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Constellation Capital Corp. — Management Reports 2025
Apr 24, 2025
48446_rns_2025-04-23_7070957c-13b3-45f2-9be8-62a0410d995c.pdf
Management Reports
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CONSTELLATION CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2025
(Expressed in Canadian Dollars)
1
CONSTELLATION CAPITAL CORP.
Management’s Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management’s Discussion & Analysis (“MD&A”) is intended to provide readers with the information that management (“Management”) of Constellation Capital Corp. (“The Company” or “Constellation”) believes is required to gain an understanding of the financial results of the Company for the three months ended March 31, 2025 and to assess the Company’s future prospects. Accordingly, certain sections of this report contain forward-looking statements and forward-looking information (collectively, “Forward-Looking Information” as defined under applicable Canadian securities laws), which are based on current plans and expectations. See under the heading “Special Note Regarding Forward-Looking Information”.
The Company’s financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee.
This MD&A should be read in conjunction with the Company’s unaudited interim financial statements and related notes for the three months ended March 31, 2025 and March 31, 2024 and the audited financial statements and related notes as at and for the years ended December 31, 2024 and December 31, 2023. All currency amounts in the accompanying financial statements and this MD&A are in Canadian dollars unless otherwise noted.
This MD&A has considered information available up to and including April 22, 2025.
Special Note Regarding Forward Looking Information
Certain statements in this MD&A, other than statements of historical fact, may include Forward-Looking Information that involves various risks and uncertainties. These can include, without limitation, statements based on current expectations involving a number of risks and uncertainties. These risks and uncertainties may have a material impact on future prospects and may cause actual results to differ from information contained herein. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. These forward-looking statements are based on the estimates and opinions of Management on the dates they are made and are expressly qualified in their entirety by this notice. Since actual events and results could differ materially, the reader is cautioned not to place undue reliance on any Forward-Looking Information. The Company assumes no obligation to update Forward-Looking Information should circumstances or Management’s estimates or opinions change, except as required by law. See “Caution Regarding Forward-Looking Information” and “Risk Factors”.
MANAGEMENT AND BOARD OF DIRECTOR RESPONSIBILITIES
Management (specifically the Company’s CEO and CFO) is responsible for the reliability and timeliness of information disclosed in this MD&A. In this regard, Management has implemented systems, controls and processes (“Systems”) to ensure that all information required for this MD&A is collected and communicated on an accurate and timely basis. As a small company, the current Systems consist of first-hand involvement of the CEO and CFO in all material transactions of the Company. In Management’s view, the Company’s Systems are sufficient for the Company to report reliable and timely information.
2
CONSTELLATION CAPITAL CORP.
Management’s Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
The Company’s Audit Committee is responsible for reviewing the Company’s interim and annual MD&A prior to release. The Company’s Board of Directors is responsible for approving the Company’s annual and interim MD&A prior to release.
DESCRIPTION OF THE BUSINESS
Constellation was incorporated on July 27, 2022 by Certificate of Incorporation issued pursuant to the provisions of the Business Company’s Act (Alberta). The Company is classified as a Capital Pool Company (“CPC”) as defined in Policy 2.4 of the TSX Venture Exchange (the “Exchange”). The principal business of the Company is to identify and evaluate assets or businesses with a view to potentially acquire them or an interest therein by completing a purchase transaction, by exercising of an option or by any concomitant transaction. The purpose of such an acquisition is to satisfy the related conditions of a qualifying transaction under the Exchange rules.
The Company became a “Reporting Issuer” in the provinces of Alberta and British Columbia pursuant to applicable securities legislation on April 24, 2023, the date of the final receipt for the Prospectus was issued by the Alberta and British Columbia Securities Commissions.
On July 18, 2023, the TSX Venture Exchange (the “Exchange”) issued a bulletin approving the listing of the Company’s common shares (the “Common Shares”). On July 20, 2023, the Company completed its initial public offering of 6,800,000 Common Shares in the capital of the Company at the price of $0.10 per Common Share for gross proceeds of $680,000 (the “Offering” or the “IPO”). On July 21, 2023 the Common Shares began trading under the trading symbol “CNST.P”.
