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Delota Corp. Management Reports 2025
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Delota Corp.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Prepared as at July 29, 2025
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Management's Discussion and Analysis
The following Management's Discussion and Analysis ("MD&A") reflects management's assessment of Delota Corp.'s ("Delota" or the "Company") financial and operating results for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024. This document should be read in conjunction with the annual audited consolidated financial statements for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024. The Company's consolidated financial statements and the financial information herein have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and the interpretations of the IFRS Interpretations Committee ("IFRIC").
This MD&A is prepared by management as at July 29, 2025, which is the date of this report. All amounts are expressed in Canadian dollars, unless otherwise noted.
Reference should also be made to the Company's filings with SEDAR+, which are available at www.sedarplus.ca.
Change in Financial Year End
On January 22, 2025, the Company announced the change of the fiscal year end from January 31 to March 31. The change allows to facilitate efficiencies in administration and accounting, and to facilitate investors to more easily compare quarterly and annual financial results. The Company elected to have a transition year of a fourteen-month period from February 1, 2024 to March 31, 2025 with the comparative being the twelve months ended January 31, 2024.
Disclaimer
Certain statements contained in the following MD&A constitute "forward-looking statements" (within the meaning of the Canadian securities legislation) that involve risks and uncertainties. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible" and similar expressions, or statements that events, conditions or results "will", "may", "could" or "should" occur or be achieved. The forward-looking statements may include statements regarding future events, developments, acquisitions, capital expenditures, timelines, strategic plans, or other statements that are not statements of fact. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company may differ materially from those reflected in forward-looking statements due to a variety of risks, uncertainties and other factors. For the reasons set forth above, investors should not place undue reliance on forward-looking statements. Important factors that could cause actual results to differ materially from the Company's expectations include uncertainties involved in continued availability of capital and financing; dependence on key personnel; uncertainties related to the Company's operations and products; uncertainties as to future expense levels and the possibility of unanticipated costs or expenses or cost overruns; and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The Company has no policy for updating forward looking information beyond the procedures required under applicable securities laws.
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DELOTA CORP. Management's Discussion and Analysis For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Overview
Nature of Business
Delota Corp. was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on February 20, 2014. The Company’s common shares currently trade on the Canadian Securities Exchange ("CSE") under the symbol "NIC" and on the Frankfurt Stock Exchange under the symbol "S62". The Company’s corporate and registered office is 7941 Jane Street, Unit 2, Concord, Ontario, L4K 2M7.
The Company is a nicotine vape enterprise that spearheads the smoke-free revolution in Canada, catering to adult consumers seeking alternatives to traditional combustible tobacco. With a strong emphasis on delivering exceptional retail experiences and carefully curated product offerings, the Company is dedicated to redefining the way people transition away from smoking. The Company’s flagship brand, 180 Smoke Vape Store, stands as Ontario’s largest omni-channel specialty vape retailer, fueling innovation, growth, and leadership in the nicotine vape and alternative tobacco sector.
The Company currently operates 32 brick-and-mortar specialty vape stores in Ontario under the 180 Smoke Vape Store brand, a leading national e-commerce platform www.180smoke.ca, and 3 licenced dispensaries in Ontario under the Offside Cannabis brand.
The Company’s flagship brand 180 Smoke Vape Store is the largest omni-channel specialty vape retailer in Ontario with a mission of becoming the largest national specialty retailer of nicotine vape and alternative tobacco products. The Company’s growth strategy includes aggressively growing its flagship brand, 180 Smoke Vape Store, by expanding its retail footprint organically in Ontario and select provinces across Canada, strengthening its national e-commerce platform, and through strategic mergers & acquisitions to accelerate growth and market consolidation. The Company is committed to expanding its nicotine product assortment, enhancing customer experience, and growing its loyalty program with over 280,000 registered customers.
About 180 Smoke
In 2021, the Company acquired 180 Smoke which has solidified its reputation as a trusted destination for vape enthusiasts for over a decade. Boasting 32 brick-and-mortar retail locations across Ontario and a thriving national e-commerce platform, 180 Smoke has firmly established a prominent presence within Canada serving over 300,000 registered customers across its platforms.
180 Smoke is committed to delivering an unparalleled retail experience fueled by an education-focused sales approach that ensures exceptional customer service at every interaction. Meticulously designed store layouts, a curated selection of top-notch brands and products, and strategic partnerships with renowned manufacturers further enhance the brand’s unique and elevated shopping experience, firmly positioning 180 Smoke as the leading go-to vape destination.
Additionally, 180 Smoke is a licensed Canadian vape manufacturer with an ISO 7 standard manufacturing facility at its head office in Concord, Ontario. The Company has developed a robust portfolio of nicotine e-liquid brands, primarily sold through its branded stores and e-commerce platform. Private label brands provide the Company with a competitive advantage and a core differentiator in its product assortment, which increases customer engagement and loyalty.
180 SMOKE VAPE STORE
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
About Offside Cannabis
Offside Cannabis is a value-centered dispensary brand providing retail and online services. The Company currently operates 3 licensed dispensaries in Ontario.
offside cannabis
Overall Performance
On March 30, 2021, the Company acquired (the “Acquisition”) all of the issued and outstanding common shares of the entities that collectively comprise the business of 180 Smoke (collectively, “180 Smoke”), a dominant vape retailer in Canada, namely: (i) 2360149 Ontario Inc. d/b/a 180 Smoke and its wholly-owned subsidiaries 420 Wellness Inc. and 180 Smoke LLC; (ii) 180 VFC Inc.; and (iii) 2488004 Ontario Inc. The Acquisition was completed with an arm’s length party on a cash-free basis (after post-closing adjustments), for a nominal consideration of $1. The Company filed the required Form 51-102F4 – Business Acquisition Report on June 15, 2021.
On May 7, 2021, the board of directors of the Company (the “Board” or “Board of Directors”) appointed Cameron Wickham as Director, Chief Executive Officer and Corporate Secretary of the Company and Ankit Gosain as Chief Financial Officer of the Company. Daniel Pelchovitz, the Company’s former Chief Executive Officer, continued with the Company as a Director and as Chief Executive Officer of the Company’s Cannabis Division. Mark Pelchovitz, the Company’s former Chief Financial Officer and Corporate Secretary, continued with the Company as a Director. The Board also appointed Mark Pelchovitz as Executive Chair of the Board and Cameron Wickham as Executive Vice Chair of the Board.
On May 21, 2021, the Company announced the appointment of Christina Pan as Chief Operating Officer of the Company. Ms. Pan served as Chief Operating Officer until April 16, 2025.
On September 17, 2021, the Company completed a 5 to 1 common share consolidation.
On November 17, 2021, the Company changed its name from “Spyder Cannabis Inc.” to “Delota Corp.” The Company’s common shares currently trade on the CSE under the symbol “NIC” and on the Frankfurt Stock Exchange under the symbol “S62”.
On March 30, 2022, the Company acquired all of the issued and outstanding common shares of 2766563 Ontario Inc. (“276 Ontario”) from the shareholders of 276 Ontario for an aggregate purchase price of $3,000,000, which the Company satisfied through the issuance of an aggregate of 12,000,001 common shares of the Company, at a price of $0.25 per common share. 276 Ontario held a $11,129,171 promissory note owing from 180 Smoke. As a result of the acquisition of 276 Ontario, the Company’s promissory note held with 276 Ontario was eliminated on consolidation, resulting in a gain on acquisition of $8,129,171.
On May 19, 2022, the Company’s wholly-owned subsidiary, Spyder Cannabis Subco Inc. (“Spyder Subco”), received a Retail Store Authorization from the Alcohol and Gaming Commission of Ontario (the “AGCO”) for its cannabis dispensary located at 1033 King Street West, Hamilton, Ontario. The dispensary opened for business on June 3, 2022 and currently operates under the Offside Cannabis brand.
On May 26, 2022, the Company opened a 180 Smoke Vape Store located at 41 William Street, Unit B, Ottawa, Ontario.
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DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
On July 28, 2022, the Company opened a 180 Smoke Vape Store located at 429 Spadina Avenue, Floor 2, Toronto, Ontario.
On July 29, 2022, the Company announced that an outstanding secured loan, in the principal amount of $200,000, between the Company and an independent third party has been assigned to a corporation controlled by the Chief Executive Officer of the Company.
On September 26, 2022, the Company opened a 180 Smoke Vape Store located at 209860 Highway 26, Blue Mountains, Ontario.
On October 17, 2022, 180 Smoke received a Vaping Product License from the Canadian Revenue Agency, allowing the Company to continue to manufacture its owned and co-branded vaping products in Canada.
On November 4, 2022, Spyder Subco received a Retail Store Authorization from the AGCO for its cannabis dispensary located at 693 Queen Street, Port Perry, Ontario. The dispensary opened for business on November 18, 2022 and currently operates under the Offside Cannabis brand.
On May 15, 2023, the Company’s common shares commenced trading on the CSE. In connection with the CSE listing, the Company submitted a request to voluntarily delist its common shares from the TSX Venture Exchange that became effective at the close of the market on May 16, 2023. The Company’s common shares currently trade on the CSE under the symbol “NIC”.
On July 10, 2023, the Company granted an aggregate of 1,710,000 stock options and an aggregate of 640,000 RSUs to certain directors, officers, employees and consultants of the Company. The granted stock options vest immediately and are exercisable for a period of four years from the date of issuance with an exercise price of $0.11 per common share.
On September 25, 2023, the Company’s common shares commenced trading on the Frankfurt Stock Exchange under the symbol “S62”.
On November 1, 2023, the Company amended its previously entered non-exclusive issuer trading services agreement (the “Trading Agreement”) with Independent Trading Group, Inc. (“ITG”), for an amended term of three months. Pursuant to Trading Agreement, ITG will be compensated in the amount of $7,000 per month for November 2023, December 2023, and January 2024 and will thereafter be compensated in the amount of $5,000 per month unless terminated in accordance with the provisions of the Trading Agreement.
