ZD VENTURES Corp

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These amendments clarify and improve areas of guidance related to recently issued standards on the topics of credit losses, hedging and recognition and measurements. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides entities that have certain instruments an option to irrevocably elect the fair value option in Subtopic 825-10. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326 - Financial Instruments - Credit Losses, which clarifies guidance on how to report expected recoveries. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update eliminate the need for an organization to analyze whether certain exceptions apply for tax purposes. It also simplifies GAAP for certain taxes. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

The convertible loan notes issued during the period have a conversion feature in which, number of shares issuable on conversion is contingent upon future market price of shares. The Company has ability to raise authorized share capital, and had done so from time to time (see Note 13 (3)), when needed to provide shares issuable on such conversion.  As a result, the embedded conversion feature is considered equity and is included in additional paid in capital.

Stock compensation cost was approximately $1.3 million and $20.5 million for the three and nine months ended December 31, 2018.  On August 1, 2018, the Company revised the terms of the consulting agreement with Lupama. As a result, 5 million shares issued to Lupama and 25 million shares issuable to Lupama on completion of certain milestones were cancelled and replaced by 30 million warrants, which vested immediately on issuance, valid for three years and convertible into equal number of common shares at an exercise price of $0.0025 per share. On October 1, 2018, Lupama was awarded additional 4 million fully vested warrants which were exercised for equal number of common shares on October 2, 2018 at an exercise price of $0.0025 per share. The warrants were valued at $20.5 million using Black-Sholes valuation method. Since all warrants were vested, the entire value was expensed.