrants awarded to employees are accounted for using the fair value method. The fair value
of such share options and warrants granted is recognized as an expense on a proportionate basis consistent with the vesting features of
each tranche of the grant. The fair value is calculated using the Black-Scholes option pricing model with assumptions applicable at the
date of grant.

 

		[j]	Net Loss Per Share

 

Net loss per share is calculated based on the
profit for the financial year and the weighted average number of common shares outstanding during the year. Diluted net loss per share
is calculated using the profit for the financial year adjusted for the effect of any dilutive instruments and the weighted average diluted
number of shares (ignoring any potential issue of common shares that would be anti-dilutive) during the year. For all periods presented,
diluted loss per share equals basic loss per share due to the anti-dilutive effects of warrants and options (note 12).

 

		[k]	Financial Instruments

 

Financial assets and financial liabilities are
recognized when the Company becomes a party to the contractual provisions of the instruments.

 

    	 	- 11 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

Financial assets and financial liabilities are
initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately
in profit or loss.

 

Financial Assets

 

On initial recognition, a financial asset is classified
as measured at: amortized cost; fair value through other comprehensive income (‘‘FVOCI’’); or fair value through
profit and loss (‘‘FVTPL’’). The classification of financial assets is based on the business model in which a
financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial
asset in the scope of the standard are not separated. Instead, the hybrid financial asset as a whole is assessed for classification.

 

A financial asset is measured at amortized cost
if it meets both of the following conditions and is not designated as at FVTPL:

 

		·	it is held within a business model whose objective
is to hold assets to collect contractual cash flows; and

		·	its contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt investment is measured at FVOCI if it meets
both of the following conditions and is not designated as at FVTPL:

 

		·	it is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling financial assets; and

		·	its contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

On initial recognition of an equity investment
that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in
other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.

 

All financial assets not classified as measured
at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition,
the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI
as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

A financial asset (unless it is a trade receivable
without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus,
for an item not at FVTPL, transaction costs that are directly attributable to its acquisition.

 

    	 	- 12 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The following accounting policies apply to the
subsequent measurement of financial assets.

 

	Financial assets at FVTPL	Subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
	Financial assets at amortized cost	Subsequently measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses and impairment losses are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
	Debt investments at FVOCI	Subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment losses are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
	Equity investments at FVOCI	Subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are not reclassified to profit or loss, even upon derecognition.

 

Financial Liabilities

 

The Company initially recognizes financial liabilities
at fair value on the date at which the Company becomes a party to the contractual provisions of the instrument.

 

The Company classifies its financial liabilities
as either financial liabilities at fair value through profit or loss or amortized cost.

 

Subsequent to initial recognition, other liabilities
are measured at amortized cost using the effective interest method. Financial liabilities at fair value are stated at fair value with
changes being recognized in profit or loss.

 

The Company derecognizes a financial liability
when its contractual obligations are discharged or cancelled or expire.

 

Financial Liabilities and Equity Instruments

 

Classification as debt or equity

 

Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions
of a financial liability and an equity instrument.

 

Equity Instruments

 

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are
recognized at the proceeds received, net of direct issue costs.

 

    	 	- 13 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

Classification of Financial Instruments

 

The Company classifies its financial assets and
liabilities as outlined below:

	 
	Cash and cash equivalents	Amortized cost
	Trade receivables	Amortized cost
	Other receivables	Amortized cost
	Security deposit	Amortized cost
	Trade and other payables	Amortized cost
	
    Contingent consideration

    Derivative instruments
	
    FVTPL

    FVTPL

	Borrowings	Amortized cost

 

Impairment of Financial Assets

 

An expected credit loss (“ECL”) model
applies to the financial assets measured at amortized cost. The Company’s financial assets measured at amortized cost and subject
to the ECL model consist primarily of trade and other receivables. The Company applies the simplified approach to the impairment for trade
and other receivables by recognizing a loss allowance based on lifetime expected losses at each reporting date taking into consideration
historical credit loss experience and financial factors specific to the debtors and general economic conditions.

 

		[l]	Government Assistance

 

Government assistance is recognized when there
is reasonable assurance it will be received and all related conditions will be complied with. When the government assistance relates to
an expense item, it is recognized as a reduction of expense over the period necessary to match the government assistance on a systematic
basis to the costs it is intended to subsidize.

 

		[m]	Business Combinations

 

Business combinations are accounted for using
the acquisition method. Under this method, the identifiable assets acquired, and liabilities assumed, including contingent liabilities,
are recognized in the consolidated statement of financial position at their respective fair values. Goodwill is recorded based on the
excess of the fair value of the consideration transferred over the fair value of the Company’s interest in the acquiree’s
net identifiable assets on the date of the acquisition.

 

The consideration transferred by the Company to
acquire control of an entity is calculated as the sum of the acquisition-date fair values of the assets transferred, liabilities incurred,
and equity interests issued by the Company, including the fair value of all the assets and liabilities resulting from a deferred contingent
payment arrangement. Acquisition-related costs are expensed as incurred.

 

		[n]	Leases

 

At inception of a contract, the Company assesses
whether a contract is, or contains, a lease based on whether the contract conveys the right of control the use of identified asset for
a period of time in exchange for consideration. The Company recognized a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of the costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The assets
are depreciated to the earlier of the end of useful life of the right-of-use asset or the lease term using the straight-line method as
this most closely reflects the expected pattern of the consumption of the future economic benefits. The lease term includes periods covered
by an option to extend if the Company is reasonably certain to exercise that option. In addition, the right-of-use asset can be periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially
measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses
its incremental borrowing rate as the discount rate. The Company used an incremental borrowing rate to measure the lease liabilities.

 

    	 	- 14 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The lease liability is measured at the amortized
cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from change in an index
or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or
if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability
is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use, unless it has been reduced to
zero. The Company has elected to apply the practical expedient not to recognize right-of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less or to leases of low value assets when applicable. The lease payments associated with
those leases is recognized as an expense on a straight-line basis over the lease term.

 

		[o]	Capitalized Programming Asset

 

Capitalized Programming Asset represent the costs
of projects in development, projects in process, the unamortized costs of proprietary programming assets that have been produced by the
Company or for which the Company has acquired distribution rights, and third-party-produced equity film investments. Such costs include
development and production expenditures and attributed studio and other costs that are expected to benefit future periods. Costs are capitalized
upon the commencement of the project. Capitalized Programming Asset is amortized over three years with 50% at the time of initial episodic
delivery and thereafter 25% annually. The amortization period and the amortization method for film investments are reviewed at least at
the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the assets are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in
accounting estimates.

 

Recently adopted provisions of
IFRS

 

IFRS 9, Financial Instruments, IAS 39, Financial
Instruments: Recognition and Measurement and IFRS 7, Financial Instruments: Disclosures, Interest Rate Benchmark Reform

 

On August 27, 2020, the IASB issued Interest
Rate Benchmark Reform - Phase 2 which includes amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition
and Measurement, IFRS 7, Financial Instruments: Disclosures, IFRS 4, Insurance Contracts, and IFRS 16, Leases, and concludes
phase two of its work to respond to the effects of IBOR reform on financial reporting. The amendments address the issues that affect financial
reporting at the time that an existing interest rate benchmark is replaced with a risk-free rate ("RFR"). The amendments are
effective for annual periods beginning on or after January 1, 2021, and must be applied retrospectively, with early adoption permitted.
The Company has adopted the amendments to IFRS 9, IAS 39 and IFRS 7, which had no impact on the Financial Statements.

 

Interpretations Committee Agenda Decision,
Costs Necessary to Sell Inventories

 

In June 2021, the IASB issued Interpretations
Committee agenda decision - Costs Necessary to Sell Inventories to address the necessary costs to sell when determining the net realizable
value of inventories that affects the application of IAS 2, Inventories. It was concluded that, when determining the net realizable
value of inventories, an entity estimates the costs necessary to make the sale in the ordinary course of business. An entity uses its
judgement to determine which costs are necessary to make the sale considering its specific facts and circumstances, including the nature
of the inventories. The Company has adopted the agenda decision relate to IAS 2, which had no impact on the Financial Statements

 

IAS 37, Provisions, Contingent Liabilities and Contingent Assets

 

In May 2020, the IASB issued amendments to
IAS 37, Provisions, Contingent Liabilities and Contingent Assets to specify which costs an entity needs to include when assessing whether
a contract is onerous or loss-making. The amendments apply a 'direct related cost approach'. The costs that relate directly to a contract
to provide goods or services include both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs
directly related to contract activities (e.g., depreciation of equipment used to fulfill the contract as well as costs of contract management
and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable
to the counterparty under the contract. The amendments are effective for annual periods beginning on or after January 1, 2022, and
must be applied prospectively to contracts for which an entity has not yet fulfilled all of its obligations at the beginning of the annual
reporting period in which it first applies the amendments (the date of initial application). Earlier application is permitted and must
be disclosed. The Company has adopted the amendments to IAS 37, which had no impact on the Financial Statements.