On December 19, 2023, the Company closed a non-brokered private placement (the “Offering”) of senior secured convertible debenture units (the “Debenture Units”) of the Company for aggregate gross proceeds of $900,000. In connection with the Offering, the Company issued an aggregate of 900 Debenture Units to subscribers at a price of $1,000 per Debenture Unit. Each Debenture Unit consisted of: (i) a $1,000 principal senior secured convertible debenture (each a "Debenture"); and (ii) 10,000 common share purchase warrants of the Company (each a “Debenture Warrant”). The Debentures mature 18 months from the date of issuance and bear interest at a rate of 1% per month, beginning on the date of issuance and payable in cash on the last day of each calendar month. The principal sum of the Debentures, or any portion thereof, and any accrued but unpaid interest, may be converted into common shares of the Company until December 19, 2026 at a conversion price of $0.10 per share, subject to adjustments conditional upon compliance with the policies of the CSE. Each Debenture Warrant entitles the holder thereof to purchase one common share of the Company at a price of $0.15 per share, subject to adjustments conditional upon compliance with the policies of the CSE, for a period of 36 months from the date of issuance. The obligations under the Debentures are collaterally secured by a general security agreement from the Company and its wholly-owned subsidiaries, 2360149 Ontario Inc., 180 VFC Inc., 1000712645 Ontario Inc., and Spyder Cannabis Subco Inc. (collectively, the "Guarantors") and a pledge of the security interests of the Guarantors. On
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DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
April 22, 2025, the Company completed the early redemption of Debentures in the amount of $900,000 plus accrued interest and the security interests and obligations of the Guarantors and the Company have been discharged and all pledged securities have been returned to the Company.
On December 19, 2023, the Company opened a 180 Smoke Vape Store located at 103 10th Street East, Owen Sound, Ontario.
On February 5, 2024, the Company completed debt settlements in the aggregate amount of $215,000 with certain directors, officers, and consultants of the Company to preserve the Company’s cash for working capital through the issuance of 1,535,715 units of the Company (each, a “Settlement Unit”) at a price of $0.14 per Settlement Unit. Each Settlement Unit consisted of one common share of the Company and one common share purchase warrant of the Company. Each warrant entitles the holder thereof to purchase one common share of the Company at a price of $0.15 per share for a period of 24 months from the date of issuance.
On March 14, 2024, the Company retained Strike Communications Inc. (“Strike”) to perform capital markets and corporate communications services. Strike is a boutique capital markets, investor relations and corporate communications firm with extensive experience across various industries. Strike will assist with the creation, coordination and implementation of the Company’s targeted capital markets strategy and investor relations objectives. As compensation for its services, Strike will receive a fee of $8,000 per month which will continue on a month-to-month basis and may be terminated by either party upon 60 days’ written notice.
Furthermore, the Company granted stock options for the purchase of up to 150,000 common shares of the Company to Strike that are exercisable for a period of two years from the date of issuance with an exercise price of $0.20 per share. These issued options vest over a period of one year in four equal installments every three months following the date of grant.
On April 2, 2024, the Company changed its stock symbol from “LOTA” to “NIC” on the CSE. The new stock symbol is intended to better reflect the Company’s mission of becoming the largest national specialty retailer of nicotine vape and alternative tobacco products.
On June 12, 2024 and in connection with the exercise of previously issued stock options by an employee, the Company issued 125,000 common shares at $0.11 per share for aggregate gross proceeds of $13,750.
On July 25, 2024, the Company opened a 180 Smoke Vape Store located at 70 Joseph Street, Parry Sound.
On August 26, 2024, the Company opened a 180 Smoke Vape Store located at 499 Main Street South, Unit 60D, Shoppers World in Brampton.
On January 22, 2025, the Company changed its fiscal year-end from January 31st to March 31st. As a result, the Company was required to file transition period financial statements which included audited financial statements for the fourteen months period ended March 31, 2025, with comparative figures for the twelve months period ended January 31, 2024 and unaudited condensed interim consolidated financial statements for the twelve months period ended January 31, 2025, compared to the twelve month period ended January 31, 2024.
On February 3, 2025, the Company opened a 180 Smoke Vape Store located at 1530 Albion Road, Unit 51A in Etobicoke expanding 180 Smoke’s brick-and-mortar presence to 32 locations.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Subsequent Events
On April 22, 2025, the Company completed the early redemption of Debentures in the amount of $900,000 plus accrued interest. As a result, the Debentures have been cancelled, and none of the Debentures were converted into common shares. Furthermore, the security interests and obligations of the Guarantors and the Company have been discharged and all pledged securities have been returned to the Company.
On July 7, 2025, the Company announced it had entered into agreements with 180 Global relating to the licensing of the 180 Smoke Vape Store brand for retail online sales in Eastern Canada. 180 Global assumed operational functions in Eastern Canada as a result of the retail partnership (the "Retail Partnership") in exchange for certain service fees and a royalty fee payable to the Company. The Company anticipates there may be a reduction in reported revenues and expenses on its consolidated financial statements, as operational functions are transitioned to 180 Global. These changes are expected to be reflected in the Company's future consolidated financial statements as the Company adjusts its operational structure which, if successful, may have a positive impact on profitability which would be reflected in future financial results.
On July 15, 2025, the Company changed its auditor to Horizon Assurance LLP.
Key Financial Highlights
-
Generated total revenue of $46,564,733 for the fourteen months ended March 31, 2025 as compared to $34,069,680 for the twelve months ended January 31, 2024.
-
Gross profit margin of approximately 38% for the fourteen months ended March 31, 2025 as compared to approximately 40% for the twelve months ended January 31, 2024; and
-
Positive Adjusted EBITDA (as defined below) of $1,198,383 for the fourteen months ended March 31, 2025 as compared to $235,552 for the twelve months ended January 31, 2024.
-
Revenue during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 was comprised of the following:
-
180 Smoke's omni-channel specialty vape retail revenue derived from the sale of nicotine vape and alternative tobacco products amounted to $42,435,863 for the fourteen months ended March 31, 2025 as compared to $30,309,144 for the twelve months ended January 31, 2024. This segment accounted for 91% of total revenue during the fourteen months ended March 31, 2025 (twelve months ended January 31, 2024 – 89%) and was comprised of the following:
-
B2C direct to consumer retail revenue (both brick-and-mortar and e-commerce) amounted to $36,410,525 for the fourteen months ended March 31, 2025 as compared to $23,434,410 for the twelve months ended January 31, 2024; and
-
B2B direct to business franchise, wholesale, and partnership revenue amounted to $6,025,338 for the fourteen months ended March 31, 2025 as compared to $6,874,734 for the twelve months ended January 31, 2024.
-
Offside Cannabis' retail revenue derived from the sale of cannabis products amounted to $4,128,870 for the fourteen months ended March 31, 2025 as compared to $3,760,536 for the twelve months ended January 31, 2024. These were direct to consumer sales which accounted for 9% (twelve months ended January 31, 2024 – 11%) of total revenue during the fourteen months ended March 31, 2025.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Selected Financial Information
The following table summarizes financial information for the two months ended March 31, 2025 and the preceding seven quarters:
| Quarter Ended | Mar 31, 2025^{(1)} | Jan 31, 2025 | Oct 31, 2024 | July 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 |
|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Revenue | 6,362,762 | 10,274,933 | 10,285,372 | 9,757,783 | 9,883,883 | 10,152,051 | 8,087,168 | 8,300,152 |
| Net income (loss) and comprehensive income (loss) | 137,118 | 253,846 | 474,928 | 341,172 | (508,188) | (959,575) | (545,828) | (162,549) |
| Earnings (loss) per share – basic | 0.01 | 0.01 | 0.02 | 0.01 | (0.02) | (0.04) | (0.02) | (0.01) |
(1) All periods in the above table are three-month periods except for the period ended March 31, 2025 which was a two-month period as a result of the change in the year end, as described in the Change in financial year end section above.
Selected Annual Information
The following selected financial data for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 and 2023 are derived from the Company's annual audited consolidated financial statements for the fourteen months ended March 31, 2025 and the annual audited consolidated financial statements for the years ended January 31, 2024 and 2023.
| March 31, 2025 | January 31, 2024 | January 31, 2023 | |
|---|---|---|---|
| $ | $ | $ | |
| Revenue | 46,564,733 | 34,069,680 | 25,937,502 |
| Net income (loss) for the period | 698,876 | (1,992,576) | 7,673,115 |
| Net earnings (loss) per share – basic and diluted | 0.02 | (0.07) | 0.31 |
| Working capital (deficit) | (802,292) | (771,198) | (1,533,522) |
| Total assets | 15,244,565 | 13,735,729 | 14,780,382 |
| Total non-current liabilities | 5,232,369 | 6,565,672 | 6,093,425 |
| Total liabilities | 13,900,704 | 13,351,331 | 12,622,389 |
| Share capital | 7,832,560 | 7,592,481 | 7,528,481 |
| Warrant reserve | 99,398 | 99,398 | 99,398 |
| Contributed surplus | 507,513 | 507,005 | 352,024 |
| Accumulated deficit | (7,115,610) | (7,814,486) | (5,821,910) |
| Shareholders’ equity | 1,323,861 | 384,398 | 2,157,993 |
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Adjusted EBITDA
The Company's "Adjusted EBITDA" is a non-IFRS metric used by management that does not have any standardized meaning prescribed by IFRS and may not be fully comparable to similar measures presented by other companies. Management defines Adjusted EBITDA as the net income (loss) reported, before income taxes and other expense (income) items such as finance costs, finance income, gains and losses related to derivative liability valuations, and adjusted for share-based compensation, depreciation and amortization expenses, gains and losses related to the revaluations of its right-of-use assets and lease liabilities and foreign exchange differences.
The reconciliation of net income (loss) to Adjusted EBITDA is presented below.
| Fourteen Months Ended March 31, 2025 | Twelve Months Ended January 31, 2024 | Twelve Months Ended January 31, 2023 | |
|---|---|---|---|
| $ | $ | $ | |
| Net income (loss) for the period – as reported | 698,876 | (1,992,576) | 7,673,115 |
| Depreciation and amortization | 603,958 | 575,431 | 640,904 |
| Interest and accretion expenses | 955,635 | 330,492 | 162,818 |
| Stock-based compensation | 11,837 | 218,981 | - |
| Fair value adjustment of derivative liabilities | (990,629) | 566,212 | - |
| Gain on acquisition of 276 Ontario | - | - | (8,129,171) |
| Deferred tax recovery | (74,405) | (63,777) | (63,777) |
| Lease adjustments | (35,583) | 567,395 | (145,265) |
| Foreign exchange loss | 28,694 | 33,394 | 7,745 |
| Adjusted EBITDA | 1,198,383 | 235,552 | 146,369 |
Results of Operations for the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
The Company's annual audited consolidated financial statements have been prepared in accordance with IFRS on a going concern basis which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. There is a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. The continuing operations of the Company are dependent on the Company receiving sufficient funding to support its operations. The Company intends to finance its future requirements through a combination of debt or equity financing. There is no assurance that the Company will be able to obtain such financing or obtain them on favorable terms. These material uncertainties cast significant doubt as to the Company's ability to continue as a going concern. As at March 31, 2025 and January 31, 2024, the Company's consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
The following table summarizes the Company’s revenue, cost of goods sold, gross profit, expenses and net income (loss) and comprehensive income (loss) for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024:
| Fourteen Months Ended March 31, 2025 $ | Twelve Months Ended January 31, 2024 $ | |
|---|---|---|
| Revenue | 46,564,733 | 34,069,680 |
| Cost of goods sold | 28,679,514 | 20,448,586 |
| Gross profit | 17,885,219 | 13,621,094 |
| Operating expenses | 17,405,491 | 14,335,286 |
| Other income (expense) | 144,743 | (1,342,161) |
| Deferred tax recovery | 74,405 | 63,777 |
| Net income (loss) | 698,876 | (1,992,576) |
Comprehensive income (loss) is equivalent to net income (loss).
