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Falcon Gold Corp. Audit Report / Information 2025
46148_rns_2026-01-09_a4f99f87-83df-450d-9cfe-6d2771a68e84.pdf
Audit Report / Information
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FALCON
GOLD CORP
Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
DAVIDSON & COMPANY LLP
Chartered Professional Accountants
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Falcon Gold Corp.
Opinion
We have audited the accompanying consolidated financial statements of Falcon Gold Corp. (the "Company"), which comprise the consolidated statements of financial position as at June 30, 2025 and 2024, and the consolidated statements of operations and comprehensive loss, changes in shareholders' deficiency, and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has not achieved profitable operations, has accumulated losses of $16,629,853 since inception and expects to incur further losses in the development of its business. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor's report.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
A member of Nexia International
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Zachary Faure.
Vancouver, Canada
January 9, 2026
Chartered Professional Accountants
FALCON GOLD CORP.
Consolidated Statements of Financial Position
As at June 30, 2025 and 2024
(Expressed in Canadian Dollars)
| 2025 | 2024 | |
|---|---|---|
| ASSETS | ||
| Current | ||
| Cash | $ 42,723 | $ 55,748 |
| Amounts receivable (Note 8) | 77,569 | 91,955 |
| Marketable securities (Note 5) | 175,216 | 217,038 |
| Prepaid expenses (Note 8) | 26,773 | 100,813 |
| TOTAL ASSETS | $ 322,281 | $ 465,554 |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities (Note 8) | $ 1,360,046 | $ 1,179,552 |
| Premium on flow-through (Note 10) | 135,447 | - |
| TOTAL LIABILITIES | 1,495,493 | 1,179,552 |
| SHAREHOLDERS’ DEFICIENCY | ||
| Share capital (Note 7) | 13,200,377 | 12,330,899 |
| Share subscriptions (receivable) | (51,276) | (25,000) |
| Reserves (Note 7) | 2,307,540 | 2,228,490 |
| Deficit | (16,629,853) | (15,248,387) |
| (1,173,212) | (713,998) | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY | $ 322,281 | $ 465,554 |
Nature of operations and going concern (Note 1)
Subsequent events (Note 11)
Approved and authorized for issuance on behalf of the Board of Directors on January 9, 2026:
/s/ Karim Rayani
/s/ Michelle Suzuki
Karim Rayani
Michelle Suzuki
(The accompanying notes are an integral part of these consolidated financial statements)
FALCON GOLD CORP.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended June 30, 2025 and 2024
(Expressed in Canadian Dollars)
| 2025 | 2024 | |
|---|---|---|
| Expenses | ||
| Consulting fees | $ 109,000 | $ 42,311 |
| Exploration expenditures (Note 6) | 690,923 | 1,134,655 |
| Filing fees and communications | 178,598 | 174,142 |
| Foreign exchange | - | 154 |
| General and administration costs (Note 8) | 54,667 | 87,961 |
| Management fees (Note 8) | 180,000 | 180,000 |
| Professional fees (Note 8) | 111,778 | 134,824 |
| Share-based payments (Notes 7 and 8) | 29,653 | 82,989 |
| Travel and promotion | 15,675 | 13,562 |
| 1,370,294 | 1,850,598 | |
| Loss before other items | (1,370,294) | (1,850,598) |
| Other items | ||
| Other income (Note 10) | 40,553 | 207,493 |
| Gain on sale of mineral properties (Note 6) | - | 199,500 |
| Unrealized loss on marketable securities (Note 5) | (41,822) | (96,423) |
| Write-off of amounts receivable (Note 8) | (9,903) | (29,765) |
| (11,172) | 280,805 | |
| Loss comprehensive loss for the year | $ (1,381,466) | $ (1,569,793) |
| Basic and diluted loss per share | $ (0.01) | $ (0.01) |
| Weighted average number of common shares outstanding – basic and diluted | 166,952,423 | 134,806,411 |
(The accompanying notes are an integral part of these consolidated financial statements)
FALCON GOLD CORP.