The head office and registered office of the Company is located at 1250, 639 – 5th Avenue SW Calgary, Alberta, T2P 0M9.
RISKS AND UNCERTAINTIES
Where an acquisition or participation is warranted, additional funding may be required. The ability of the Company to fund its potential future operations and commitments is dependent upon the ability of the Company to obtain additional financing. There is no assurance that the Company will identify a business or asset that warrants acquisition or participation within the time limitations permissible under the policies of the Exchange, at which time the Exchange may suspend or de-list the Company's shares from trading.
SELECTED FINANCIAL INFORMATION
For the three months ended March 31, 2025, the Company reported no discontinued operations and declared no cash dividends.
3
CONSTELLATION CAPITAL CORP.
Management's Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
SUMMARY OF QUARTERLY RESULTS – CAD ($)
| Three Months Ended | Mar. 31, 2025 ($) | Dec. 31, 2024 ($) | Sept. 30, 2024 ($) | Jun. 30, 2024 ($) |
|---|---|---|---|---|
| Total assets | 668,649 | 680,063 | 691,095 | 697,210 |
| Total liabilities | 14,366 | 9,840 | 9,723 | 7,178 |
| Net working capital | 654,283 | 670,223 | 681,372 | 690,032 |
| Revenue | - | - | - | - |
| Net Loss | (15,940) | (11,149) | (8,660) | (12,162) |
| Basic and diluted loss per share | - | - | - | - |
| Weighted average shares outstanding | 6,800,000 | 6,800,000 | 6,800,000 | 6,800,000 |
| Three Months Ended | Mar. 31, 2024 ($) | Dec. 31, 2023 ($) | Sept. 30, 2023 ($) | Jun. 30, 2023 ($) |
| --- | --- | --- | --- | --- |
| Total assets | 711,554 | 724,164 | 731,712 | 193,513 |
| Total liabilities | 9,360 | 8,560 | 3,409 | 4,399 |
| Net working capital | 702,194 | 715,604 | 728,303 | 189,114 |
| Revenue | - | - | - | - |
| Net Loss | (13,410) | (12,699) | (82,433) | (6,270) |
| Basic and diluted loss per share | - | - | (0.02) | - |
| Weighted average shares outstanding | 6,800,000 | 6,800,000 | 5,321,739 | - |
RESULTS OF OPERATIONS
During the three months ended March 31, 2025 the Company incurred a loss of $15,940 (2024 - $13,410) consisting of consulting fees of $2,678 (2024 - $2,550), professional fees of $5,959 (2024 - $4,252), transfer agent and listing fees of $4,850 (2024 - $6,356) and general and administrative expenses of $2,453 (2024 - $252).
OUTSTANDING SHARE DATA
Common shares
On July 18, 2023, the TSX Venture Exchange (the "Exchange") issued a bulletin approving the listing of the Company's common shares (the "Common Shares"). On July 20, 2023, the Company completed its initial public offering of 6,800,000 Common Shares in the capital of the Company at the price of $0.10 per Common Share for gross proceeds of $680,000 (the "Offering" or the "IPO"). On July 21, 2023 the Common Shares began trading under the trading symbol "CNST.P".
As a result of the closing of the Offering, the Company has 12,000,000 Common Shares issued and outstanding, 5,200,000 of which were issued to the founders of the Company at a price of $0.05 per share and are subject to escrow restrictions pursuant to policies of the Exchange.
4
CONSTELLATION CAPITAL CORP.
Management's Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
Leede Jones Gable Inc. (the "Agent") acted as agent under the Offering. For its services, the Agent received a cash commission equal to $68,000 (10% of the total gross proceeds of the IPO), a corporate finance fee of $15,750 and additional consideration consisting of agent's share purchase options in an amount equal to 10% of the Common Shares issued pursuant to the Offering registered in the name of the Agent or as the Agent may otherwise direct (the "Agent's Options"). Each Agent's Option will entitle the holder thereof to acquire one Common Share at an exercise price of $0.10 per Common Share up to July 20, 2025.