Revenue
Revenue during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 was comprised of the following:
| Fourteen Months Ended March 31, 2025 $ | Twelve Months Ended January 31, 2024 $ | |
|---|---|---|
| 180 Smoke – Vape (B2C – Direct to Consumer) | 36,410,525 | 23,434,410 |
| 180 Smoke – Vape (B2B – Franchise, Wholesale and Partnership) | 6,025,338 | 6,874,734 |
| Offside Cannabis – Cannabis (B2C – Direct to Consumer) | 4,128,870 | 3,760,536 |
| Total revenue | 46,564,733 | 34,069,680 |
Revenue for the fourteen months ended March 31, 2025 amounted to $46,564,733 as compared to $34,069,680 for the twelve months ended January 31, 2024. The increase in revenue during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was primarily attributable to the incremental time frame in the comparative periods and the overall growth of 180 Smoke’s brick-and-mortar and e-commerce platforms, derived from the sale of nicotine vape and alternative tobacco products. 180 Smoke’s platform consists of B2C direct to consumer retail revenue (both brick-and-mortar and e-commerce) and B2B direct to business franchise, wholesale and partnership revenue. 180 Smoke’s platform accounted for 91% of the Company’s total revenue during the fourteen months ended March 31, 2025 and 89% during the twelve months ended January 31, 2024.
180 Smoke’s B2C channel revenue for the fourteen months ended March 31, 2025 amounted to $36,410,525 as compared to $23,434,410 for the twelve months ended January 31, 2024. 180 Smoke’s B2C channel accounted for 78% and 69%, respectively, of the Company’s total revenue during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024.
180 Smoke’s B2B channel revenue for the fourteen months ended March 31, 2025 amounted to $6,025,338 as compared to $6,874,734 for the twelve months ended January 31, 2024. 180 Smoke’s B2B channel accounted for 13% and 20%, respectively, of the Company’s total revenue during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Offside Cannabis' B2C channel revenue for the fourteen months ended March 31, 2025 amounted to $4,128,870 as compared to $3,760,536 for the twelve months ended January 31, 2024. These were direct to consumer sales derived from the sale of cannabis products which accounted for 9% and 11%, respectively, of the Company's total revenue during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024.
Cost of goods sold
Cost of goods sold for the fourteen months ended March 31, 2025 amounted to $28,679,514 as compared to $20,448,586 for the twelve months ended January 31, 2024. The increase in cost of goods sold during the fourteen months ended March 31, 2025 as compared to twelve months ended January 31, 2024 was consistent with the incremental time frame in the comparative periods an overall increase in revenue as discussed above.
Gross profit
Gross profit for the fourteen months ended March 31, 2025 amounted to $17,885,219 as compared to $13,621,094 for the twelve months ended January 31, 2024. During the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024, the Company had a gross profit margin of 38% and 40%, respectively.
Operating Expenses
The Company's operating expenses were comprised of the following for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024:
| Fourteen Months Ended March 31, 2025 $ | Twelve Months Ended January 31, 2024 $ | |
|---|---|---|
| Expenses | ||
| Salaries and wages | 7,470,688 | 6,661,962 |
| Delivery | 2,599,198 | 1,175,163 |
| Office and general | 2,650,564 | 1,952,317 |
| Rent and utilities | 909,105 | 980,702 |
| Professional fees | 543,705 | 326,136 |
| Insurance | 297,161 | 383,450 |
| Advertising and promotion | 180,064 | 130,273 |
| Repairs and maintenance | 116,558 | 54,279 |
| Stock-based compensation | 11,837 | 218,981 |
| Foreign exchange loss | 28,694 | 33,394 |
| Depreciation | 252,823 | 274,339 |
| Depreciation of right-of-use assets | 1,234,872 | 1,245,055 |
| Amortization | 70,357 | 60,425 |
| Interest on loans payable | 255,635 | 110,017 |
| Interest on lease liabilities | 784,230 | 728,793 |
| Total expenses | 17,405,491 | 14,335,286 |
The Company incurred additional costs during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 due to the incremental time frame in the comparative periods in addition to the reasons discussed below.
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DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Salaries and wages
Salaries and wages for the fourteen months ended March 31, 2025 amounted to $7,470,688 as compared to $6,661,962 for the twelve months ended January 31, 2024. The increase in salaries and wages expense during the fourteen months ended March 31, 2025 as compared to twelve months ended January 31, 2024 was primarily attributable to additional staff required to support the Company’s growing retail footprint.
Office and general
Office and general for the fourteen months ended March 31, 2025 amounted to $2,650,564 as compared to $1,952,317 for the twelve months ended January 31, 2024. The increase in office and general expense during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was primarily attributable to the Company’s overall increased business activity to support its growing retail footprint. Office and general expenses consist of dues, subscriptions, merchant fees, and other ancillary costs associated with the regular upkeep of the business.
Delivery
Delivery for the fourteen months ended March 31, 2025 amounted to $2,599,198 as compared to $1,175,163 for the twelve months ended January 31, 2024. Delivery expense relates to delivery costs associated with 180 Smoke’s national e-commerce platform. The increase in delivery expense during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was attributable to an increased number of orders through the Company’s e-commerce platform.
Rent and utilities
Rent and utilities for the fourteen months ended March 31, 2025 amounted to $909,105 as compared to $980,702 for the twelve months ended January 31, 2024. Rent and utilities expense relates to the Company’s long-term leases for its brick-and-mortar retail footprint consisting of 180 Smoke Vape Stores and Offside Cannabis dispensary locations. The decrease in rent and utilities expense during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was attributable to the expiry or subleasing of certain retail leases during the period.
Professional fees
Professional fees for the fourteen months ended March 31, 2025 amounted to $543,705 as compared to $326,136 for the twelve months ended January 31, 2024. Professional fees relate to legal, audit and accounting fees along with transaction specific legal fees associated with the Company’s ongoing business operations and public company compliance. The increase in professional fees during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was attributable to the Company’s growing operations, along with increased compliance costs.
Insurance
Insurance for the fourteen months ended March 31, 2025 amounted to $297,161 as compared to $383,450 for the twelve months ended January 31, 2024. Insurance expense relates to the Company’s D&O policy, product liability and general liability policies, and tenant insurance policies for the Company’s leased premises. The decrease in insurance expense during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was attributable to reduced policy premiums.
12 | Page
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Advertising and promotion
Advertising and promotion for the fourteen months ended March 31, 2025 amounted to $180,064 as compared to $130,273 for the twelve months ended January 31, 2024. Advertising and promotion expense relates to the Company’s marketing efforts of 180 Smoke and Offside Cannabis brands.
Repairs and maintenance
Repairs and maintenance for the fourteen months ended March 31, 2025 amounted to $116,558 as compared to $54,279 for the twelve months ended January 31, 2024. Repairs and maintenance expense relates to general repairs and maintenance required on the Company’s equipment and leased properties.
Stock-based compensation
Stock-based compensation for the fourteen months ended March 31, 2025 amounted to $11,837 as compared to $218,981 for the twelve months ended January 31, 2024. Stock-based compensation expense for the fourteen months ended March 31, 2025 was attributable to the issuance of stock options under the Company’s Omnibus Plan issued to a consultant. Stock-based compensation expense for the twelve months ended January 31, 2024 was attributable to the issuance of stock options and restricted share units under the Company’s Omnibus Plan to certain directors, employees, officers and consultants.
Foreign exchange loss
Foreign exchange loss for the fourteen months ended March 31, 2025 amounted to $28,694 as compared to $33,394 for the twelve months ended January 31, 2024. Foreign exchange gains and losses are a result of exchange rate fluctuations related to transactions based in United States dollars and Euros.
Depreciation
Depreciation for the fourteen months ended March 31, 2025 amounted to $252,823 as compared to $274,339 for twelve months ended January 31, 2024. Depreciation expense relates to the Company’s property and equipment located at the Company’s leased premises.
Depreciation of right-of-use assets
Depreciation of right-of-use assets for the fourteen months ended March 31, 2025 amounted to $1,234,872 as compared to $1,245,055 for the twelve months ended January 31, 2024. Depreciation of right-of-use assets expense relates to depreciation on the Company’s long-term leases on its brick-and-mortar retail footprint consisting of 180 Smoke Vape Stores and Offside Cannabis dispensary locations.
Amortization
Amortization for the fourteen months ended March 31, 2025 amounted to $70,357 as compared to $60,425 for the twelve months ended January 31, 2024. Amortization expense relates to amortization of the Company’s website and ERP software.
13 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Interest on loans payable
Interest on loans payable for the fourteen months ended March 31, 2025 amounted to $255,635 as compared to $110,017 for the twelve months ended January 31, 2024. Interest expense on loans payable relates to interest charged on the Company's loans payable, convertible debentures, and Canada Emergency Business Account ("CEBA") loans during the. The increase in interest expense on loans payable during the fourteen months ended March 31, 2025 as compared to the twelve months ended January 31, 2024 was attributable to interest charged on convertible debentures that were issued in December 2023.
Interest on lease liabilities
Interest on lease liabilities for the fourteen months ended March 31, 2025 amounted to $784,230 as compared to $728,793 for the twelve months ended January 31, 2024. Interest expense on lease liabilities relates to the interest expense on the Company's long-term leases for its brick-and-mortar retail footprint consisting of 180 Smoke Vape Stores and Offside Cannabis dispensary locations.
Other Income (Expenses)
The Company's other income (expenses) for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 was comprised of the following:
| Fourteen Months Ended March 31, 2025 $ | Twelve Months Ended January 31, 2024 $ | |
|---|---|---|
| Other income | 181,183 | 72,397 |
| Accretion | (700,000) | (220,475) |
| Remeasurement of right-of-use assets | (46,291) | (387,204) |
| Fair value adjustment of derivative liabilities | 990,629 | (566,212) |
| Amortization of intangible assets - trade name | (280,778) | (240,667) |
| Total other income (expense) | 144,743 | (1,342,161) |
Other income
Other income for the fourteen months ended March 31, 2025 amounted to $181,183 as compared to $72,397 for the twelve months ended January 31, 2024. Other income relates to finance income and other miscellaneous income earned that were not in the normal course of operations.
Accretion
Accretion for the fourteen months ended March 31, 2025 amounted to $700,000 as compared to $220,475 for the twelve months ended January 31, 2024. Accretion expense during the fourteen months ended March 31, 2025 was attributable to accretion on the Company's convertible debentures. Accretion expense during the twelve months ended January 31, 2024 was attributable to accretion of the Company's CEBA loans.