Consolidated Statements of Changes in Shareholders' Deficiency
For the years ended June 30, 2025 and 2024
(Expressed in Canadian Dollars)
| Number of Shares | Share Capital | Share subscriptions receivable | Contributed Surplus | Deficit | Total Shareholders' Deficiency | |
|---|---|---|---|---|---|---|
| Balance, June 30, 2023 | 129,464,694 | $ 11,563,752 | $ (25,000) | $ 2,128,568 | $ (13,678,594) | $ (11,274) |
| Cash | ||||||
| Private placement | 18,143,834 | 755,455 | - | - | - | 755,455 |
| Exercise of warrants | 472,500 | 23,625 | - | - | - | 23,625 |
| Exercise of stock options | 500,000 | 35,000 | - | (10,000) | - | 25,000 |
| Share issue cost | - | (56,933) | - | 21,933 | - | (35,000) |
| Shares issued for mineral properties | 250,000 | 10,000 | - | - | - | 10,000 |
| Warrants issued for mineral properties | - | - | - | 5,000 | - | 5,000 |
| Share-based payments | - | - | - | 82,989 | - | 82,989 |
| Loss for the year | - | - | - | - | (1,569,793) | (1,569,793) |
| Balance, June 30, 2024 | 148,831,028 | $ 12,330,899 | $ (25,000) | $ 2,228,490 | $ (15,248,387) | $ (713,998) |
| Cash | ||||||
| Private placement | 27,153,102 | 1,086,161 | (26,276) | 48,864 | - | 1,108,749 |
| Exercise of warrants | 150,000 | 7,500 | - | - | - | 7,500 |
| Exercise of stock options | 300,000 | 24,000 | - | (9,000) | - | 15,000 |
| RSUs vested to shares | 1,000,000 | 25,000 | - | (25,000) | - | - |
| Share issue cost | - | (97,183) | - | 34,533 | - | (62,650) |
| Flow-through share premium | - | (176,000) | - | - | - | (176,000) |
| Share-based payments | - | - | - | 29,653 | - | 29,653 |
| Loss for the year | - | - | - | - | (1,381,466) | (1,381,466) |
| Balance, June 30, 2025 | 177,434,130 | $ 13,200,377 | $ (51,276) | $ 2,307,540 | $ (16,629,853) | $ (1,173,212) |
(The accompanying notes are an integral part of these consolidated financial statements)
FALCON GOLD CORP.
Consolidated Statements of Cash Flows
For the years ended June 30, 2025 and 2024
(Expressed in Canadian Dollars)
| 2025 | 2024 | |
|---|---|---|
| Operating Activities | ||
| Net loss for the year | $ (1,381,466) | $ (1,569,793) |
| Items not affecting cash | ||
| Unrealized loss on marketable securities | 41,822 | 96,423 |
| Share-based payments | 29,653 | 82,989 |
| Other income | (40,553) | (207,493) |
| Shares issued for mineral properties | - | 10,000 |
| Warrants issued for mineral properties | - | 5,000 |
| Gain on disposal of mineral property | - | (199,500) |
| Write-off amount receivable | 9,903 | 29,765 |
| Changes in non-cash working capital items related to operations: | ||
| Amount receivable | 4,483 | (39,593) |
| Prepaid expenses | 74,040 | 92,842 |
| Accounts payable and accrued liabilities | 180,494 | 654,672 |
| Cash used in operating activities | (1,081,624) | (1,044,688) |
| Investing Activities | ||
| Proceeds on disposal of exploration and evaluation assets | - | 5,000 |
| Cash provided by investing activities | - | 5,000 |
| Financing Activities | ||
| Shares issued for cash | 1,131,249 | 804,080 |
| Share issue cost – cash | (62,650) | (35,000) |
| Cash provided by financing activities | 1,068,599 | 769,080 |
| Change in cash during the year | (13,025) | (270,608) |
| Cash, beginning of year | 55,748 | 326,356 |
| Cash, end of the year | $ 42,723 | $ 55,748 |
| Supplemental Disclosure of Cash Flow Information: | ||
| Cash paid during the year: | ||
| Interest | $ - | $ - |
| Income taxes | $ - | $ - |
| Non-cash Transactions | ||
| Transfer of fair value on exercise of stock options | $ 9,000 | $ 10,000 |
| Transfer of fair value on vesting RSUs to shares | $ 25,000 | $ - |
| Flow-through premium | $ 176,000 | $ - |
| Residual value of warrants | $ 48,864 | $ - |
| Fair value of broker warrants | $ 34,533 | $ 21,933 |
(The accompanying notes are an integral part of these consolidated financial statements)
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Falcon Gold Corp. (the "Company") was incorporated pursuant to the provisions of the Business Corporations Act (Ontario) on November 24, 2006 and was continued under the Business Corporations Act (British Columbia) on May 2, 2013. The address of the Company and the registered office is Suite 2200, 885 West Georgia Street, Vancouver, British Columbia V6C 3E8. The address of the records office is 200-3310 South Service Road, Burlington, Ontario L7N 3M6
These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company was not expected to continue operations for the foreseeable future. At June 30, 2025, the Company has not achieved profitable operations, has accumulated losses of $16,629,853 since inception and expects to incur further losses in the development of its business.