 

    	 	- 15 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

New standards, amendments and interpretations
not yet adopted by the Company:

 

The following new accounting standards have been
issued but not yet adopted by the Company as at December 31, 2021:

 

IAS 1, Presentation of Financial Statements
(“IAS 1”)

 

In January 2020, the IASB issued Classification
of Liabilities as Current or Non-current (Amendments to IAS 1). The amendments aim to promote consistency in applying the requirements
by helping companies determine whether, in the consolidated statements of financial position, debt and other liabilities with an uncertain
settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments
include clarifying the classification requirements for debt a company might settle by converting it into equity.

 

The amendments are effective for annual reporting
periods beginning on or after January 1, 2022, with earlier application permitted. In July 2020, the effective date was deferred
to January 1, 2023. The Company is still assessing the impact of adopting these amendments on its financial statements.

 

IAS 1, Presentation of Financial Statements

 

In February 2021, the IASB issued amendments
to IAS 1 and IFRS Practice Statements 2, Making Materiality Judgements, to help entities provide accounting policy disclosures that are
more useful by replacing the requirement to disclose "significant" accounting policies with a requirement to disclose "material"
accounting policies. The amendments are effective for annual periods beginning on or after January 1, 2023, with earlier application
permitted. The Company is currently evaluating the impact of these amendments on its Financial Statements and will apply the amendments
from the effective date.

 

IAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors (“IAS 8”)

 

In February 2021, the IASB issued Definition
of Accounting Estimates, which amends IAS 8. The amendment replaces the definition of a change in accounting estimates with a definition
of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject
to measurement uncertainty”. The amendment provides clarification to help entities to distinguish between accounting policies and
accounting estimates.

 

The amendments are effective for annual periods
beginning on or after January 1, 2023. The Company is still assessing the impact of adopting these amendments on its financial statements.

 

IAS 12, Income Taxes (“IAS 12”)

 

In May 2021, the IASB issued Deferred Tax
related to Assets and Liabilities arising from a single transaction (Amendments to IAS 12). The amendment narrows the scope of the initial
recognition exemption so that it does not apply to transactions that give rise to equal and offset temporary differences. As a result,
companies will need to recognize a deferred tax asset and deferred tax liability for temporary differences arising on initial recognition
of transactions such as leases and decommissioning obligations.

 

The amendments are effective for annual reporting
periods beginning on or after January 1, 2023 and are to be applied retrospectively. The Company is still assessing the impact of
adopting these amendments on its financial statements.

 

    	 	- 16 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

IFRS 9, Financial Instruments (“IFRS
9”)

 

As part of its 2018-2020 annual improvements to
IFRS standards process, the IASB issued an amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing
whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.
These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower
or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after
the beginning of the annual reporting period in which the entity first applies the amendment.

 

The amendment is effective for annual reporting
periods beginning on or after January 1, 2022 with earlier adoption permitted. The Company is still assessing the impact of adopting
these amendments on its financial statements.

 

		4.	BUSINESS COMBINATION

 

Chatterbox

 

On June 14, 2021, the Company acquired 97%
of the outstanding common shares of Chatterbox, an influencer marketing company based in India for total consideration of $4,711,063,
as part of the Company’s international distribution and strategic partnerships growth strategy. The purchase consideration consisted
of cash consideration of $2,630,345, working capital adjustment of $106,837, 2021 earnings before income tax, depreciation and amortization
(“EBITDA”) adjustments of ($68,103) and $2,638,912 of contingent consideration.

 

The share acquisition of Chatterbox qualified
as a business combination and was accounted for using the acquisition method of accounting. Accordingly, the results of Chatterbox have
been included in the consolidated financial statements of the Company from the date of acquisition, which is the date the Company obtained
control.

 

Due to the complexity associated with the valuation
process, the identification and measurement of the assets acquired, and liabilities assumed, as well as the measurement contingent consideration
is provisional and subject to adjustment on completion of the valuation process and analysis of resulting tax effects. Management will
finalize the accounting for the acquisition, specifically the intangible assets, contingent consideration, and the related tax effects,
no later than one year from the date of the acquisition and will reflect these adjustments retrospectively as required under IFRS 3. Differences
between these provisional estimates and the final acquisition accounting may occur and these differences could have a material impact
on the Company’s future financial position and results of operations.

 

The allocation of the total consideration to the
fair value of the identifiable assets acquired and liabilities assumed as at the date of the acquisition was as follows:

 

	 	 	$	 
	Cash and cash equivalents	 	 	747,785	 
	Trade receivables	 	 	256,259	 
	Other receivables	 	 	50,718	 
	Customer relationships	 	 	298,438	 
	Brand name	 	 	619,802	 
	Goodwill	 	 	3,231,125	 
	Trade and other payables	 	 	(260,919	)
	Deferred tax liabilities	 	 	(232,145	)
	 	 	 	4,711,063	 

 

Goodwill arising from the acquisition reflects
the benefits attributable to synergies, revenue growth and future market development. These benefits were not recognized separately from
goodwill because they did not meet the recognition criteria for identifiable intangible assets. Goodwill is not deductible for income
tax purposes.

 

All transaction costs associated with the acquisition
are included within legal and consulting on the statement of loss and comprehensive loss, in the amount of $187,148 in the year ended
June 30, 2021.

 

    - 17 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

During the fiscal period ending December 31,
2021, the Company paid additional consideration related to working capital adjustments of $106,837, with net post acquisition measurement
adjustments of $37,352. Management is continuing to review the acquisition and its accounting and finalizing the accounting for the acquisition
no later than one year from the date of the acquisition.

 

The contingent consideration is classified as
Level 3 in the fair value hierarchy. The contingent consideration fair value is based on the present value of the estimated likely obligation.
During the fiscal period ended December 31, 2021, the Company recorded a loss on the remeasurement of contingent consideration of
$393,950 and as at December 31, 2021, the fair value of the contingent consideration was $2,638,912 (June 30, 2021 of $2,197,506).
The Company uses a scenario-based model to independently assess individual earnouts and calculate the fair value of the earnout based
on probabilities of success attributable to each individual scenario. The significant assumptions used in making the estimates are revenue
growth rate and discount rate. A 10% change in the discount rate used in the valuation of the contingent consideration as at December 31,
2021 would change the valuation of the liability by approximately $270,000 (June 30, 2021 – approximately $200,000).

 

The Non-Controlling Interest (“NCI”)
on the transaction meets the definition of a liability as the Company is obligated to purchase the remaining 3% of common shares. The
amount payable is included in contingent consideration and is measured at fair valued through profit or loss.

 

The contingent consideration as at December 31,
2021:

 

	 	 	 	 
	 	 	Earnout	 
	 	 	$	 
	As at June 30, 2020	 	 	—	 
	Acquisition - Chatterbox	 	 	2,186,960	 
	Effects of foreign exchange	 	 	10,546	 
	Balance – June 30, 2021	 	 	2,197,506	 
	Loss on remeasurement of contingent consideration	 	 	393,950	 
	Effects of foreign exchange	 	 	47,456	 
	Balance – December 31, 2021	 	 	2,638,912	 
	Current	 	 	861,697	 
	Non-current	 	 	1,777,215	 

 

    - 18 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		5.	PROPERTY AND EQUIPMENT

 

The Company’s property and equipment are
as follows:

 

	Cost	 	Computer hardware and

 equipment

 $	 	 	Furniture and fixtures

 $	 	 	Total 

$	 
	As at June 30, 2019	 	 	204,940	 	 	 	236,686	 	 	 	441,626	 
	Additions	 	 	—	 	 	 	38,814	 	 	 	38,814	 
	Foreign exchange	 	 	11,777	 	 	 	990	 	 	 	12,767	 
	As at June 30, 2020	 	 	216,717	 	 	 	276,490	 	 	 	493,207	 
	Additions	 	 	28,470	 	 	 	—	 	 	 	28,470	 
	Foreign exchange	 	 	(17,549	)	 	 	(4,477	)	 	 	(22,026	)
	As at June 30, 2021	 	 	227,638	 	 	 	272,013	 	 	 	499,651	 
	Additions	 	 	30,699	 	 	 	31,475	 	 	 	62,174	 
	Foreign exchange	 	 	5,635	 	 	 	13,101	 	 	 	18,736	 
	As at December 31, 2021	 	 	263,972	 	 	 	316,589	 	 	 	580,561	 

 

	 	 	Computer hardware
 and equipment
	 	 	Furniture and fixtures	 	 	Total	 
	Accumulated depreciation	 	$	 	 	$	 	 	$	 
	As at June 30, 2019	 	 	124,586	 	 	 	116,310	 	 	 	240,896	 
	Depreciation	 	 	56,232	 	 	 	82,063	 	 	 	138,295	 
	Impairment loss	 	 	2,160	 	 	 	36,529	 	 	 	38,689	 
	Foreign exchange	 	 	4,599	 	 	 	194	 	 	 	4,793	 
	As at June 30, 2020	 	 	187,577	 	 	 	235,096	 	 	 	422,673	 
	Depreciation	 	 	31,068	 	 	 	13,410	 	 	 	44,478	 
	Foreign exchange	 	 	(17,068	)	 	 	(443	)	 	 	(17,511	)
	As at June 30, 2021	 	 	201,577	 	 	 	248,063	 	 	 	449,640	 
	Depreciation	 	 	6,454	 	 	 	2,949	 	 	 	9,403	 
	Foreign exchange	 	 	5,076	 	 	 	11,744	 	 	 	16,820	 
	As at December 31, 2021	 	 	213,107	 	 	 	262,756	 	 	 	475,863	 