Remeasurement of right-of-use assets
Remeasurement of right-of-use assets for the fourteen months ended March 31, 2025 amounted to $46,291 as compared to $387,204 for the twelve months ended January 31, 2024. Remeasurement of right-of-use assets relates to the Company entering into a sublease arrangements for its lease premises during the respective periods, resulting in a partial derecognition of the respective right-of-use asset.
14 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Fair value adjustment of derivative liabilities
Fair value adjustment of derivative liabilities for the fourteen months ended March 31, 2025 amounted to a gain of $990,629 as compared to a loss of $566,212 for twelve months ended January 31, 2024. Derivative liabilities relate to the conversion option embedded in the convertible debentures as well as certain warrants that are categorized as derivative liabilities. Changes in the fair value adjustment of derivative liabilities are impacted by conversions, passage of time, volatility assumptions and movement in the underlying common shares of the Company. Derivative liabilities are reevaluated at the end of each reporting period with such required changes in value reflected as a fair value adjustment.
Amortization of intangible assets – trade name
Amortization of intangible assets - trade name for the fourteen months ended March 31, 2025 amounted to $280,778 as compared to $240,667 for the twelve months ended January 31, 2024. The amortization expense of intangible assets – trade name relates to the amortization of the Company’s intangible asset acquired as part of the acquisition of 180 Smoke.
Deferred tax recovery
Deferred tax recovery for the fourteen months ended March 31, 2025 amounted to $74,405 as compared to $63,777 for the twelve months ended January 31, 2024. Deferred tax recovery relates to the change in the temporary difference of the acquired trade name as a result of the amortization recorded on the respective trade name.
Net income (loss) and comprehensive income (loss)
Net and comprehensive income for the fourteen months ended March 31, 2025 amounted to $698,876 as compared to a net and comprehensive loss of $1,992,576 for the twelve months ended January 31, 2024.
Liquidity and Capital Resources
As at March 31, 2025, the Company had total assets of $15,224,565 (January 31, 2024 – $13,735,729) consisting of cash of $2,934,022, accounts receivable of $1,444,348, inventory of $3,114,897, prepaid expenses of $296,554, current net investment in sublease of $76,222, intangible assets of $481,666, intangible assets – trade name of $2,647,333, property and equipment of $576,278, non-current net investment in sublease of $329,455, and right-of-use assets of $3,323,790.
As at January 31, 2024, the Company had total assets of $13,735,729 consisting of cash of $1,753,355, accounts receivable of $1,501,702, inventory of $2,509,102, prepaid expenses of $211,398, current net investment in sublease of $38,904, intangible assets of $401,415, intangible assets – trade name of $2,928,111, property and equipment of $695,101, non-current net investment in sublease of $256,660, and right-of-use assets of $3,439,981.
The increase in assets from January 31, 2024 to March 31, 2025 was primarily attributable to the increase in cash and inventory.
As at March 31, 2025, the Company had total liabilities of $13,900,704 consisting of trade and other payables of $5,460,165, current lease liabilities of $1,260,114, current contract liabilities of $390,276, government loans of $254,367, current convertible debentures of $819,355, current derivative liabilities of $31,029, loans payable of $453,029, non-current lease liabilities of $3,940,432, non-current contract liabilities of $203,339, non-current derivative liabilities of $387,054 and deferred tax liability of $701,544.
15 | Page
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
As at January 31, 2024, the Company had total liabilities of $13,351,331 consisting of trade and other payables of $4,630,018, current lease liabilities of $1,059,713, current contract liabilities of $310,154, government loans of $240,395, loans payable of $545,379, non-current lease liabilities of $4,133,373, non-current contract liabilities of $128,283, non-current derivative liabilities of $1,408,712, non-current convertible debentures of $119,355 and deferred tax liability of $775,949.
The increase in liabilities from January 31, 2024 to March 31, 2025 was primarily attributed to the increase in trade and other payables.
Cash Flows Provided By Operating Activities
Cash flows provided by operating activities for the fourteen months ended March 31, 2025 amounted to $3,532,331 as compared to $1,663,275 for the twelve months ended January 31, 2024 due to the reasons discussed above.
Cash Flows Used In Financing Activities
Cash flows used in financing activities for the fourteen months ended March 31, 2025 amounted to $2,067,057 as compared to $1,071,914 for the twelve months ended January 31, 2024. During the fourteen months ended March 31, 2025, the Company paid $2,100,976 towards the Company’s lease obligations, repaid loans payable of $92,350, received sublease rent in the amount of $112,519 and received proceeds from the exercise of stock options in the amount of $13,750. During the twelve months ended January 31, 2024, the Company received proceeds from the issuance of convertible debentures of $900,000, received proceeds from loans payable of $48,000, received sublease rent of $2,750, repaid loans payable of $131,507, paid $57,500 in debt issuance costs associated with the issuance of convertible debentures, repaid $40,000 in CEBA loans, and paid $1,793,657 towards the Company’s lease obligations.
Cash Flows Used In Investing Activities
Cash flows used in investing activities for the fourteen months ended March 31, 2025 amounted to $284,607 as compared to $109,488 for the twelve months ended January 31, 2024. During the fourteen months ended March 31, 2025, the Company had additions to intangible assets in the amount of $150,608 and additions to property and equipment in the amount of $133,999. During the fourteen months ended March 31, 2025, the Company had additions to intangible assets in the amount of $101,838 and additions to property and equipment in the amount of $7,650.
Summary
During the fourteen months ended March 31, 2025, the Company had net and comprehensive income of $698,876 as compared to a net and comprehensive loss of $1,992,576 during the twelve months ended January 31, 2024, had an accumulated deficit of $7,115,610 (January 31, 2024 – $7,814,486) as at March 31, 2025 and had a working capital deficiency of $802,292 (January 31, 2024 – $771,198) as at March 31, 2025.
The continuing operations of the Company are dependent on the Company receiving sufficient funding to support its operations. The Company intends to finance its future requirements through a combination of debt or equity financings. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These material uncertainties cast significant doubt as to the Company’s ability to continue as a going concern.
16 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by management and the board of directors on an ongoing basis.
Outstanding Share Data
There were 29,110,330 common shares of the Company issued and outstanding as at March 31, 2025 and at the date of this report. There were options for the purchase of 2,245,000 common shares of the Company issued and outstanding as at March 31, 2025 and at the date of this report. There were 10,535,715 warrants issued and outstanding as at March 31, 2025 and at the date of this report.
Share Capital
Common Shares
The Company is authorized to issue unlimited number of common shares.
During the fourteen months ended March 31, 2025, the Company had the following common share transactions:
- On February 5, 2024, the Company completed debt settlements in the aggregate amount of $215,000 with certain creditors of the Company to preserve the Company's cash for working capital through the issuance of 1,535,715 units of the Company (each, a "Settlement Unit") at a price of $0.14 per Settlement Unit. Each Settlement Unit consisted of one common share of the Company and one common share purchase warrant of the Company. Each warrant entitles the holder thereof to purchase one common share of the Company at a price of $0.15 per share for a period of 24 months from the date of issuance; and
- On June 12, 2024 and in connection with the exercise of previously issued stock options, the Company issued 125,000 common shares at a value of $0.11 per share to an employee of the Company. As a result of this stock option exercise, $11,329 was transferred from contributed surplus to share capital.
During the twelve months ended January 31, 2024, the Company had the following common share transactions:
- On July 10, 2023 and in connection with the grant of RSUs, the Company issued 640,000 common shares at a value of $0.10 per share to certain directors, officers, employees, and consultants of the Company.
Preferred shares
The Company is authorized to issue unlimited number of preferred shares, issuable in series. The preferred shares may be issued in one or more series at the discretion of the Company's board of directors who are authorized to fix the number of preferred shares in each series and to determine the designation, rights, privileges, restrictions and conditions attached to the preferred shares of each series.
As at March 31, 2025 and January 31, 2024, no preferred shares were issued and outstanding.
17 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Warrants
The following is a continuity of the Company’s warrants for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024:
| Warrants Outstanding (#) | Weighted Average Exercise Price ($) | Weighted Average Life Remaining (yrs) | |
|---|---|---|---|
| Balance, January 31, 2023 | 2,962,956 | 0.68 | 0.16 |
| Granted | 9,000,000 | 0.15 | 3.00 |
| Expired | (2,962,956) | 0.68 | - |
| Balance, January 31, 2024 | 9,000,000 | 0.15 | 2.88 |
| Granted | 1,535,715 | 0.15 | 2.00 |
| Expired | - | - | - |
| Balance, March 31, 2025 | 10,535,715 | 0.15 | 1.59 |
| Exercisable, March 31, 2025 | 10,535,715 | 0.15 | 1.59 |
During the fourteen months ended March 31, 2025, the Company issued an aggregate of 1,535,715 common share purchase warrants of the Company in connection with debt settlements on February 5, 2024.
During the twelve months ended January 31, 2024, an aggregate of 2,962,956 warrants expired, unexercised. The Company issued an aggregate of 9,000,000 common share purchase warrants of the Company in connection with the issuance of Debenture Units.
A summary of the Company’s share purchase warrants outstanding as at March 31, 2025 is as follows:
| Grant Date | Expiry Date | Warrants Outstanding | Warrants Exercisable | Exercise Price | Weighted Average Life (Years) |
|---|---|---|---|---|---|
| 19-Dec-23 | 19-Dec-26 | 9,000,000 | 9,000,000 | $0.15 | 1.72 |
| 05-Feb-24 | 05-Feb-26 | 1,535,715 | 1,535,715 | $0.15 | 0.85 |
Share-based Payments
The Company has an omnibus incentive plan (the “Omnibus Plan”) under which the board of directors may from time to time, in its discretion, grant non-transferable stock options (“Options”) and restricted share units (“RSUs”) (Options and RSUs collectively referred to as “Awards”) to directors, officers, employees and consultants of the Company. Pursuant to the Omnibus Plan, the aggregate number of common shares reserved for issue under the Omnibus Plan may not exceed ten percent (10%) of the common shares of the Company outstanding from time to time. Furthermore, the Omnibus Plan sets the maximum number of common shares reserved for issuance, in the aggregate, pursuant to the settlement of RSUs granted under the Omnibus Plan at 740,000 common shares. Options granted pursuant to the Omnibus Plan shall be exercisable for a period of up to ten (10) years at an exercise price of not less than the closing price of the common shares on the trading day immediately preceding that date of grant, less the maximum discount, if any, permitted by the principal stock exchange on which the common shares are listed.