In addition, the Company paid the agent legal and administration expenses of $25,816, less the deferred financing cost of $12,875.
Concurrent with the closing of the Offering, the Company granted options to acquire an aggregate of 680,000 Common Shares at an exercise price of $0.10 per Common Share to the directors and officers of the Company, which expire ten years from the date of grant.
Share issuance costs for the year ended December 31, 2023 were $184,560. Of the $184,560 in share issuance costs, $36,936 in fair value was recorded in relation to 680,000 non-transferable options issued to the Agent.
All of the common shares issued at $0.05 are held in escrow until completion of a Qualifying Transaction. 25% of the common shares held in escrow will be released on the issuance of the Final Exchange Bulletin and an additional 25% will be released on the dates 6 months, 12 months and 18 months following the initial release. These common shares, which are considered contingently issuable until the Company completes a Qualifying Transaction, are not considered to be outstanding for the purpose of the loss per share calculation. As at March 31, 2025, there are 5,200,000 (December 31, 2024 – 5,200,000) common shares held in escrow.
Stock options
The Company's stock options at March 31, 2025 are summarized as follows:
| Description | Number outstanding | Weighted Average Exercise Price | Expiry Date |
|---|---|---|---|
| Officer and Director options | 520,000 | $0.05 | August 30, 2032 |
| Officer and Director options | 680,000 | $0.10 | July 20, 2033 |
| Total | 1,200,000 | $0.08 | |
| Exercisable | 680,000 | $0.10 |
LIQUIDITY AND CAPITAL RESOURCES
On July 20, 2023, the Company completed an initial public offering ("IPO") as a Capital Pool Company pursuant to Policy 2.4 of the TSX Venture Exchange. At closing, the Company received gross proceeds of $680,000, representing the issuance of 6,800,000 common shares of the Company at an issuance price of $0.10, less expenses retained by the agent of $96,691, for net proceeds of $583,309.
5
CONSTELLATION CAPITAL CORP.
Management's Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
Considering the seed share investment of $260,000 (5.2 million shares at $0.05) and IPO related and operating expenses of approximately $180,000, as of March 31, 2025, the Company has cash of $663,292. Management considers this sufficient for the Company to meet its ongoing obligations.
OFF-BALANCE SHEET ARRANGEMENTS
As at the date of this report, the Company had no off-balance sheet arrangements.
TRANSACTIONS WITH RELATED PARTIES
Key management personnel consist of officers and directors of the Company.
| For the period | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 $ |
|---|---|---|
| Accounting services, Director | 2,678 | 2,550 |
| 2,678 | 2,550 |
During the three months ended March 31, 2025, the Company incurred accounting services in the amount of $2,678 (2024 - $2,550) from a company controlled by a director of the Company. As at March 31, 2025, $893 (December 31, 2024 - $840) is included in accounts payable and accrued liabilities related to these services.
During the three months ended March 31, 2025, the Company incurred legal services in the amount of $3,724 (2024 - $2,003) from a law firm in which a spouse of a director is a partner. As at March 31, 2025, $3,225 (December 31, 2024 - $Nil) is included in accounts payable and accrued liabilities related to these services.
On August 30, 2022, the Company issued 520,000 stock options to directors and officers of the Company. An additional 680,000 stock options were issued to directors and officers of the Company on July 20, 2023.
Transactions with related parties are incurred in the normal course of business and initially measured at fair value.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company is exposed to various risks in relation to financial instruments. These risks can include credit risk, interest rate risk, custody risk, currency risk, and liquidity risk. The Company's risk management function is performed by Management, with input from the Board of Directors. The Company seeks to minimize the effects of the identified risks by focusing on actively securing short to medium-term cash flows and minimizing exposures to capital markets. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
6
CONSTELLATION CAPITAL CORP.