 

	 	 	Computer hardware
 and equipment
	 	 	Furniture and fixtures	 	 	Total	 
	Net book value	 	$	 	 	$	 	 	$	 
	As at June 30, 2020	 	 	29,140	 	 	 	41,394	 	 	 	70,534	 
	As at June 30, 2021	 	 	26,061	 	 	 	23,950	 	 	 	50,011	 
	As at December 31, 2021	 	 	50,865	 	 	 	53,833	 	 	 	104,698	 

 

    - 19 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		6.	CAPITALIZED PROGRAMMING ASSET

 

The Company’s capitalized programming asset
are as follows:

 

	 	 	Programming Asset	 
	Cost	 	$	 
	As at June 30, 2021 and 2020	 	 	—	 
	Additions	 	 	211,501	 
	Effects of foreign exchange	 	 	2,665	 
	As at December 31, 2021	 	 	214,166	 

 

	 	 	Programming Asset	 
	Accumulated amortization	 	$	 
	As at June 30, 2021 and 2020	 	 	—	 
	Amortization	 	 	24,406	 
	Effects of foreign exchange	 	 	307	 
	As at December 31, 2021	 	 	24,713	 

 

	 	 	Programming Asset	 
	Net book value	 	$	 
	As at June 30, 2021 and 2020	 	 	—	 
	As at December 31, 2021	 	 	189,453	 

 

		7.	RIGHT-OF-USE ASSETS

 

The Company has three office leases with maturities
ranging between 2 to 5 years.

 

The Company’s right-of-use assets are as
follows:

 

	 	 	$	 
	Balance – July 1, 2019	 	 	49,263	 
	Additions	 	 	640,375	 
	Depreciation	 	 	(123,806	)
	Effects of foreign exchange	 	 	26,525	 
	Balance – June 30, 2020	 	 	592,357	 
	Lease modification	 	 	8,067	 
	Lease termination	 	 	(276,106	)
	Additions	 	 	213,062	 
	Depreciation	 	 	(144,848	)
	Effects of foreign exchange	 	 	(41,232	)
	Balance – June 30, 2021	 	 	351,300	 
	Additions	 	 	467,462	 
	Depreciation	 	 	(73,178	)
	Effects of foreign exchange	 	 	7,683	 
	Balance – December 31, 2021	 	 	753,267	 

 

    - 20 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		8.	LEASE LIABILITIES

 

The Company’s lease liabilities are as follows:

 

	 	 	$	 
	Balance – July 1, 2019	 	 	49,263	 
	Additions	 	 	640,375	 
	Add: Interest expense	 	 	28,277	 
	Less: Lease payments	 	 	(126,815	)
	Effects of foreign exchange	 	 	24,576	 
	Balance – June 30, 2020	 	 	615,676	 
	Lease modification	 	 	8,067	 
	Lease termination	 	 	(295,403	)
	Additions	 	 	213,062	 
	Add: Interest expense	 	 	44,874	 
	Less: Lease payments	 	 	(150,208	)
	Effects of foreign exchange	 	 	(45,551	)
	Balance – June 30, 2021	 	 	390,517	 
	Additions	 	 	467,462	 
	Add: Interest expense	 	 	20,380	 
	Less: Lease payments	 	 	(86,173	)
	Effects of foreign exchange	 	 	8,647	 
	Balance – December 31, 2021	 	 	800,833	 
	 	 	 	 	 
	Current	 	 	242,489	 
	Non-current	 	 	558,344	 

 

For the six months ended December 31, 2021,
the Company made lease payments of $135,353 related to short-term leases (June 30, 2021 - $11,430; 2020 – $111,510).

 

During the six months ended December 31,
2021, the Company entered into a new lease agreement for office space for the Chatterbox subsidiary. During the year ended June 30,
2021, the Company modified the QYOU USA office lease to reduce office space, resulting in lower lease payments and terminated the QYOU
India office lease and entered into a new lease agreement for office space.

 

The Company has calculated the lease liability
utilizing an estimated incremental borrowing rate of 10%.

 

    - 21 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		9.	BORROWINGS

 

	 	 	December 31, 2021	 	 	June 30, 2021	 
	 	 	$	 	 	$	 
	Current	 	 	 	 	 	 	 	 
	US Small Business Administration Loan	 	 	7,756	 	 	 	10,872	 
	 	 	 	7,756	 	 	 	10,872	 
	Non-current	 	 	 	 	 	 	 	 
	US Small Business Administration Loan	 	 	52,857	 	 	 	52,008	 
	 	 	 	52,857	 	 	 	52,008	 
	Total	 	 	60,613	 	 	 	62,880	 

 

On May 20, 2020 (“date of advance”),
the Company received a loan for gross proceeds of $206,700 (USD $150,000) from the U.S. Small Business Administration under the Economic
Injury Disaster Loan program. The loan bears annual interest at a rate of 3.75%. Monthly repayments of $996 (USD $731) will commence 12
months from the date of advance and the loan matures 30 years from the date of advance.

 

The benefit of the government loan received at
below market rate of interest is treated as a government grant. The loan was recognized at fair value using the Company’s incremental
borrowing rate of 17%, $58,955. The difference between the initial carrying amount and proceeds received is the value of the grant of
$147,745. The Company recognized in income the value of the grant as it incurred the related expenses for which the grant was intended
to compensate. The full value of the grant had been recognized in income during the year ended June 30, 2020 as a deduction of the
related operating expenses.

 

The balance outstanding at December 31, 2021
is as follows:

 

	 	 	$	 
	Principal balance	 	 	206,700	 
	 	 	 	 	 
	Grant adjustment to fair value	 	 	(147,745	)
	Interest and accretion expense	 	 	846	 
	Effects of foreign exchange	 	 	(1,361	)
	Balance - June 30, 2020	 	 	58,440	 
	Interest and accretion expense	 	 	10,334	 
	Payments	 	 	(937	)
	Effects of foreign exchange	 	 	(4,957	)
	Balance - June 30, 2021	 	 	62,880	 
	Interest and accretion expense	 	 	5,498	 
	Payments	 	 	(5,528	)
	Effects of foreign exchange	 	 	(2,237	)
	Balance - December 31, 2021	 	 	60,613	 
	Current	 	 	7,756	 
	Non-current	 	 	52,857	 

 

    - 22 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		10.	INTANGIBLE ASSETS

 

A summary of the Company’s intangible assets
are as follows:

 

	 	 	Brand QYOU 

    $	 	 	Capitalized 

    development
 $	 	 	Brand 
 Chatterbox

    $	 	 	Customer
 relationships

    $	 	 	Total

    $	 
	As at June 30, 2020	 	 	90,474	 	 	 	993,870	 	 	 	—	 	 	 	—	 	 	 	1,084,344	 
	Acquisition - Chatterbox	 	 	—	 	 	 	—	 	 	 	619,802	 	 	 	298,438	 	 	 	918,240	 
	Effects of foreign exchange	 	 	(3,583	)	 	 	—	 	 	 	2,989	 	 	 	1,439	 	 	 	845	 
	As at June 30, 2021	 	 	86,891	 	 	 	993,870	 	 	 	622,791	 	 	 	299,877	 	 	 	2,003,429	 
	Effects of foreign exchange	 	 	(1,820	)	 	 	—	 	 	 	13,450	 	 	 	6,476	 	 	 	18,106	 
	As at December 31, 2021	 	 	85,071	 	 	 	993,870	 	 	 	636,241	 	 	 	306,353	 	 	 	2,021,535	 

 

	Accumulated amortization	 	Brand QYOU 

    $	 	 	Capitalized 

    development
 $	 	 	Brand 
 Chatterbox

    $	 	 	Customer
 relationships

    $	 	 	Total

    $	 
	As at June 30, 2020	 	 	—	 	 	 	993,870	 	 	 	—	 	 	 	—	 	 	 	993,870	 
	Amortization	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,429	 	 	 	2,429	 
	Effects of foreign exchange	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(102	)	 	 	(102	)
	As at June 30, 2021	 	 	—	 	 	 	993,870	 	 	 	—	 	 	 	2,327	 	 	 	996,197	 
	Amortization	 	 	—	 	 	 	—	 	 	 	—	 	 	 	25,326	 	 	 	25,326	 
	Effects of foreign exchange	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,073	 	 	 	2,073	 
	As at December 31, 2021	 	 	—	 	 	 	993,870	 	 	 	—	 	 	 	29,726	 	 	 	1,023,596	 

 

	Net book value	 	Brand QYOU 

    $	 	 	Capitalized 

    development
 $	 	 	Brand 
 Chatterbox

    $	 	 	Customer
 relationships

    $	 	 	Total

    $	 
	As at June 30, 2020	 	 	90,474	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	90,474	 
	As at June 30, 2021	 	 	86,891	 	 	 	—	 	 	 	622,791	 	 	 	297,550	 	 	 	1,007,232	 
	As at December 31, 2021	 	 	85,071	 	 	 	—	 	 	 	636,241	 	 	 	276,627	 	 	 	997,939	 

 

		11.	GOODWILL

 

A summary of the Company’s goodwill is as
follows:

 

	 	 	$	 
	As at June 30, 2020	 	 	—	 
	Acquisition - Chatterbox	 	 	3,231,125	 
	Effects of foreign exchange	 	 	15,971	 
	Balance – June 30, 2021	 	 	3,247,096	 
	Chatterbox - Working capital adjustments	 	 	37,352	 
	Effects of foreign exchange	 	 	115,191	 
	Balance – December 31, 2021	 	 	3,399,639	 

 

Annual impairment testing involves determining
the recoverable amount of the CGU group to which goodwill is allocated and comparing this to the carrying value of the CGU. The Chatterbox
Brand, customer relationships and all of the goodwill has been allocated to the Chatterbox CGU for purposes of assessing for potential
impairment. The measurement of the recoverable amount of the CGU was calculated based on value in use using level 3 inputs in a discounted
cash flow model. The value in use was determined to be in greater than the fair value less cost of disposal of the CGUs. The key
assumptions used in the estimates of the recoverable amounts are described below:

 

		●	Cash flows were projected based on the Company's
long-term business plan. The business plan contains forecasts based on actual operating results in conjunction with anticipated future
growth opportunities, as well as industry and market trends. The forecasts were extended to a total of five years (with a terminal
year thereafter). Revenue compound annual growth rate was 28%.