The maximum number of common shares reserved for issue pursuant to Awards granted to participants who are insiders of the Company in any twelve (12) month period may not exceed, in the aggregate, ten percent (10%) of the number of common shares then outstanding. The maximum number of common shares reserved for issue
18 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
pursuant to Awards granted to any one participant in any twelve (12) month period shall not exceed five percent (5%) of the number of common shares then outstanding. The maximum number of common shares reserved for issue under Awards granted to any one participant (other than a participant who is an eligible director or eligible employee) in any twelve (12) month period shall not exceed two percent (2%) of the number of common shares then outstanding.
The following is a continuity of the Company’s Options for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024:
| Options Outstanding (#) | Weighted Average Exercise Price ($) | Weighted Average Life Remaining (yrs) | |
|---|---|---|---|
| Balance, January 31, 2023 | 735,000 | 0.50 | 1.83 |
| Granted | 1,710,000 | 0.11 | 4.00 |
| Expired | (225,000) | 0.50 | - |
| Balance, January 31, 2024 | 2,220,000 | 0.20 | 2.95 |
| Granted | 150,000 | 0.20 | 1.34 |
| Exercised | (125,000) | 0.11 | 3.09 |
| Expired | - | - | - |
| Balance, March 31, 2025 | 2,245,000 | 0.20 | 1.70 |
| Exercisable, March 31, 2025 | 2,245,000 | 0.20 | 1.70 |
A summary of the Company’s Options outstanding as at March 31, 2025 is as follows:
| Grant Date | Expiry Date | Options Outstanding (#) | Options Exercisable (#) | Exercise Price ($) | Weighted Average Life (Years) |
|---|---|---|---|---|---|
| 21-May-21 | 21-May-25 | 510,000 | 510,000 | $0.50 | 0.14 |
| 10-Jul-23 | 10-Jul-27 | 1,585,000 | 1,585,000 | $0.11 | 2.28 |
| 14-Mar-24 | 14-Mar-26 | 150,000 | 150,000 | $0.20 | 0.95 |
Options
During the fourteen months ended March 31, 2025, the Company had the following stock options transactions:
On March 14, 2024, the Company retained Strike Communications Inc. (“Strike”) to perform capital markets and corporate communications services. The Company granted Options for the purchase of up to 150,000 common shares of the Company to Strike that are exercisable for a period of two years from the date of issuance with an exercise price of $0.20 per share. These issued Options vest over a period of one year in four equal instalments, every three months following the date of grant.
The fair value of these issued Options was determined using the Black-Scholes-Merton option pricing model with the following range of assumptions:
Risk-free interest rate: 4.25 %
Expected life: 2 years
Estimated volatility in the market price of the common shares: 92 %
Dividend yield: Nil
19 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
During the fourteen months ended March 31, 2025, the Company expensed $11,837 (January 31, 2024 – $nil) in the fair value of the above Options which has been recorded as stock-based compensation.
During the twelve months ended January 31, 2024, the Company had the following stock options transactions:
On July 10, 2023, the Company issued Options for the purchase of up to 1,710,000 common shares of the Company, to certain Company’s directors, officers, employees, and consultants. These Options are exercisable for a period of four years from the date of issuance with an exercise price of $0.11 per share.
The fair value of these issued Options was determined using the Black-Scholes-Merton option pricing model with the following range of assumptions:
| Risk-free interest rate: | 4.00 | % |
|---|---|---|
| Expected life: | 4 years | |
| Estimated volatility in the market price of the common shares: | 166 | % |
| Dividend yield: | Nil |
During the twelve months ended January 31, 2024, the Company recorded $154,981 as stock-based compensation expense in relation to the above Options. There was no stock-based compensation expense recorded in relation to the above Options during the fourteen months ended March 31, 2025.
Restricted Share Units
During the fourteen months ended March 31, 2025, the Company did not issue any RSUs.
During the twelve months ended January 31, 2024, the Company had the following RSU transactions:
On July 10, 2023, the Company granted 640,000 RSUs to certain Company’s directors, officers, employees, and consultants, vesting immediately. These RSUs were valued at $0.10 per RSU, based on the market value of the Company’s common shares at the time of issuance for total consideration of $64,000. On July 13, 2023, these RSUs were converted into common shares of the Company, which resulted in $64,000 being transferred from contributed surplus to share capital.
During the fourteen months ended March 31, 2025, the Company expensed $nil of the fair value of RSUs (twelve months ended January 31, 2024 – $64,000) as a result of this issuance which has been recorded as stock-based compensation.
20 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Acquisition of 180 Smoke
On March 30, 2021, the Company acquired (the “Acquisition”) all of the issued and outstanding common shares of the entities that collectively comprise the business of 180 Smoke (collectively, “180 Smoke”), a dominant vape retailer in Canada, namely: (i) 2360149 Ontario Inc. d/b/a 180 Smoke and its wholly-owned subsidiaries 420 Wellness Inc. and 180 Smoke LLC; (ii) 180 VFC Inc.; and (iii) 2488004 Ontario Inc. The Acquisition was completed with an arm’s length party on a cash-free basis (after post-closing adjustments), for promissory note of $11,129,171 and nominal consideration of $1.
The following table summarizes the fair value of consideration paid on the acquisition date and the allocation of the purchase price to the assets and liabilities acquired.
| $ | |
|---|---|
| Consideration paid | |
| Cash consideration | 1 |
| Promissory note | 11,129,171 |
| Total consideration paid | 11,129,172 |
| Purchase Price Allocation | |
| Assets acquired | |
| Cash and cash equivalents | 288,546 |
| Accounts receivable | 368,727 |
| Prepaid expenses and deposits | 176,143 |
| Inventory | 1,279,735 |
| Property and equipment | 955,131 |
| Intangible assets | 463,096 |
| Right-of-use assets | 5,201,946 |
| Total Assets | 8,733,324 |
| Liabilities assumed | |
| Accounts payable and accrued liabilities | 1,026,407 |
| Income taxes payable | 5,767 |
| Contract liability | 261,302 |
| Lease liabilities | 5,883,989 |
| Total Liabilities | 7,177,465 |
| Excess of consideration over net assets acquired | 9,573,313 |
| Amount allocated to intangible assets - 180 Smoke trade name | 3,610,000 |
| Amount deferred tax liability | (956,650) |
| Amount allocated to goodwill | 6,919,963 |
| 9,573,313 |
Following the Acquisition, the Company tested for impairment of goodwill, and determined that the amount allocated to goodwill was impaired. During the year ended January 31, 2022, the Company recorded an impairment of goodwill in the amount of $6,919,963, which was reported on the Company’s consolidated statements of operations and comprehensive income (loss).
21 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Related Party Transactions
Key management personnel compensation
The Company defines key management personnel as the officers and directors of the Company. Key management compensation during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 are as follows:
| Fourteen Months Ended March 31, 2025 | Twelve Months Ended January 31, 2024 | |
|---|---|---|
| $ | $ | |
| Salaries and other short-term employee benefits | 920,915 | 894,307 |
| Car allowance to director | 14,059 | 12,804 |
| Stock-based compensation | - | 136,164 |
| Director fees | 63,000 | 54,000 |
| 997,974 | 1,097,275 |
Related party transactions as at and for the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024 and the balances as at those dates, not disclosed elsewhere in these consolidated financial statements are as follows:
a) Included in accounts payable and accrued liabilities(Note 9) is amounts payable to related parties of the Company in the amount of $324,134 (January 31, 2024 – $430,910);
b) The Company had loans payable to related parties of the Company bearing interest between 12% to 24%, with no set terms of repayment. During the fourteen months ended March 31, 2025, the Company made repayments towards these non-arms' length loans payable in the amount of $62,350. The non-arms' length loans payables were owing to the chairman of the Company, immediate family members of the chairman of the Company, and CEO of the Company. Included in accounts payable and accrued liabilities is interest payable in the amount of $141,453 (January 31, 2024 – $112,581) to related parties of the Company;
c) The Company issued RSUs and stock options to certain officers and directors of the Company during the twelve months ended January 31, 2024; and
d) On February 5, 2024, the Company had debt settlement transactions with directors and officers of the Company in the aggregate amount of $165,000.
22 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Loans Payable
Loans payable are comprised of the following:
| March 31, 2025 $ | January 31, 2024 $ | |
|---|---|---|
| Operating facility, interest bearing at 15% per annum, secured and due on demand. | 130,780 | 160,780 |
| Loan facility, interest bearing at 21.70% per annum, secured and due on demand. This is a non-arms length promissory note payable to a corporation controlled by the CEO of the Company. | 75,000 | 100,000 |
| Promissory note, unsecured, interest bearing at 12% per annum and due on demand. This is a non-arms length promissory note payable to the chairman of the Company. | 26,800 | 26,800 |
| Promissory note, unsecured, interest bearing at 24% per annum and due on demand. This is a non-arms length promissory note payable to a family member of the chairman of the Company. | - | 22,350 |
| Promissory note, unsecured, interest bearing at 12% per annum and due on demand. This is a non-arms length promissory note payable to a family member of the chairman of the Company. | 25,000 | 25,000 |
| Promissory note, secured, interest bearing at 21.70% per annum and due on demand. This is a non-arms length promissory note payable to a family member of the chairman of the Company. | 176,449 | 176,449 |
| Promissory note, non-interest bearing and due on demand. This is a non-arms length promissory note payable to the chairman of the Company. | 19,000 | 34,000 |
| Balance | 453,029 | 545,379 |
As at March 31, 2025, interest payable on these loans amounted to $304,712 (January 31, 2024 – $249,004 which has been included in trade and other payables on the consolidated statements of financial position. As noted above, loans payables include amounts due to non-arm's length parties.
During the fourteen months ended March 31, 2025, the Company:
- repaid an outstanding promissory note in the principal amount of $22,350. This non-arms' length promissory note was payable to a family member of the chair of the Company, interest bearing at 24% per annum and was due on demand;
- made repayments towards an outstanding promissory note in the principal amount of $30,000. This promissory note is with a third-party, interest bearing at 15% per annum and is due on demand;
- made repayments to an outstanding loan facility in the principal amount of $25,000. This is a non-arms' length promissory note payable to the CEO of the Company, interest bearing at 21.70% per annum and is due on demand; and
- made repayments to an outstanding related party loan noted above in the principal amount of $15,000. This non-arms' length loan is payable to the chairman of the Company, is non-interest bearing, and due on demand.
