ConsolidatedStatements of Cash Flows  (Expressed in Canadian dollars)  Years ended December 31, 2014and 2013  DIVERSIFIED ROYALTY CORP.  The accompanying notes are an integral part of these  consolidated financial statements. 2014  2013  Cash flows provided by (used in): Cash flowsfrom (used in) operating activities:  Net income (loss) for the year  $  7,422,238  $ (3,586,462)  Adjustments for:  Deferred taxes  (10,328,049)  -  Amortization  -  140,847  Impairment loss  -  36,439  Loss on disposal of assets held for sale -  302,174  Unwinding of discount onprovision  24,929  (5,824)  Share-based compensation  280,461  413,236  Income tax recovery -  (95,500)  Changes in non-cash operating items:  Royalty receivable (1,062,224)  Amounts receivable  (41,966)  1,253,305  Prepaid expenses and other 23,407  852,450  Deferredcosts  -  40,224  Accounts payable and accrued liabilities 208,552  (1,656,293)  Provisions  883,928  489,138  Current tax liabilities (57,881)  9,247  Repayment of long-term liability  (79,000)  (79,000)  Net cash used in operating activities (2,725,605)  (1,886,019)  Cash flows from (used in) investing activities: Additions to assets held for sale -  (23,100)  Purchase ofintangible assets, Franworks Rights (88,072,970)  -  Net proceeds on disposal of assets held for sale -  7,062,949  Net cash provided by(used in) investing activities  (88,072,970) 7,039,849  Cash flowsfrom (used in) financing activities:  Payment of finance lease liabilities -  (32,642)  Payment of dividends  (2,152,685)  -  Proceeds from equity issuance 41,637,932  -  Issuance of long-term debt  14,804,733  -  Proceeds from exercise of share options 2,019,300  22,400  Net cash provided by (used in) financing activities  56,309,280  (10,242)  Net increase (decrease) in cash and cash equivalents (34,489,295)  5,143,588  Cash and cash equivalents,beginning of year  68,999,809  63,856,221  Cash and cash equivalents,end of year  $ 34,510,514  $ 68,999,809  Transactions not involving cash:  Shares issued as consideration for the Franworks Rights $ 20,682,030  $  -  4 