 

    - 23 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		●	The terminal growth rate of 4% was based on historical
and projected industry and relevant Indian market data. If all other assumptions were held constant and the terminal growth rate
were to decrease by 1% this would translate into a decrease of the recoverable amount of approximately $50,000.

 

		●	The post tax discount rate applied in determining
the recoverable amount of the CGU groups was 39.3%. The discount rates were estimated based on past experience and the weighted average
cost of capital of the CGU, other competitors in the industry and adjusted for risks in the cash flow. If all other assumption were
held constant and the discount rates were to increase by 1% this would translate into a decrease of the recoverable amount of approximately
$140,000.

 

		12.	SHARE CAPITAL

 

	 	 	Common shares	 	 	Share capital	 	 	Warrants	 	 	Warrants	 	 	Compensation

    options	 	 	Compensation

    options amount

    within share-based

    payment reserve	 
	 	 	#	 	 	$	 	 	#	 	 	$	 	 	#	 	 	$	 
	Balance, June 30, 2019	 	 	136,819,060	 	 	 	22,312,422	 	 	 	54,868,300	 	 	 	1,819,172	 	 	 	6,156,220	 	 	 	519,330	 
	Issuance of common shares and
    warrants, net of issuance costs [a][b]	 	 	42,000,000	 	 	 	1,582,330	 	 	 	42,000,000	 	 	 	346,531	 	 	 	2,686,000	 	 	 	49,573	 
	Warrants expired [c]	 	 	—	 	 	 	—	 	 	 	(26,938,175	)	 	 	—	 	 	 	(2,046,753	)	 	 	—	 
	Share-based compensation [d]	 	 	4,315,832	 	 	 	129,475	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Warrants exercised [e]	 	 	500,000	 	 	 	36,292	 	 	 	(500,000	)	 	 	(6,292	)	 	 	—	 	 	 	—	 
	Balance, June 30, 2020	 	 	183,634,892	 	 	 	24,060,519	 	 	 	69,430,125	 	 	 	2,159,411	 	 	 	6,795,467	 	 	 	568,903	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Issuance of common shares and
    warrants, net of issuance costs [f] [g]	 	 	101,737,959	 	 	 	7,986,843	 	 	 	50,868,980	 	 	 	2,140,394	 	 	 	8,835,697	 	 	 	1,083,052	 
	Compensation options and warrants
    exercised [h]	 	 	79,529,929	 	 	 	6,986,425	 	 	 	(65,816,471	)	 	 	(535,863	)	 	 	(8,992,975	)	 	 	(192,884	)
	RSU Redeemed [i]	 	 	11,258,338	 	 	 	1,908,500	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Share options exercised [j]	 	 	5,193,268	 	 	 	469,775	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Share-based compensation [k]	 	 	83,333	 	 	 	38,750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Compensation options and warrants
    expired	 	 	—	 	 	 	—	 	 	 	(9,451,000	)	 	 	—	 	 	 	(1,615,907	)	 	 	—	 
	Balance, June 30, 2021	 	 	381,437,719	 	 	 	41,450,812	 	 	 	45,031,634	 	 	 	3,763,942	 	 	 	5,022,282	 	 	 	1,459,071	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Issuance of common shares, net
    of issuance costs [l]	 	 	7,896,875	 	 	 	2,160,891	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Compensation options and warrants
    exercised [m]	 	 	10,713,883	 	 	 	1,063,340	 	 	 	(9,356,809	)	 	 	(63,260	)	 	 	(881,383	)	 	 	(15,994	)
	RSUs
    redeemed [n]	 	 	1,216,669	 	 	 	60,833	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Share options exercised [o]	 	 	129,168	 	 	 	22,987	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	Compensation options and warrants
    expired	 	 	—	 	 	 	—	 	 	 	(14,250	)	 	 	—	 	 	 	—	 	 	 	—	 
	Balance, December 31, 2021	 	 	401,394,314	 	 	 	44,758,863	 	 	 	35,660,575	 	 	 	3,700,682	 	 	 	4,140,899	 	 	 	1,443,077	 

 

		[a]	During the six months ended December 31, 2019, the Company completed the issuance of 36,000,000 units
as part of a private placement at a price of $0.05 per unit. The total gross proceeds from the issuance was $1,800,000. Each unit is comprised
of one common share of the Company, one-half of a purchase warrant exercisable at a price of $0.06 (a “6 Cent Warrant”) and
one-half of a purchase warrant exercisable at a price of $0.10 (a “10 Cent Warrant”).

 

Each whole 6 Cent Warrant is exercisable
to purchase one common share in the capital of the Company at a price of $0.06 for a period of one year following the closing date. Each
whole 10 Cent Warrant is exercisable to purchase one common share in the capital of the Company at a price of $0.10 for a period of two
years following the closing date. The fair value of each 6 Cent Warrant is $0.013 per warrant and $0.01 per 10 Cent Warrant; based on
the relative fair value of the shares issued and the warrants, calculated using the Black-Scholes options pricing model with a market
price per common share of $0.055 on the date of grant, a risk-free interest rate of 1.58%, an expected annualized volatility of 65% and
expected dividend yield of 0%. The fair value of all the warrants is $279,821 as calculated using the Black-Scholes options pricing model.

 

    - 24 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

Transaction costs consisted of $140,468
in cash and issuance of 2,266,000 compensation options. Each compensation option is exercisable into one unit until September 30,
2021 at a price of $0.05. Total fair value of the compensation options was determined to be $41,283. The fair value of the compensation
units was determined using the Black-Scholes options pricing model with a market price per compensation unit of $0.05, a risk-free interest
rate of 1.58%, an expected annualized volatility of 65% and expected dividend yield of 0%.

 

		[b]	On February 11, 2020, the Company completed the issuance of 6,000,000 units as part of a private
placement at a price of $0.06 per unit. The total gross proceeds from the issuance was $360,000. Each unit is comprised of one common
share of the Company and one purchase warrant exercisable at a price of $0.08 (a “8 Cent Warrant”).

 

Each 8 Cent Warrant is exercisable
to purchase one common share in the capital of the Company at a price of $0.08 for a period of two year following the closing date. The
fair value of each 8 Cent Warrant is $0.015 per warrant; based on the relative fair value of the shares issued and the warrants, calculated
using the Black-Scholes options pricing model with a market price per common share of $0.055 on the date of grant, a risk-free interest
rate of 1.51%, an expected annualized volatility of 68% and expected dividend yield of 0%. The fair value of the warrants is $66,710 as
calculated using the Black-Scholes options pricing model.

 

Transaction costs consisted of $41,098
in cash and issuance of 420,000 compensation options to the agents in connection with the transaction. Each compensation option is exercisable
into one unit until February 11, 2022 at a price of $0.06. Total fair value of the compensation options was determined to be $8,290.
The fair value of the compensation units was determined using the Black-Scholes options pricing model with a market price per compensation
unit of $0.06, a risk-free interest rate of 1.51%, an expected annualized volatility of 68% and expected dividend yield of 0%.

 

		[c]	During the period ending June 30, 2020, 26,938,175 warrants and 2,046,753 compensation options expired
in accordance with their terms.

 

		[d]	On March 23, 2020, the Company issued 4,315,832 common shares to certain directors and their holding
corporations as compensation for services provided to the Company valued at $129,475.

 

		[e]	On January 14, 2020, 500,000 warrants were exercised at $0.06 per warrant into 500,000 common shares.

 

		[f]	During the three months ended September 30, 2020, the Company completed the issuance of 60,666,399
units of the Company as part of a private placement at a price of $0.03 per unit. The total gross proceeds from the issuance was $1,820,002.
Each unit is comprised of one common share of the Company and one-half of one common share purchase warrant exercisable to purchase one
common share at a price of $0.05 (a “5 Cent Warrant”).

 

Each 5 Cent Warrant is exercisable
to purchase one common share in the capital of the Company at a price of $0.05 per 5 Cent Warrant Share until June 30, 2022. The
fair value of each 5 Cent Warrant is $0.01 per warrant, calculated using the Black-Scholes option pricing model with a market price per
common share of $0.035 on the date of grant, a risk-free interest rate of 0.24%, an expected annualized volatility of 76% and expected
dividend yield of 0%.