23 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Convertible Debentures
On December 19, 2023, the Company closed a non-brokered private placement (the "Offering") of senior secured convertible debenture units (the "Debenture Units") of the Company for aggregate gross proceeds of $900,000. In connection with the Offering, the Company issued an aggregate of 900 Debenture Units to subscribers at a price of $1,000 per Debenture Unit. Each Debenture Unit consisted of: (i) a $1,000 principal senior secured convertible debenture (each a "Debenture"); and (ii) 10,000 common share purchase warrants of the Company (each a "Debenture Warrant"). The Debentures mature on June 19, 2025 and bear interest at a rate of 1% per month, beginning on the date of issuance and payable in cash on the last day of each calendar month. The principal sum of the Debentures, or any portion thereof, and any accrued but unpaid interest, may be converted into common shares of the Company at the option of the holder at any time prior to the maturity date at a conversion price of $0.10 per share, subject to adjustments as described below. Each Debenture Warrant entitles the holder to purchase one common share of the Company until December 19, 2026 at an exercise price of $0.15 per share, subject to adjustment as described below. An aggregate of 9,000,000 Debenture Warrants were issued in connection with the Offering of Debenture Units. The conversion feature in the Debentures and exercise price of the Debenture Warrants have a racket provision which could result in repricing of the conversion price or exercise price, as applicable and conditional upon compliance with the policies of the CSE, if the Company were to issue any common shares at a price less than $0.10 per share, or if any convertible instruments, stock options, share purchase warrants, or RSUs are issued at an exercise price less than $0.15 per share (collectively, the "Racket Provision"). The obligations under the Debentures are collaterally secured by a general security agreement from the Company and its wholly-owned subsidiaries, 2360149 Ontario Inc., 180 VFC Inc., 1000712645 Ontario Inc., and Spyder Cannabis Subco Inc. (collectively, the "Guarantors") and a pledge of the security interests of the Guarantors.
The Debenture Units were determined to be a compound instrument, comprising of a liability and embedded derivative liabilities consisting of the conversion feature of the Debentures and the Debenture Warrants as a result of the Rachet Provision. The fair value of the embedded derivative liability components were estimated using the Black-Scholes-Merton valuation model with the assumptions disclosed in the consolidated financial statements. Using the residual method, the carrying amount of the debt component is the difference between the principal amount, less debt issuance costs, and the initial fair value of the embedded derivative liabilities. The carrying value of the Debentures has been accreted using the effective interest rate method over the term of the Debentures, such that the carrying amount of the financial liability will equal the face value of the Debentures at maturity. The embedded derivative liabilities are carried at fair market value with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). In connection with the issuance of the Debentures Units, the Company incurred debt issuance costs of $57,500, which was amortized over the term of the Debentures.
| $ | |
|---|---|
| Proceeds from issuance of convertible debentures | 900,000 |
| Debt issuance costs | (57,500) |
| Amount classified as embedded derivative liability | (842,500) |
| Amount classified as convertible debenture at amortised cost | - |
| Accretion of convertible debenture | 119,355 |
| Carrying amount of convertible debt as at January 31, 2024 | 119,355 |
| Accretion of convertible debenture | 700,000 |
| Carrying amount of convertible debt as at March 31, 2025 | 819,355 |
In connection with the Debentures, the Company incurred interest expense in the amount of $126,000 (twelve months ended January 31, 2024 – $12,774), and accretion expense in the amount of $700,000 (twelve months ended January 31, 2024 – $119,355), during the fourteen months ended March 31, 2025.
24 | Page
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Government Loan
During the year ended January 31, 2021, the Company obtained an aggregate of $300,000 in loans under the Canada Emergency Business Account (collectively, the "CEBA Loan"). The CEBA Loan was granted in the form of an interest-free revolving line of credit. If two-thirds of the outstanding CEBA Loan was paid on or before January 18, 2024, the remaining one-third would be forgiven. The Company discounted the CEBA Loan during the interest-free loan period at the Company's specific business unit's incremental borrowing rate. During the twelve months ended January 31, 2024, the Company repaid one of the five CEBA Loans and qualified for the respective forgiveness. The remaining four CEBA Loans converted into interest-bearing loans at a rate of 5% per annum.
During the fourteen months ended March 31, 2025, the Company recorded interest expense on the CEBA Loans in the amount of $13,972, respectively (twelve months ended January 31, 2024 – $395), which has been recorded as part of the aggregate CEBA Loan balance. Accretion expense on the CEBA Loans during the fourteen months ended March 31, 2025 amounted to $nil (twelve months ended January 31, 2024 – $101,120, of which $80,000 was related to the forgivable portion related to the four unpaid CEBA Loans). As at March 31, 2025, the CEBA Loans amounted to $254,367 (January 31, 2024 – $240,395).
Off Balance Sheet Arrangements
As at March 31, 2025, the Company had no material off balance sheet arrangements such as guaranteed contracts, contingent interests in assets transferred to an entity, derivative instrument obligations or any instruments that could trigger financing, market or credit risk to the Company.
Material Accounting Policies
These consolidated financial statements have been prepared on a historical cost basis, except where otherwise disclosed. Historical cost is based on the fair value of the consideration given in exchange for assets. In addition, the consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries.
The Company adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) effective February 1, 2023. The amendments aim to 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 and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments have had an impact on the Company's disclosures of accounting policies in certain instances, but not on the measurement, recognition or presentation of any items in the Company's consolidated financial statements. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements.
The following material accounting policy information has been consistently applied to all periods presented in these consolidated financial statements, unless if mentioned otherwise.
25 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Basis of Consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity and be exposed to the variable returns from its activities. The financial statements of the Company’s subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: 2360149 Ontario Inc. and its wholly-owned subsidiaries: 420 Wellness Inc. and 180 Smoke LLC; 2766563 Ontario Inc.; 2488004 Ontario Inc.; 1000712645 Ontario Inc.; 180 VFC Inc.; and Spyder Cannabis Subco Inc. and its wholly-owned subsidiaries: Spyder Vapes Inc., Spyder Vapes (East) Inc., Spyder Vapes (Appleby) Inc., and The Green Spyder Inc. and its wholly-owned subsidiaries: The Green Spyder (Pickering) Inc., The Green Spyder (Lundy’s) Inc. and The Green Spyder IP Inc. All inter-company transactions, balances and unrealized gains and losses on transactions between these subsidiaries are eliminated upon consolidation.
Cash
Cash includes cash on hand, balances held in trust by counsel, cash deposits in financial institutions and other short-term deposits that are readily convertible into cash. Short-term deposits with maturity dates greater than 90 days are classified as short-term investments.
Inventory
Inventory is valued at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Costs are comprised of variable costs, and fixed costs, incurred in bringing inventory to the location and in a condition necessary for sale to customers. Storage and administrative overhead are expensed as incurred. Supplier rebates and discounts are recorded as a reduction in the cost of goods sold.
Business combinations
Acquisitions have been accounted for using the acquisition method required by IFRS 3 - Business Combinations. Goodwill arising from acquisitions is measured as the fair value of the consideration transferred less the net recognized amount of the estimated fair value of identifiable assets acquired and liabilities assumed (subject to certain exemptions to fair value measurement principles such as deferred tax assets or liabilities), all measured as of the acquisition date. Transaction costs that are incurred by the Company in connection with a business combination are expensed as incurred (except for costs directly related to the issuance of shares which are recognized in equity). The Company uses its best estimates and assumptions to accurately value assets and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, and these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which does not exceed more than one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. On conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations and comprehensive income (loss).
26 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Foreign currency translation
Revenues and expenses denominated in foreign currencies are translated into Canadian dollars using the exchange rate in effect at the transaction date. Monetary assets and liabilities are retranslated at the reporting date using the rate in effect at the consolidated statements of financial position date and non-monetary items are translated at historical exchange rates. Related exchange gains and losses are included in the consolidated statements of net income (loss) and comprehensive income (loss) for the period.
Share-based payments
Share-based payments to employees are measured at the fair value of the instruments issued and recognized over the expected service periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined that the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. Valuation models such as Black-Scholes-Merton are used to measure the fair value of the instruments issued when there are sufficient and reliable observable market inputs. The offset to the recorded cost is applied to contributed surplus. Consideration received on the exercise of stock options and the related contributed surplus is recorded as share capital and the related contributed surplus is transferred to share capital.
Convertible Debentures
The Company’s convertible debentures are segregated into their debt and equity components or derivative liability components at the date of issue, in accordance with the substance of the contractual agreements.
The conversion feature of the convertible debentures is presumed to be classified as a derivative financial liability unless it meets all the criteria to recognize as equity instrument under IAS 32, Financial Instruments: Presentation. One of the criteria is that the conversion option exchanges a fixed number of shares for a fixed amount of cash ("fixed for fixed").
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest rate method until extinguished upon conversion or at the instrument's maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issuance of convertible debentures are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the term of the convertible debentures using the effective interest method.
For compound instruments with non-equity derivatives, the fair value of the embedded derivative is determined first based on the contractual terms, and the initial carrying amount of the host instrument is the residual amount after separating the embedded derivative.
Derivative liabilities
Derivatives liabilities are measured at fair value through profit and loss at initial recognition and subsequent measurement.
27 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Property and equipment
Property and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is provided using the following methods at rates intended to depreciate the costs of the assets over their estimated use lives:
| Asset | Method | Rate |
|---|---|---|
| Furniture and equipment | Declining balance | 20% |
| Plant and machinery | Declining balance | 20% |
| Computer equipment | Declining balance | 30% |
| Leasehold improvements | Straight-line | Lease term |
| Website and signs | Straight-line | 2 years |
When a property and equipment asset has significant components with different useful lives, each significant component is depreciated separately. The estimated useful lives and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in consolidated statements of operations and comprehensive income (loss).
Other subsequent expenditures are capitalized if future economic benefits will arise from the expenditure. All other expenditures, including repairs and maintenance, are recognized in the consolidated statements of operations and comprehensive income (loss).
Provisions
Provisions are recognized when (a) the Company has a present obligation (legal or constructive) as a result of a past event; and (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statements of net income (loss) and comprehensive income (loss), net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Intangible assets
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets acquired are measured on initial recognition at cost. The cost of an intangible asset acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization expense on intangible assets with finite lives is recognized in the consolidated statements of net income (loss) and comprehensive income
28 | Page
DELOTA CORP. Management's Discussion and Analysis For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
(loss). Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually or more frequently when circumstances indicate that the carrying value may not be recoverable.
| Asset type | Amortization method | Amortization term |
|---|---|---|
| Website and ERP | Straight-line | 10 years |
| Trade name | Straight-line | 15 years |
Estimated useful life of an intangible asset is the lesser of the economic life of the intangible asset and the number of years the right is legally enforceable. The estimated useful life, residual value and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets in progress are not amortized until they are complete and placed in use.
Following initial recognition, intangible assets with indefinite useful lives are carried at cost less any accumulated impairment losses.