Management’s Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
Fair value of financial instruments
The estimated fair value of the Company’s financial instruments approximates 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. The carrying values of accounts receivable and accounts payable and accrued liabilities approximate their fair value because of the near term to maturity of these instruments.
Credit risk
Credit risk arises from the possibility that the entities to which the Company provides services may experience financial difficulty and be unable to fulfill their obligations. The Company is currently in a pre-production phase and has no active accounts receivable or revenue from sales of product. The Company intends to manage its credit risk through a credit assessment process and through extensive credit monitoring and collections processes. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at the reporting date and presented in the statement of financial position.
Interest rate risk
The Company does not have any bank indebtedness or long-term debt financing available to it as at March 31, 2025. As such, the Company does not have significant exposure to interest rate risk from variable interest rates.
Custody risk
Custody risk is the risk of loss of cash and cash equivalents held in custody caused by the insolvency or negligence of the custodian. To mitigate this risk, the Company’s cash balance is held in a lawyer’s trust account with a reputable Canadian law firm.
Currency risk
The Company may be subject to foreign currency risk due to some of its cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities potentially being denominated in foreign currencies. Therefore, there is a small risk of earnings fluctuations arising from changes in and the degree of volatility of foreign exchange rates arising on foreign monetary assets and liabilities.
As at March 31, 2025, the Company’s cash and cash equivalents were all denominated in Canadian currency, and all of the accounts payable and accrued liabilities were denominated in Canadian currency.
Liquidity risk
Liquidity risk is the risk that the Company may not have cash available to satisfy financial liabilities as they become due. The Company actively monitors its financing obligations, as well as its cash and cash equivalents, to ensure that it has sufficient available funds to meet current and foreseeable future financial requirements at a reasonable cost.
MATERIAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements in conformity with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based
7
CONSTELLATION CAPITAL CORP.
Management’s Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates.
Estimates
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:
Fair value of financial instruments
The estimated fair value of financial assets and liabilities, by their very nature, are subject to measurement uncertainty.
Taxes
Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.
Judgments
The key areas of judgment that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:
Taxes
The Company recognizes deferred tax assets to the extent that it is probable that future taxable profits will be available to utilize the Company’s deductible temporary differences which are based on management’s judgment on the degree of future taxable profits. To the extent that future taxable profits differ significantly from the estimates impacts the amount of the deferred tax assets management judges is probable.
Financial instruments
The Company is required to classify its various financial instruments into certain categories for the financial instruments’ initial and subsequent measurement. This classification is based on management’s judgment as to the purpose of the financial instrument and to which category is most applicable.
Stock options
The Company records stock-based payments based on management’s judgment of the expected exercise date of options which is impacted by the timing of completion of the qualifying transaction.
8
CONSTELLATION CAPITAL CORP.
Management’s Discussion and Analysis
For the three months ended March 31, 2025 and March 31, 2024
(Expressed in Canadian dollars)
Key Sources of Estimation Uncertainty
Due to the limited nature of the Company’s operations since incorporation on July 27, 2022, Management has not yet been required to make significant assumptions about the future that could result in a material adjustment to the carrying amounts of assets and liabilities of the Company in the event that actual results differ from assumptions made.
CAPITAL RISK MANAGEMENT
The Company’s capital currently consists of common shares. The Company defines capital as total equity which was $654,283 at March 31, 2025. Its principal source of cash is from the issuance of common shares. The Company’s capital management objectives are to safeguard its ability to continue as a going concern and to have sufficient capital to be able to identify, evaluate and then acquire an interest in a business or assets.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares.
Subsequent to the IPO, proceeds raised from the issuance of common shares may only be used to identify and evaluate assets or business for future investment, with the exception that up to $3,000 per month may be used for reasonable general and administrative expenses of the Company. These restrictions apply until the completion of a Qualifying Transaction.