 

Total transaction costs consisted of
$161,145 in cash and issuance of 5,549,973 compensation options to the agents in connection with the transaction. Each compensation option
is exercisable into one unit until June 30, 2022 at a price of $0.05. Total fair value of the compensation options was determined
to be $89,386. The fair value of the compensation units was determined using the Black-Scholes options pricing model with a market price
per compensation unit of $0.035, a risk-free interest rate of 0.24%, an expected annualized volatility of 76% and expected dividend yield
of 0%.

 

		[g]	During the three months ended March 31, 2021, the Company completed the issuance of 41,071,560 units
of the Company as part of a private placement at a price of $0.28 per unit. The total gross proceeds from the issuance was $11,500,037.
Each unit is comprised of one common share of the Company and one-half of one common share purchase warrant exercisable to purchase one
common share at a price of $0.45 (a “45 Cent Warrant”).

 

    - 25 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

Each 45 Cent Warrant is exercisable
to purchase one common share in the capital of the Company at a price of $0.45 per 45 Cent Warrant Share until February 25, 2023.
The fair value of each 45 Cent Warrant is $0.1837 per warrant; calculated using the Black-Scholes options pricing model with a market
price per common share of $0.315 on the date of grant, a risk-free interest rate of 0.32%, an expected annualized volatility of 131% and
expected dividend yield of 0%.

 

Total transaction costs consisted of
$2,942,270 in cash and issuance of 3,285,724 compensation options to the agents in connection with the transaction. Each compensation
option is exercisable into one unit until February 25, 2023 at a price of $0.28. Total fair value of the compensation options was
determined to be $993,666. The fair value of the compensation units was determined using the Black-Scholes options pricing model with
a market price per common share of $0.315, a risk-free interest rate of 0.32%, an expected annualized volatility of 131% and expected
dividend yield of 0%.

 

		[h]	During the year ended June 30, 2021, 8,992,975 compensation options were exercised for proceeds of
$489,638. Upon exercise of the compensation options the Company issued 8,992,975 common shares, 2,279,401 5 Cent Warrants, 57,750 6 Cent
Warrants, 332,500 8 Cent Warrants, 767,600 10 Cent Warrants, 1,258,232 12 Cent Warrants and 25,000 45 Cent Warrants.

 

During the year ended June 30,
2021, 18,903,088 5 Cent Warrants, 16,869,250 6 Cent Warrants, 4,082,510 8 Cent Warrants, 10,256,250 10 Cent Warrants and 20,425,856 12
Cent Warrants were exercised for proceeds of $5,760,937. Upon the exercise of the warrants the Company issued 70,536,954 common shares.

 

		[i]	During the year ended June 30, 2021, 11,258,338 restricted share units were redeemed for 11,258,338
common shares.

 

		[j]	During the year ended June 30, 2021, 5,193,268 share options were exercised for proceeds of $285,172.
Upon the exercise of the share options 5,193,268 common shares were issued.

 

		[k]	During the year ended June 30, 2021, the Company issued 83,333 common shares to a non-related party
resulting in a recognition of $34,583 share-based compensation expense.

 

		[l]	On August 16, 2021 the Company completed the
issuance of 7,896,875 common shares as part of a non-brokered private placement at a price of $0.32 per share. Total gross proceeds
from the issuance was $2,527,000.  In addition to the issuance of common shares, the Company also granted the investor a right to
subscribe for an additional US $2,000,000 worth of common shares between January 1, 2022 and March 31, 2022 at the greater of
$0.42 per share and a discounted price based on the volume weighted-average price of the common shares on the TSXV.  The
option meets the definition of a derivative liability, and as such was initially recognized at its fair value of $114,532. 
The fair value of the liability was estimated by utilizing a Monte Carlo simulation.  As at December 31, 2021, the Company
revalued the liability relating to the derivative, and determined that the fair value was $nil, due to decreases in the trading price
of the Company’s common shares on the TSXV.  As such, the Company has recognized a gain on revaluation of derivative liability
in the consolidated statements of loss and comprehensive loss of $114,532. 
Total transaction costs consisted of $251,577 in cash. On the date of the investment, the Company purchased media credits in the amount
of $2,000,000 USD from the investor. Of this amount, $1,673,771 CAD remains in the prepaid expenses as of December 31, 2021 to be
utilized over the next fiscal year.

 

		[m]	During the six months ended December 31, 2021, 881,383 compensation options were exercised from proceeds
of $15,994. Upon exercise of the compensation options the Company issued 881,383 common shares and 475,691 10 cent warrants.

 

During the six months ended December 31,
2021, 8,862,500 10 cent warrants, 70,000 8 cent warrants and 900,000 5 cent warrants were exercised for proceeds of $69,355. Upon the
exercise of the warrants the Company issued 9,832,500 common shares.

 

		[n]	During the six months ended December 31, 2021, 1,216,669 restricted share unit were redeemed for
1,216,669 common shares.

 

		[o]	During the six months ended December 31, 2021, 129,168 share options were exercised for proceeds
of $13,333 by related parties. Upon the exercise of the share options 129,168 commons shares were issued.

 

    - 26 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The following is a summary of the Company’s warrants outstanding
as at December 31, 2021:

 

		 	Exercise price	 	 	Number Outstanding	 
	Expiry date	 	$	 	 	#	 
	Friday, February 11, 2022	 	0.08	 	 	2,249,990	 
	Thursday, June 30, 2022	 	0.05	 	 	12,849,805	 
	Saturday, February 25, 2023	 	0.45	 	 	20,560,780	 
	 	 	0.28	 	 	35,660,575	 

 

The following is a summary of the Company’s warrants outstanding
as at June 30, 2021:

 

	
		 	Warrants Outstanding

Exercise price	 	 	Number Outstanding	 
	Expiry date	 	$	 	 	#	 
	September 30, 2021	 	0.10	 	 	8,511,350	 
	February 11, 2022	 	0.08	 	 	2,249,990	 
	June 30, 2022	 	0.05	 	 	13,709,514	 
	February 25, 2023	 	0.45	 	 	20,560,780	 
	 	 	0.24	 	 	45,031,634	 

 

The following is a summary of the Company’s warrants outstanding
as at June 30, 2020:

 

		 	Exercise price	 	 	Number Outstanding	 
	Expiry date	 	$	 	 	#	 
	July 19, 2020	 	0.37	 	 	8,762,500	 
	September 30, 2020	 	0.06	 	 	17,500,000	 
	April 30, 2021	 	0.12	 	 	19,167,625	 
	September 30, 2021	 	0.10	 	 	18,000,000	 
	February 11, 2022	 	0.08	 	 	6,000,000	 
	 	 	0.13	 	 	69,430,125	 

 

    - 27 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		13.	SHARE-BASED COMPENSATION

 

The Company has established a share option plan
and restricted share unit (“RSU”) plan for directors, officers, employees and consultants of the Company. The Company’s
Board of Directors determines, among other things, the eligibility of individuals to participate in these plans and the term, vesting
periods, and the exercise price of share options granted to individuals under the share option plan.

 

Each share option converts into one common share
of the Company on exercise and on receipt of exercise price. Each RSU converts into one common share of the Company on the date of vesting
at $nil exercise price. Share options may be exercised at any time from the date of vesting to the date of their expiry.

 

		[i]	Share options

 

Changes in the number of share options during
the six months ended December 31, 2021, and twelve months ended June 30, 2021 and 2020 were as follows:

 

	 	 	 	 	 	Weighted average	 
	 	 	Number of options	 	 	exercise price	 
	 	 	#	 	 	$	 
	Outstanding as at June 30, 2019	 	11,379,062	 	 	0.27	 
	Granted	 	1,000,000	 	 	0.05	 
	Forfeited	 	(57,812	)	 	0.08	 
	Expired	 	(747,291	)	 	0.46	 
	Outstanding as at June 30, 2020	 	11,573,959	 	 	0.24	 
	Granted	 	26,800,000	 	 	0.18	 
	Forfeited	 	(184,356	)	 	0.08	 
	Expired	 	(112,513	)	 	0.35	 
	Cancelled	 	(150,000	)	 	0.30	 
	Exercised	 	(5,193,268	)	 	0.05	 
	Outstanding as at June 30, 2021	 	32,733,822	 	 	0.22	 
	Granted	 	3,425,000	 	 	0.28	 
	Forfeited	 	(250,000	)	 	0.36	 
	Exercised	 	(129,168	)	 	0.17	 
	Outstanding as at December 31, 2021	 	35,779,654	 	 	0.23	 
	Exercisable as at December 31, 2021	 	15,271,171	 	 	0.23	 

 

The fair value of share options granted during
the twelve months ended June 30, 2021 and 2020 determined at the date of grant using the Black Scholes option pricing model using
the following inputs:

 

	 	 	December
    31, 2021	 	 	June 30,
    2021	 	 	June 30,
    2020	 
	Grant date share price	 	$0.275	 	 	$0.05 - $0.38	 	 	$0.045	 
	Exercise price	 	$0.275	 	 	$0.05 - $0.37	 	 	$0.050	 
	Expected dividend yield	 	--	 	 	--	 	 	--	 
	Risk free interest rate	 	1.56%	 	 	0.35% - 0.92%	 	 	0.74%	 
	Expected life	 	5 years	 	 	5 years	 	 	5 years	 
	Expected volatility	 	115%	 	 	63% - 115%	 	 	70%	 

 

Expected volatility was estimated by using the
historical volatility of the Company. The expected option life represents the period of time that options granted are expected to be
outstanding. The risk-free interest rate is based on government bonds with a remaining term equal to the expected life of the options.