Goodwill
Goodwill is initially measured at cost and is calculated as the excess of the purchase price for an acquired business over the fair value of acquired net identifiable assets and liabilities and is allocated to the cash generating units ("CGU") to which it relates. Goodwill is not amortized but is evaluated for impairment against the carrying amount of the CGU annually or more often if events or circumstances indicate that there may be an impairment. The carrying amount of a CGU includes the carrying amount of assets, liabilities and goodwill allocated to the CGU. If the recoverable amount is less than the carrying value, the impairment loss is first allocated to reduce the carrying amount of any goodwill allocated to the CGU and then to the other non-financial assets of the CGU proportionately based on the carrying amount of each asset. Any impairment loss is charged to income in the period in which the impairment is identified. Goodwill is stated at cost less accumulated impairment losses. Subsequent reversals of goodwill impairment are prohibited.
Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease payments when the leased asset is available for use by the Company. The lease payments include fixed and in-substance fixed payments and variable lease payments that depend on an index or rate, less any lease incentives receivable. The lease liability is initially measured at the present value of the lease payments that are not paid at 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. Lease payments are discounted over the lease term, which includes the fixed term and renewal options that the Company is reasonably certain to exercise. Lease payments are allocated between the lease liability and an interest expense, which is recognized in finance costs over the lease term in the Company's consolidated statements of operations and comprehensive income (loss).
When a contract contains both lease and non-lease components, the Company will allocate the consideration in the contract to each of the components on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. Relative stand-alone prices are determined by maximizing the most observable prices for a similar asset and/or service.
Lease payments for assets that are exempt through the short-term exemption and variable payments not based on an index or rate are recognized in selling, distribution and administrative expenses as incurred. Lease incentives
29 | Page
DELOTA CORP. Management's Discussion and Analysis For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
received for variable payment leases are deferred and amortized as a reduction in recognized variable rent expenses over the term of the related leases.
Right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any re-measurement of lease liabilities. Cost is calculated as the initial measurement of the lease liability plus any initial direct costs and any lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term or the useful life.
Net investment in sublease
In sublease arrangements where the Company is the intermediate lessor, it determines whether the sublease is finance or operating by reference to the right-of-use asset. A sublease is a finance sublease if substantially all of the risks and rewards of the head lease right-of-use asset have been transferred to the sub-lessee and the Company accounts for the sublease as two separate contracts. The Company derecognizes the right-of-use asset corresponding to the head lease and records a net investment in the finance sublease with corresponding interest income recognized in finance income in the consolidated statements of operations and comprehensive income (loss) and a net investment receivable recognized in trade and other receivables or a net investment payable in accounts payable and accrued liabilities in the consolidated statements of financial position.
Equity
Common shares are classified as equity. Transaction costs directly attributable to the issuance of common shares and share purchase options are recognized as a deduction from equity, net of any tax effects. When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from total equity.
The Company has adopted a residual method with respect to the measurement of common shares and warrants issued as private placement units. Warrants attached to units are valued based on the fair value of the warrants using the Black-Scholes-Merton option pricing model and the share price at the time of financing, and the difference between the proceeds raised and the value assigned to the warrants is the residual fair value of the shares. The proceeds from the issue of units are allocated between share capital and warrant reserve.
Earnings (loss) per common share
Basic earnings (loss) per common share is computed by dividing the net income (loss) for the year by the weighted average number of common shares outstanding during the year, including contingently issuable shares which are included when the conditions necessary for issuance have been met. Diluted earnings (loss) per share is calculated in a similar manner, except that the weighted average number of common shares outstanding is increased to include potentially issuable common shares from the assumed exercise of common share purchase options and warrants, if dilutive. The number of additional shares included in the calculation is based on the treasury stock method for options and warrants.
30 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Revenue from contracts with customers
Revenue is measured at the fair value of consideration received or receivable, net of sales tax, trade discounts, rebates and other allowances.
The Company records revenue in accordance with the five steps as outlined below:
- Step 1: Identify the contract(s) with a customer;
- Step 2: Identify the performance obligations in the contract;
- Step 3: Determine the transaction price;
- Step 4: Allocate the transaction price to the performance obligations in the contract; and
- Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation.
The Company’s revenue consists of sales from its retail stores and e-commerce operations through the delivery of products and/or rendering of services. For retail store customers, control passes upon point of sale, and for e-commerce customers, control passes upon delivery. Revenue from the sale of goods is measured at the fair value of the consideration received less an appropriate deduction for returns, discounts, rebates, and loyalty program costs, net of sales taxes. The Company sells products with a limited right to return. The provision for returns is estimated based on the last 12 month’s return rate for retail stores and e-commerce sales, respectively.
Cost of goods sold
Cost of goods sold expense relates to the Company’s retail and e-commerce operations, and includes direct materials, direct labor, and shipping and handling related to the sale of goods.
Impairment of non-financial assets
The carrying amount of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash flows of other assets or groups of assets (the “cash-generating unit” or “CGU”).
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated to reduce the carrying amount of the assets in the unit (or group of units) on a pro rata basis.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been recognized.
31 | Page
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Income taxes
Tax expense is comprised of current and deferred tax. Tax is recognized in the consolidated statements of operations and comprehensive income (loss) except to the extent that it relates to items recognized in comprehensive loss or equity in the consolidated statements of financial position.
Current tax
Current tax is calculated using tax rates which are enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to taxation authorities.
Deferred tax
Deferred tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates which are enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax liabilities are generally recognized for all taxable temporary differences, except for temporary differences that arise from goodwill, which is not deductible for tax purposes. Deferred tax liabilities are also recognized for taxable temporary differences arising on investments in subsidiaries except where the reversal of the temporary difference can be controlled, and it is probable that the difference will not reverse in the foreseeable future.
Deferred tax assets are recognized to the extent it is probable that taxable profits will be available against which the deductible balances can be utilized. All deferred tax assets are reviewed at each reporting period and reduced to the extent that it is no longer probable that the asset will be recovered.
Financial instruments
Financial assets
Financial assets are classified as either financial assets at fair value through profit or loss ("FVTPL"), fair value through other comprehensive income ("FVTOCI") or amortized cost. The Company determines the classification of financial assets at initial recognition.
Financial assets at FVTPL
Financial instruments classified as fair value through profit and loss are reported at fair value at each reporting date, and any change in fair value is recognized in the consolidated statements of net income (loss) during the period in which the change occurs. Realized and unrealized gains or losses resulting from assets held at FVPTL are included in the consolidated statements of net income (loss) and comprehensive income (loss) in the period in which they relate to.
Financial assets at FVTOCI
Financial assets carried at FVTOCI are initially recorded at fair value plus transaction costs with all subsequent changes in fair value recognized in other comprehensive income (loss). For investments in equity instruments that are not held for trading, the Company can make an irrevocable election (on an instrument-by-instrument bases) at initial recognition to classify them as FVTOCI. On the disposal of the investment, the cumulative change in fair value remains in other comprehensive income (loss) and is not recycled to the consolidated statements of net income (loss).
32 | P a g e
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Financial assets at amortized cost
Financial assets are classified at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. The Company's accounts receivable are recorded at amortized cost. A provision is recorded based on the expected credit losses for the financial asset and reflects changes in the expected credit losses at the end of each reporting period.
Financial liabilities
Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost, unless they are required to be measured at FVTPL (such as derivatives) or the Company has elected to measure at FVTPL. The Company has made the following classifications of its financial instruments:
| Financial instrument | Classification |
|---|---|
| Cash | FVTPL |
| Accounts receivable | Amortized cost |
| Trade and other payables | Amortized cost |
| Derivative liabilities | FVTPL |
| Convertible debentures | Amortized cost |
| Government loan | Amortized cost |
| Contract liability | Amortized cost |
| Loans payable | Amortized cost |
| Promissory note | Amortized cost |
Impairment
IFRS 9 requires an 'expected credit loss' model to be applied which requires a loss allowance to be recognized based on expected credit losses. This applies to financial assets measured at amortized cost. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in initial recognition.
Adoption of New Accounting Pronouncements
The following amendments and standards have been recently issued but are not yet effective. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.
Amendments to IFRS 16: Leases
This amendment clarifies how a seller-lessee measures sale and leaseback transactions that satisfy the requirements in IFRS 15- Revenue from Contracts with Customers ensure the seller-lessee does not recognize any amount of the gain or loss that related to the right of use it retains that is effective for annual periods beginning on or after January 1, 2024. The Company has adopted the amendments effective February 1, 2024 and it did not impact the classification of current or non-current liabilities.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2024. The Company has applied the amendments effective February 1, 2024 and it did not impact the classification of current or non-current liabilities.
33 | Page
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
New standards not yet adopted and interpretations issued but not yet effective
The following amendments and standards have been recently issued but are not yet effective. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18, Presentation and Disclosures in Financial Statements, replaces IAS 1, Presentation of Financial Statements for reporting periods beginning on or after January 1, 2027, including for interim financial statements with retrospective application. IFRS 18, introduces a specified structure for the income statement by requiring income and expenses to be presented into the three defined categories of operating, investing and financing, and by specifying certain defined totals and subtotals. Where company-specific measures related to the income statement are provided, IFRS 18 requires companies to disclose explanations around these measures, which are referred to as management defined performance measures. IFRS 18 also provides additional guidance on principles of aggregation and disaggregation which apply to the primary financial statements and the notes. IFRS 18 will not affect the recognition and measurement of items in the financial statements, nor will it affect which items are classified in other comprehensive income and how these items are classified. The Company is currently assessing the effect of this new standard on its financial statements.
Amendments to IFRS 9 and IFRS 7: Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures, relating to the classification and measurement requirements of financial instruments recognized within those standards. These amendments clarify that a financial liability is to be derecognized on the 'settlement date' and introduces an accounting policy to derecognize financial liabilities settled through an electronic payment system before settlement date if certain conditions are met. Also, it requires additional disclosures for financial assets and liabilities with contractual terms that reference a contingent event and equity instruments classified at fair value through other comprehensive income. These amendments will be effective for annual periods beginning on or after January 1, 2026 and will be applied retrospectively with an adjustment to opening retained earnings. Prior periods will not be required to be restated and can only be restated without using hindsight. The Company is currently assessing the effect of this new standard on its financial statements.
Use of Judgements and Estimates
In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the periods presented. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant, the results of which form the basis of the valuation of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The 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 judgements in applying accounting policies and key sources of estimation uncertainty at the end of the reporting period that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Estimates and judgements
Critical accounting estimates are those that require management to make assumptions about matters that are highly uncertain at the time the estimate or assumption is made. Judgements are used in situations when there is a choice and/or assessment required by management. Critical accounting estimates are also those that could potentially have a material impact on the Company's consolidated financial results where a different estimate or assumption is used. The significant areas of estimation uncertainty and use of judgements are as follows:
Inventory valuation
Inventory is carried at the lower of cost and net realizable value; in estimating net realizable value, the Company makes estimates related to obsolescence, future selling prices, seasonality, customer behavior, and fluctuations in inventory levels. The Company records a write-down to reflect management’s best estimate of the net realizable value of inventory based on the above noted factors.