 

    - 28 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The following table is a summary of the Company’s
share options outstanding as at December 31, 2021:

 

	Options outstanding	 	 	Options exercisable	 
	Exercise price	 	 	Number outstanding	 	 	Weighted average remaining 

    contractual life [years]	 	 	Exercise price	 	 	Number exercisable	 
	$	 	 	#	 	 	#	 	 	$	 	 	#	 
	0.050	 	 	 	7,622,903	 	 	 	3.51	 	 	 	0.050	 	 	 	3,338,622	 
	0.060	 	 	 	2,000,000	 	 	 	2.45	 	 	 	0.060	 	 	 	2,000,000	 
	0.075	 	 	 	2,899,979	 	 	 	2.16	 	 	 	0.075	 	 	 	2,242,516	 
	0.180	 	 	 	4,350,000	 	 	 	4.07	 	 	 	0.180	 	 	 	996,908	 
	0.275	 	 	 	3,425,000	 	 	 	4.90	 	 	 	0.275	 	 	 	65,634	 
	0.300	 	 	 	8,600,001	 	 	 	4.17	 	 	 	0.300	 	 	 	1,751,962	 
	0.360	 	 	 	2,000,000	 	 	 	4.45	 	 	 	0.360	 	 	 	250,008	 
	0.370	 	 	 	300,000	 	 	 	4.41	 	 	 	0.370	 	 	 	43,750	 
	0.500	 	 	 	4,581,771	 	 	 	0.29	 	 	 	0.500	 	 	 	4,581,771	 
	0.228	 	 	 	35,779,654	 	 	 	3.35	 	 	 	0.234	 	 	 	15,271,171	 

 

The following table is a summary of the Company’s
share options outstanding as at June 30, 2021:

 

	Options outstanding	 	 	Options exercisable	 
	Exercise price	 	 	Number outstanding	 	 	Weighted average remaining 

    contractual life [years]	 	 	Exercise price	 	 	Number exercisable	 
	$	 	 	#	 	 	#	 	 	$	 	 	#	 
	0.050	 	 	 	7 ,702,071	 	 	 	4.02	 	 	 	0.050	 	 	 	2 ,523,945	 
	0.060	 	 	 	2,000,000	 	 	 	2.96	 	 	 	0.060	 	 	 	2,000,000	 
	0.075	 	 	 	2,924,979	 	 	 	2.66	 	 	 	0.075	 	 	 	1 ,991,646	 
	0.180	 	 	 	4,350,000	 	 	 	4.58	 	 	 	0.180	 	 	 	4 83,333	 
	0.300	 	 	 	8,625,001	 	 	 	4.67	 	 	 	0.300	 	 	 	7 41,668	 
	0.360	 	 	 	2,250,000	 	 	 	4.96	 	 	 	0.360	 	 	 	5 0,000	 
	0.370	 	 	 	300,000	 	 	 	4.91	 	 	 	0.370	 	 	 	6 ,667	 
	0.500	 	 	 	4,581,771	 	 	 	0.79	 	 	 	0.500	 	 	 	4 ,744,017	 
	0.223	 	 	 	32,733,822	 	 	 	3.70	 	 	 	0.247	 	 	 	1 2,541,276	 

 

The following table is a summary of the Company’s
share options outstanding as at June 30, 2020:

 

	Options outstanding	 	 	Options exercisable	 
	Exercise price	 	 	Number outstanding	 	 	Weighted average remaining 

    contractual life [years]	 	 	Exercise price	 	 	Number exercisable	 
	$	 	 	#	 	 	#	 	 	$	 	 	#	 
	0.050	 	 	 	1,000,000	 	 	 	4.68	 	 	 	0.050	 	 	 	83,333	 
	0.060	 	 	 	2,000,000	 	 	 	3.96	 	 	 	0.060	 	 	 	2,000,000	 
	0.075	 	 	 	3 ,917,188	 	 	 	3.65	 	 	 	0.075	 	 	 	2 ,007,188	 
	0.500	 	 	 	4 ,656,771	 	 	 	1.79	 	 	 	0.500	 	 	 	4 ,015,085	 
	0.241	 	 	 	11,573,959	 	 	 	3.05	 	 	 	0.282	 	 	 	8,105,606	 

 

During the six months ended December 31,
2021, the Company recognized $1,170,434 of share-based compensation expense associated with options issued under the share option plan.
During the year ended June 30, 2021, the Company recognized $1,225,129 (2020 – $201,247) of share-based compensation expense
associated with options issued under the share option plan.

 

    - 29 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		[ii]	RSUs

 

Changes in the number of RSUs during the years
ended June 30, 2021 and 2020 were as follows:

 

	 	 	Number of RSUs	 	 	Number exercisable	 
	 	 	#	 	 	#	 
	Outstanding as at June 30, 2020	 	 	11,825,000	 	 	 	7,475,000	 
	Vested	 	 	—	 	 	 	2,683,338	 
	Granted	 	 	15,950,000	 	 	 	1,350,000	 
	Forfeited	 	 	(500,000	)	 	 	(250,000	)
	Redeemed	 	 	(11,258,338	)	 	 	(11,258,338	)
	Outstanding as at June 30, 2021	 	 	16,016,662	 	 	 	—	 
	Vested	 	 	—	 	 	 	—	 
	Granted	 	 	3,150,000	 	 	 	—	 
	Forfeited	 	 	—	 	 	 	—	 
	Redeemed	 	 	(1,216,669	)	 	 	—	 
	Outstanding as at December 31, 2021	 	 	17,949,993	 	 	 	—	 

 

The fair value of RSUs granted during the six
months ended December 31, 2021 was $0.22 (2021 - $0.05 – $0.38; 2020 – $0.045) per unit, determined by reference to
the Company’s share price on the date of grant.

 

During the six months ended December 31,
2021, the Company recognized $1,113,802 of share-based compensation expense associated with RSUs issued under the RSU plan. During the
year ended June 30, 2021, the Company recognized $1,078,547 (2020 – $531,953) of share-based compensation expense associated
with RSUs issued under the RSU plan.

 

 

		14.	NON-CONTROLLING INTEREST

 

The Company has an 88% (June 30, 2021 –
88%) ownership interest in QYOU India.

 

Reconciliation of non-controlling interest is as follows:

 

	 	 	$	 
	Balance — June 30, 2019	 	 	(31,119	)
	Share of net loss for the period	 	 	(277,238	)
	Adjustment for increased ownership	 	 	98,270	 
	Balance — June 30, 2020	 	 	(210,087	)
	Share of net loss for the period	 	 	(341,719	)
	Balance — June 30, 2021	 	 	(551,806	)
	Share of net income for the period	 	 	108,363	 
	Balance — December 31, 2021	 	 	(443,443	)

 

    - 30 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The following is a summary of QYOU India’s stand-alone financial
results:

 

	 	 	As at and six months ended
 December 31,
    2021	 	 	As at and year ended

    June 30, 2021	 	 	As at and year ended

    June 30, 2020	 
	 	 	$	 	 	$	 	 	$	 
	Current assets	 	 	4,638,638	 	 	 	2,297,607	 	 	 	34,500	 
	Non-current assets	 	 	380,458	 	 	 	47,397	 	 	 	10,064	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current liabilities	 	 	1,179,431	 	 	 	340,500	 	 	 	357,133	 
	Non-Current liabilities	 	 	447,079	 	 	 	161,916	 	 	 	35,102	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Revenue	 	 	5,310,415	 	 	 	940,782	 	 	 	66,153	 
	Net income (loss)	 	 	167,631	 	 	 	(2,847,656	)	 	 	(1,630,363	)

 

		15.	CONTINGENCIES

 

In the ordinary course of business, from time
to time the Company is involved in various claims related to operations, rights, commercial, employment or other claims. Although such
matters cannot be predicted with certainty, management does not consider the Company’s exposure to these claims to be material
to these financial statements.

 

		16.	RELATED PARTY TRANSACTIONS

 

Key management personnel and directors include
the Company’s CEO, CFO, executives and members of the Board of Directors. The compensation paid or payable to key management and
directors comprised of the following:

 

On June 5, 2017, the Company agreed to loan
Curt Marvis, the Chief Executive Officer of the Company, an aggregate principal amount of USD$150,000, as evidenced by a promissory note
issued by Mr. Marvis to the Company, which bears interest at a rate of 3% per annum (the “Officer Loan”) and was originally
intended to become due on June 5, 2019. The Company extended the term of the promissory note to January 31, 2021. During the
year ended June 30, 2021, the loan was forgiven by the Company and the carrying amount of $214,420 including interest was recorded
as an expense in the statements of loss and comprehensive loss under legal and consulting expenses.

 

Compensation expense for the Company’s
key management personnel for the six months ended December 31, 2021, the years ended June 30, 2021 and 2020 is as follows:

 

	 	 	Six months ended

 December 31, 2021	 	 	Year ended
 June 30, 2021	 	 	Year ended
 June 30, 2020	 
	 	 	$	 	 	$	 	 	$	 
	Salaries, benefits and consulting fees	 	 	1,098,156	 	 	 	1,263,607	 	 	 	1,260,913	 
	Share-based payments	 	 	1,374,329	 	 	 	1,508,966	 	 	 	592,157	 
	 	 	 	2,472,485	 	 	 	2,772,573	 	 	 	1,853,070	 

 

Included in trade and other payables is $167,125 (2021 - $34,052;
2020 – $27,089) owing to executives for expense reimbursement and sales commissions.

 

    - 31 -

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

		17.	INCOME TAXES

 

The reconciliation of income tax expense for
the periods ended December 31, 2021, June 30, 2021 and 2020 consists of the following:

   

	 	 	December 31, 2021	 	 	June 30, 2021	 	 	June 30, 2020	 
	 	 	$	 	 	$	 	 	$	 
	Loss before income taxes	 	 	(4,733,718	)	 	 	(7,262,212	)	 	 	(6,547,697	)
	Statutory Rate	 	 	26.50	%	 	 	26.50	%	 	 	26.50	%
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Expected income tax recovery at combined basis federal and
    provincial tax rates	 	 	(1,254,435	)	 	 	(1,924,486	)	 	 	(1,735,140	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effect on income taxes of:	 	 	 	 	 	 	 	 	 	 	 	 
	Non-deductible expenses	 	 	14,242	 	 	 	604,971	 	 	 	246,460	 
	Losses not recognized	 	 	1,406,256	 	 	 	1,455,742	 	 	 	1,411,090	 
	Change in temporary differences not
    recognized	 	 	(16,841	)	 	 	(202,118	)	 	 	81,365	 
	Rate differential between jurisdictions	 	 	(54,541	)	 	 	79,364	 	 	 	(3,353	)
	Other	 	 	(48,892	)	 	 	31,767	 	 	 	(422	)
	Income Tax Expense	 	 	45,789	 	 	 	45,240	 	 	 	-	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current	 	 	100,908	 	 	 	45,240	 	 	 	-	 
	Deferred	 	 	(55,119	)	 	 	-	 	 	 	-	 
	 	 	 	45,789	 	 	 	45,240	 	 	 	-	 

 

Deferred income taxes reflect the impact of loss
carry forwards and of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts
as measured by tax laws. The following deferred tax assets and liabilities have been recognized for accounting purposes:

 

	 	 	December 31,
    2021

$	 	 	June 30,
    2021

$	 
	Deferred tax asset	 		238,048	 	 		116,966	 
	Deferred tax liability	 	 	(465,707	)	 	 	(350,439	)
	Net deferred tax liability	 		(227,659	)	 		(233,473	)

 

The tax effects of temporary differences and
loss carry forwards that give rise to significant portions of the deferred tax asset, which have not been recognized, are approximately
as follows:

  

	 	 	July 1,
    2021

    $	 	 	Recognized
    in Other
 Comprehensive Income	 	 	Recognized
    in profit and

    loss

    $	 	 	December 31,
    2021

    $	 
	Deferred tax asset	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss carry forwards	 	 	23,349	 	 	 	-	 	 	 	7,253	 	 	 	30,602	 
	Fixed assets	 	 	3,731	 	 	 	798	 	 	 	(2,636	)	 	 	1,893	 
	Financial statement reserves	 	 	2,006	 	 	 	429	 	 	 	(2,436	)	 	 	-	 
	Right of use assets	 	 	87,880	 	 	 	-	 	 	 	117,673	 	 	 	205,553	 
	 	 	 	116,966	 	 	 	1,227	 	 	 	119,854	 	 	 	238,048	 
	Deferred tax liability	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed assets	 	 	-	 	 	 	 	 	 	 	(7,073	)	 	 	(7,073	)
	Intangible assets	 	 	(236,432	)	 	 	(50,531	)	 	 	57,194	 	 	 	(229,769	)
	Right of use assets	 	 	(81,074	)	 	 	-	 	 	 	(112,575	)	 	 	(193,649	)
	Debt financing	 	 	(31,605	)	 	 	-	 	 	 	(3,611	)	 	 	(35,216	)
	 	 	 	(349,111	)	 	 	(50,531	) 	 	 	(66,065	)	 	 	(465,707	)
	Revaluation
    of deferred tax liability	 	 	(1,328	)	 	 	- 	 	 	 	1,328	 	 	 	-	 
	Net
    deferred tax liability	 	 	(233,473	)	 		(49,304	) 	 		55,117	 	 	 	(227,659	)

 

    	 	- 32 -	 

     

    

  

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

	 	 	July 1, 2020	 	 	Recognized in Goodwill	 	 	Recognized in profit and

 loss	 	 	June 30, 2021	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	Deferred tax asset	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss carry forwards	 	 	37,113	 	 	 	-	 	 	 	(13,764	)	 	 	23,349	 
	Fixed assets	 	 	-	 	 	 	3,758	 	 	 	(27	)	 	 	3,731	 
	Financial statement reserves	 	 	-	 	 	 	-	 	 	 	2,006	 	 	 	2,006	 
	Right of use assets	 	 	130,528	 	 	 	-	 	 	 	(42,648	)	 	 	87,880	 
	 	 	 	167,641	 	 	 	3,758	 	 	 	(54,433	)	 	 	116,966	 
	Deferred tax liability	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed assets	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Intangible assets	 	 	-	 	 	 	(235,903	)	 	 	(529	)	 	 	(236,432	)
	Right of use assets	 	 	(125,709	)	 	 	-	 	 	 	44,635	 	 	 	(81,074	)
	Debt financing	 	 	(41,932	)	 	 	-	 	 	 	10,327	 	 	 	(31,605	)
	 	 	 	(167,641	)	 	 	(235,903	)	 	 	54,433	 	 	 	(349,111	)
	Revaluation of deferred tax liability	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1,328	)
	Net deferred tax liability	 	 	-	 	 	 	(232,145	)	 	 	-	 	 	 	(233,473	)

  

Gross temporary differences and loss carry forwards
that give rise to significant portions of the deferred tax asset, which have not been recognized, are approximately as follows:

  

	 	 	December 31, 2021	 	 	June 30, 2021	 
	 	 	$	 	 	$	 
	Property, plant and equipment and intangible assets	 	 	2,333,800	 	 	 	1,708,981	 
	Right of use sssets/lease liabilities	 	 	-	 	 	 	6,809	 
	Intangible assets	 	 	885,129	 	 	 	1,635,292	 
	Share issue costs	 	 	3,005,300	 	 	 	4,147,076	 
	Non-capital losses	 	 	36,954,305	 	 	 	35,767,794	 
	Financial statement reserves	 	 	1,172,461	 	 	 	503,908	 
	Total	 	 	44,350,995	 	 	 	43,769,860	 

  

The Company has the following non-capital losses
available to reduce future years' federal and provincial taxable income, which expire as follows:

 

	 	 	 	Canada	 	 	India	 	 	Ireland	 	 	United States	 	 	Total	 
	 	 	 	$
    	 	 	$
    	 	 	$
    	 	 	$
    	 	 	$
    	 
	2038
    and prior	 	 	 	10,497,663	 	 	 	591,960	 	 	 	-	 	 	 	6,532,225	 	 	 	17,621,848	 
	2039	 	 	 	2,831,036	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	2,831,036	 
	2040	 	 	 	2,593,254	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	2,593,254	 
	2041	 	 	 	2,214,002	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	2,214,002	 
	Indefinite	 	 	 	-	 	 	 	-	 	 	 	8,258,860	 	 	 	4,371,519	 	 	 	12,630,379	 
	 	 	 	 	18,135,955	 	 	 	591,960	 	 	 	8,258,860	 	 	 	10,903,744	 	 	 	37,890,519	 

 

		18.	FINANCIAL INSTRUMENTS

 

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 and arises principally
from deposits with banks and outstanding receivables. The Company trades only with recognized, creditworthy third parties. The Company
performs credit checks for all customers who wish to trade on credit terms. As at December 31, 2021, two customers represented 37%
(2021 - 34.9%; 2020 – 76.5%) of the outstanding trade receivable balance. As at December 31, 2021, the Company recorded a
provision of $32,238 for expected credit loss (2021 - $120,456; 2020 – $nil).

 

The Company does not hold any collateral as security
but mitigates this risk by dealing only with what management believes to be financially sound counterparties and, accordingly, does not
anticipate significant loss for non-performance.

 

    	 	- 33 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

  

The aging of trade receivables is as follows:

 

	 	 	December 31, 2021	 	 	June 30, 2021	 
	 	 	$	 	 	$	 
	Current	 	 	2,336,188	 	 	 	1,450,307	 
	1 to 30 days	 	 	571,824	 	 	 	574,589	 
	31 to 60 days	 	 	929,652	 	 	 	77,737	 
	> 60 days	 	 	326,033	 	 	 	173,839	 
	 	 	 	4,163,697	 	 	 	2,276,472	 
	Less: credit loss impairment	 	 	32,238	 	 	 	120,456	 
	Total trade receivables	 	 	4,131,459	 	 	 	2,156,016	 

 

Liquidity risk

 

Liquidity risk is the risk
that the Company will not be able to meet its financial obligations as they become due. The Company’s exposure to liquidity risk
is dependent on the Company’s ability to raise additional financing to meet its commitments and sustain operations. The Company
mitigates liquidity risk by management of working capital, cash flows and the issuance of share capital.