Share-based compensation
Estimating fair value for granted stock options and warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option or warrant, volatility, dividend yield, and rate of forfeitures and assumptions of these inputs.
Carrying values of tangible assets, and definite life intangible assets
The Company assesses the carrying value of its tangible assets and definite life intangible assets annually or more frequently if indicators of impairment exist. If it is determined that carrying values of these assets cannot be recovered, the unrecoverable amounts are charged against the current period net income (loss). Recoverability is dependent upon assumptions and judgements regarding market conditions, costs of operations and sustaining capital requirements. Other assumptions used in the calculation of recoverable amounts are discount rates and future cash flows. A material change in assumptions may significantly impact the potential impairment of these assets.
Contingencies
Management uses judgement to assess the existence of contingencies. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Management exercises significant judgement to assess the likelihood of the occurrence of one or more future events.
Income taxes
The calculations for current and deferred taxes require management's interpretation of tax regulations and legislation in the various tax jurisdictions in which the Company operates in, which are subject to change. The measurement of deferred tax assets and liabilities requires estimates of the timing of the reversal of temporary differences identified and management's assessment of the Company's ability to utilize the underlying future tax deductions against future taxable income before they expire, which involves estimating future taxable income.
The Company is subject to assessments by various taxation authorities in the tax jurisdictions in which it operates and these taxation authorities may interpret the tax legislation and regulations differently. In addition, the calculation of income taxes involves many complex factors. As such, income taxes are subject to measurement uncertainty and actual amounts of taxes may vary from the estimates made by management.
DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Leases
The Company estimates a lease term by considering the facts and circumstances that can create an economic incentive to exercise an extension option, or not exercise a termination option by assessing relevant factors such as profitability. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment of a lease term is reviewed if a significant event or a significant change in circumstance occurs, which affects this assessment and that is within the control of the lessee. The Company estimates the incremental borrowing rate used to measure the lease liability for each lease contract. This includes estimation in determining the asset-specific security impact.
Deferred tax assets and liabilities
The estimation of income taxes includes evaluating the recoverability of deferred tax assets and liabilities based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets and liabilities will not be realized. The ultimate realization of deferred tax assets and liabilities is dependent upon the generation of future taxable income, which in turn is dependent upon the successful execution of the Company’s business plan. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets or liabilities, and deferred income tax provisions or recoveries could be affected.
Assessment of revenues
Management assesses which contracts occur at a point in time, over a period of time, and based on usage and royalties. Judgement is required on revenues recorded over a period of time. Royalty, service fee, and license fee revenues from franchisees of the Company are recognized over a period of time as they are earned in accordance with the substance of the relevant agreement.
Carrying values of goodwill and other indefinite-life intangible assets
The values associated with goodwill and other indefinite-life intangible assets involve significant estimates and assumptions, including those with respect to the determination of cash generating units (“CGUs”), future cash inflows and outflows, discount rates and useful asset lives. At least annually, the carrying amount of goodwill and other indefinite-life intangible assets are reviewed for potential impairment. Among other things, this review considers the recoverable amounts of the CGUs based on the higher of value in use or fair value less costs of disposal using discounted estimated future cash flows. These significant estimates require considerable judgement which could affect the Company’s future results if the current estimates of future performance and fair value change.
Purchase price allocation
The purchase price allocation for business combinations and asset acquisitions is based on the fair value of the assets acquired, liabilities assumed, and intangible assets identified, including managements’ process for developing the estimates and the significant assumptions underlying the estimates.
DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Going concern assumption
The Company’s going concern presentation of the consolidated financial statements assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
Derivative liabilities
The Company measures the embedded derivative liabilities relating to the conversion feature of the convertible debentures and warrants issued using the Black-Scholes-Merton valuation model taking into account the features of the instrument and market data as at the grant date and on the basis of the Company’s management assumptions.
Financial Instruments and Risk Assessment
The fair value hierarchy that reflects the significance of inputs used in making fair value measurements is as follows:
- Level 1: quoted prices in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and
- Level 3: inputs for the asset or liability that are not based upon observable market data.
Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Financial instruments of the Company consist of cash, accounts receivable, trade and other payables, contract liabilities, government loan, loans payable, derivative liabilities, and convertible debentures. There are no significant differences between the carrying amounts of the current assets and current liabilities reported on the consolidated statements of financial position and their estimated fair values due to the relatively short-term maturities of these financial instruments. The government loan as at March 31, 2025 approximated its fair value as terms and conditions represented market terms and conditions.
The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies. Where quoted market values are not readily available, the Company may use considerable judgement to develop estimates of fair value. Accordingly, any estimated values are not necessarily indicative of the amounts to which the Company could realize on such financial instruments in a current market exchange and could be materially affected by the use of different assumptions or methodologies.
The Company uses the Black-Scholes-Merton valuation model to estimate fair value of the derivative liabilities at each reporting period. This is a level 3 reoccurring fair value measurement. The key level 3 inputs used by management to determine the fair value are the expected future volatility in the price of the Company’s shares and the expected life of the convertible debentures. The Company believes that a 1% difference in the inputs used for this fair value measurement would not cause a material difference to the fair value.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
The following range of assumptions were used to value the embedded derivative liabilities during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024:
Stock price: $0.10 - $0.16
Risk-free interest rate: 2.66 - 4.45%
Expected life: 0.49 - 3 years
Estimated volatility in the market price of the common shares: 86 -144 %
Dividend yield: Nil
Transactions related to the Company’s derivative liabilities during the fourteen months ended March 31, 2025 and the twelve months ended January 31, 2024, are comprised of the following:
| $ | |
|---|---|
| Proceeds from issuance of convertible debentures | 900,000 |
| Debt issuance costs | (57,500) |
| Amount classified as embedded derivative liability | (842,500) |
| Amount classified as convertible debenture at amortised cost | - |
| Accretion of convertible debenture | 119,355 |
| Carrying amount of convertible debt as at January 31, 2024 | 119,355 |
| Accretion of convertible debenture | 700,000 |
| Carrying amount of convertible debt as at March 31, 2025 | 819,355 |
The Company's risk exposures and their impact on the Company's financial instruments are summarized below:
Credit risk
The Company is exposed to credit risk on its cash balance, and accounts receivable from customers. The credit risk associated with the Company’s cash is considered low, as the cash is held with reputable financial institutions. The Company’s maximum exposure to credit risk associated with its customers is limited to $1,444,348 (January 31, 2024 – $1,501,702), the balance held as at March 31, 2025. Given the Company’s history with these customers and their financial strength, the Company has assessed the credit risk related to these customers as low.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due within one year. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
The following is an analysis of the contractual maturities of the Company’s financial liabilities:
| | 1 year
$ | 2 to 5 years
$ | >5 years
$ | Total
$ |
| --- | --- | --- | --- | --- |
| March 31, 2025 | | | | |
| Trade and other payables | 5,460,165 | - | - | 5,460,165 |
| Lease liabilities | 1,843,769 | 3,907,485 | - | 5,751,254 |
| Government loan | 254,367 | - | - | 254,367 |
| Loans payable | 453,029 | - | - | 453,029 |
| Convertible debentures | 900,000 | - | - | 900,000 |
| January 31, 2024 | | | | |
| Trade and other payables | 4,630,018 | - | - | 4,630,018 |
| Lease liabilities | 1,635,900 | 4,593,692 | 40,767 | 6,270,359 |
| Government loan | - | 240,395 | - | 240,395 |
| Loans payable | 545,379 | - | - | 545,379 |
| Convertible debentures | - | 900,000 | - | 900,000 |
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 prices comprise of interest rate risk, foreign exchange risk, and price risk.
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 interest rates on all of the Company’s existing debt are fixed or non-interest bearing, and therefore it is not currently subject to any significant interest rate risk.
Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations to cash, accounts receivable, and trade and other payables. As at March 31, 2025, the Company had minimal accounts in foreign currencies and considers foreign exchange risk to be insignificant.
Price risk
The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.
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DELOTA CORP.
Management’s Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Disclosure Controls and Procedures
The Company’s audit committee and board of directors has reviewed and approved this MD&A prior to its release. Delota is committed to providing timely, accurate and balanced disclosure of all material information about the Company and to providing fair and equal access to such information. As at March 31, 2025 and January 31, 2024, the Company’s management evaluated the effectiveness of the design and operation of its disclosure controls and procedures, as defined under the rules adopted by the Canadian securities’ regulatory authorities. In addition, the Company’s management has assessed whether there have been many significant changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed with securities regulatory authorities is recorded, processed, summarized, and reported on a timely basis, and is accumulated and communicated to the Company’s management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Internal control over financial reporting is a process designed by, or under the supervision of, senior management to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Company’s consolidated financial statements in accordance with IFRS.
The Company’s management, including the CEO and CFO, does not expect that the Company’s disclosure controls or internal control over financial reporting will prevent or detect all material misstatements due to error or fraud. Because of the inherent limitations of all control systems, an evaluation of controls can only provide reasonable, not absolute assurance, that all control issues and instances of fraud or error, if any, within the Company have been detected. The Company is continually evolving and enhancing its systems of controls and procedures. Based on the evaluation of disclosure controls, and assessment of changes in internal control over financial reporting, the CEO and CFO have concluded that, subject to the inherent limitations noted above, the Company’s disclosure controls are effective in ensuring that material information relating to the Company is made known to management on a timely basis, and is fairly presented in all material respects in this MD&A.
Internal Controls over Financial Reporting
Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the IFRS. Based on their evaluation, the CEO and CFO have concluded that the design of these internal controls over financial reporting and the preparation consolidated financial statements for external reporting on January 31, 2024, and on March 31, 2025 are effective.
The Company relies on compensating controls, including substantive periodic review of the consolidated financial statements, to ensure that disclosure controls and procedures are effective. The Company continues to address requirements to strengthen audit and financial controls.
Other Risk Factors
The Company is subject to a number of risks. A non-exhaustive list of certain specific and general risks that management is aware of and believe to be material to, and could affect, the business, results of operations, prospects and financial condition of the Company is attached as Schedule “A” to the Company’s Annual Information Form dated January 31, 2023 which was filed on February 3, 2023 on the Company’s SEDAR+ profile at www.sedarplus.ca.
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DELOTA CORP.
Management's Discussion and Analysis
For the Fourteen Months Ended March 31, 2025 and the Twelve Months Ended January 31, 2024
Corporate Information
Corporate Office
7941 Jane Street, Unit 2, Concord, Ontario, L4K 2M7
Independent Auditor
Horizon Assurance LLP, Chartered Professional Accountants
Transfer Agent
Odyssey Trust Company
Additional Information
Additional information related to Delota Corp. is available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
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