 

The Company is obligated to the following contractual
maturities of undiscounted cash flows:

   

	 	 	 	 	 	Total contractual	 	 	Contractual
    cash flows	 
	 	 	Carrying
    amount	 	 	cash flows	 	 	Year
    1	 	 	Year
    2	 	 	Year
    3	 	 	Year
    4	 	 	Year
    5 and beyond	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Trade and other payables	 	4,700,239	 	 	4,700,239	 	 	4,700,239	 	 	—	 	 	—	 	 	—	 	 	—	 
	Lease liabilities	 	 	800,833	 	 	 	462,966	 	 	 	151,922	 	 	 	162,943	 	 	 	85,730	 	 	 	57,556	 	 	 	4,815	 
	Contingent consideration	 	 	2,638,912	 	 	 	2,514,370	 	 	 	815,157	 	 	 	835,522	 	 	 	863,691	 	 	 	—	 	 	 	—	 
	Borrowings	 	 	60,613	 	 	 	312,006	 	 	 	11,176	 	 	 	11,176	 	 	 	11,176	 	 	 	11,176	 	 	 	267,302	 

 

Market risk

 

Market risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of
risk: foreign currency risk, interest rate risk and other price risk.

 

Foreign Currency risk

 

Foreign currency risk arises on financial instruments
that are denominated in a currency other than the functional currency in which they are measured. The Company’s primary exposure
with respect to foreign currencies is from USD and Indian Rupee denominated cash and other payables. A 1% change in the foreign exchange
rates would not result in any significant impact to the financial statements.

 

Interest rate risk

 

Interest rate risk is the risk that the fair
value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed
to cash flow interest rate risk as at December 31, 2021.

 

Other price risk

 

Other price risk is the risk that the fair value
or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest
rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer,
or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risks as at December 31,
2021.

 

    	 	- 34 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars,
unless otherwise noted]

 

December 31, 2021, June 30, 2021 and 2020

 

Fair values

 

The carrying values of cash and cash equivalents,
trade receivables, other receivables, borrowings and trade and other payables approximate the fair values due to the short-term nature
of these items. The risk of material change in fair value is not considered to be significant due to a relatively short-term nature.
The carrying value of borrowings approximate the fair value and change risk of material change in fair value is not considered to be
significant. The Company does not use derivative financial instruments to manage this risk.

 

Financial instruments recorded at fair value
on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The Company categorizes its fair value measurements according to a three-level hierarchy. The
hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement
based on the lowest-level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy
are defined as follows:

  

		•	Level
                                            1 – Unadjusted quoted prices as at the measurement date for identical assets or liabilities
                                            in active markets.

 

		•	Level
                                            2 – Observable inputs other than quoted prices included in Level 1, such as quoted
                                            prices for similar assets and liabilities in active markets; quoted prices for identical
                                            or similar assets and liabilities in markets that are not active; or other inputs that are
                                            observable or can be corroborated by observable market data.

 

		•	Level
                                            3 – Significant unobservable inputs, which are supported by little or no market activity.
                                            The fair value hierarchy also requires an entity to maximize the use of observable inputs
                                            and minimize the use of unobservable inputs when measuring fair value.

 

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

 

The contingent consideration is recognized as
Level 3 (Note 4) and recorded at fair value through profit and loss.

 

		19.	CAPITAL MANAGEMENT

 

The Company defines its capital as shareholders’
equity. The Company’s objectives when managing capital are to build liquidity and shareholders’ equity to ensure that strategic
objectives are met. The Company makes every attempt to manage its liquidity to minimize shareholder dilution when possible.

 

The Company policy on dividends is to retain
cash to keep funds available to finance operations and growth.

 

Capital structure is managed within guidelines
approved by the Board of Directors. The Company makes adjustments to its capital structure based on changes in economic conditions and
planned requirements. The Company has the ability to adjust its capital structure by issuing new equity or debt.

 

		20.	SEGMENT INFORMATION

 

Reportable segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision maker, with appropriate aggregation. The chief operating
decision maker is the CEO who is responsible for allocating resources, assessing performance of the reportable segment and making key
strategic decisions. The Company operates in a single segment, being the distribution of curated media content. Segment performance is
evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

 

    	 	- 35 -	 

     

    

 

QYOU Media Inc.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[expressed in Canadian dollars, unless otherwise
noted]

 

December 31, 2021, June 30, 2021 and 2020

 

The Company operates in four geographical areas,
being Canada, United States of America, Ireland and India. Revenue and assets by geography are presented below:

 

As at and for the six months ended December 31,
2021

 

	 	 	Canada	 	 	USA	 	 	Ireland	 	 	India	 	 	Intercompany	 	 	Total	 
	 	 	 	 	 	 	 	 	 	 	 	Q
    India	 	 	Chatterbox	 	 	Intercompany	 	 	Total	 
	Revenue	 	 	164,199	 	 	 	3,192,700	 	 	 	4,801	 	 	 	5,310,415	 	 	 	2,873,841	 	 	 	(1,234,852	)	 	 	10,311,104	 
	Current assets	 	 	37,514,317	 	 	 	7,348,445	 	 	 	17,519,073	 	 	 	4,638,638	 	 	 	3,047,632	 	 	 	(55,041,013	)	 	 	15,027,092	 
	Non-current assets	 	 	789,309	 	 	 	42,406	 	 	 	85,071	 	 	 	380,458	 	 	 	4,287,570	 	 	 	—	 	 	 	5,584,814	 

 

As at and for the year ended June 30,
2021

 

	 	 	Canada	 	 	USA	 	 	Ireland	 	 	Q
    India	 	 	Chatterbox	 	 	Intercompany	 	 	Total	 
	Revenue	 	 	—	 	 	 	2,642,785	 	 	 	212,923	 	 	 	940,782	 	 	 	386,049	 	 	 	—	 	 	 	4,182,539	 
	Current assets	 	 	35,364,692	 	 	 	8,595,997	 	 	 	17,918,125	 	 	 	2,297,607	 	 	 	1,508,967	 	 	 	(54,019,547	)	 	 	11,665,841	 
	Non-current assets	 	 	349,529	 	 	 	43,185	 	 	 	87,700	 	 	 	47,397	 	 	 	4,175,168	 	 	 	—	 	 	 	4,702,979	 

 

As at and for the year ended June 30,
2020

 

	 	 	Canada	 	 	USA	 	 	Ireland	 	 	Q
    India	 	 	Chatterbox	 	 	Intercompany	 	 	Total	 
	Revenue	 	 	6,594	 	 	 	2,185,284	 	 	 	544,221	 	 	 	66,153	 	 	 	—	 	 	 	—	 	 	 	2,802,252	 
	Current assets	 	 	21,509,404	 	 	 	7,535,339	 	 	 	19,020,683	 	 	 	34,500	 	 	 	—	 	 	 	(47,235,112	)	 	 	864,814	 
	Non-current assets	 	 	592,523	 	 	 	108,297	 	 	 	94,505	 	 	 	10,064	 	 	 	—	 	 	 	—	 	 	 	805,389	 

 

As at December 31, 2021, three customers
(June 30, 2021 and 2020 – three and three) customers represented 10% or more of total revenue.

 

	 	 	December 31, 2021	 	 	June 30, 2021	 	 	June 30, 2021	 
	 	 	%	 	 	%	 	 	%	 
	Customer 1	 	 	19	 	 	 	15	 	 	 	19	 
	Customer 2	 	 	11	 	 	 	14	 	 	 	17	 
	Customer 3	 	 	10	 	 	 	12	 	 	 	14	 
	Percentage of total 	 	 	40	 	 	 	41	 	 	 	50	 

   

		21.	SUBSEQUENT EVENTS

 

From January 1, 2022 to April 28, 2022,
16,664 share options were exercised for total proceeds of $1,250, resulting in the issuance of 16,664 common shares to related parties.

 

From January 1, 2022 to April 28, 2022,
2,561,990 warrants were exercised for total proceeds of $196,949, resulting in the issuance of 2,561,990 common shares. Of the total,
2,294,990 8 Cent Warrants were exercised for total proceeds of $183,599, and there is no expired warrant. 267,000 5 Cent Warrants were
exercised for total proceeds of $13,350.

 

On March 30, 2022, 4,316,673 RSUs were redeemed
for 4,316,673 common shares. Of the total, 3,316,670 RSUs were redeemed by related parties.

  

On March 31, 2022, Brand Capital International
(“BCI”), the strategic investment arm of Bennett, Coleman & Co. Ltd. d/b/a The Times of India Group, selected not
to exercise an additional purchase right under the current terms, which is under negotiation.

 

On April 8, 2022, 2,185,000 share options
were granted to certain employees, officers and consultants of the Company pursuant to the Company’s share option plan. The share
options are exercisable at a price $0.21 per share option, vest on a monthly basis for a period of 4 years and expire 5 years from the
grant date. Of the total share options granted, 850,000 were issued to related parties. 550,000 RSUs were granted to certain employees,
officers and consultants of the Company. One third of RSUs granted vest on each of the first three anniversaries of the date of grant.
Of the total RSUs, 100,000 were issued to related parties.

 

    	 	- 36 -

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