The above material uncertainties may cast significant doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent upon successful results from its exploration and evaluation activities, its ability to attain profitable operations to generate funds and/or its ability to raise equity capital or borrowings sufficient to meet its current and future obligations. Although the Company has been successful in the past in raising funds to continue operations, there is no assurance it will be able to do so in the future.
These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these consolidated financial statements.
Failure to arrange adequate financing on acceptable terms and/or achieve profitability may have an adverse effect on the financial position, results of operations, cash flows, and prospects of the Company. There are many external factors that can adversely affect general workforces, economies and financial markets globally. An example includes, but is not limited to, political conflict in other regions. It is not possible for the Company to predict the duration or magnitude of adverse results of such external factors and their effect on the Company's business or ability to raise funds.
2. BASIS OF PREPARATION
Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards, approved by the International Accounting Standards Board (the "IASB"), and effective for the Company's reporting for the year ended June 30, 2025.
These consolidated financial statements were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on January 9, 2026.
Basis of Measurement
These consolidated financial statements have been prepared on a historical cost basis. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information. The presentation currency and the functional currency of the Company and its subsidiaries is the Canadian dollar.
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION
The accounting policies set out below have been applied consistently in the consolidated financial statements, unless otherwise indicated.
Consolidation
These consolidated financial statements include the accounts of the Company and its inactive wholly owned subsidiaries, Manhattan Minerals Inc., and 2287991 Ontario Inc.
The consolidated financial statements include the financial statements of subsidiaries subject to control by the Company. Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of operations and comprehensive loss for the effective date of acquisition or up to the effective date of disposal, as appropriate. All inter-company transactions and balances are eliminated on consolidation.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at bank and cash held at brokerage account. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with a fixed deposit term of three months or less and subject to an insignificant risk of change in value. There are no cash equivalents for the periods presented.
Functional Currency
The presentation currency and the functional currency of the Company and its subsidiaries is the Canadian dollar.
Transactions in foreign currencies are translated into the functional currency at exchange rates at the date of the transactions. Foreign currency differences arising on translation are recognized in profit or loss. Foreign currency monetary assets and liabilities are translated at the functional currency exchange rate at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when acquired. All gains and losses on translation of these foreign currency transactions are included in profit or loss.
Mineral Exploration and Evaluation Expenditures
Costs incurred with respect to exploration and evaluation ("E&E") of the Company's mineral properties, including acquisition costs, are expensed as incurred until the technical feasibility and commercial viability of extracting the mineral resource is determined.
The Company may occasionally enter into option or royalty arrangements, whereby the Company will transfer part of its mineral properties, as consideration, for an agreement by the transferee to meet certain exploration and evaluation expenditures which would have otherwise been undertaken by the Company. Any consideration received from the agreement is accounted for as a recovery of expenditures in the period received.
Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as 'mines under construction'.
Impairment of Non-Financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets with finite lives to determine whether there is any indication that those assets have suffered an impairment loss.
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Impairment of Non-Financial Assets (continued)
Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of an asset's fair value less cost to sell or its value in use. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. In addition, long-lived assets that are not amortized are subject to an annual impairment assessment.
Restoration, Rehabilitation and Environmental Obligations
A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflects the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either a unit-of-production or the straight-line method as appropriate. The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage that is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses.
The Company has no restoration, rehabilitation and environmental costs as at June 30, 2025 and 2024 as the disturbance to date is minimal.
Income Taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss.
Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Share Capital
Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares are classified as equity instruments.
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Share Capital (continued)
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Consideration received from a private placement financing involving units consisting of common shares and warrants is allocated to the share capital and the warrant reserve accounts using the residual value method. The residual method first allocates the value to common shares issued in the private placements at their fair value as determined by the closing quoted bid price on the issuance date. The balance, if any, is allocated to the warrants. Any fair value attributed to the warrants is recorded as reserves in shareholders' equity.
Loss per Share
Basic loss per share is calculated by dividing the net loss for the year by the weighted average number of shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of shares outstanding used in the calculation of diluted income or loss per share assumes that the deemed proceeds received from the exercise of stock options, share purchase warrants and their equivalents would be used to repurchase common shares of the Company at the average market price during the year, if they are determined to have a dilutive effect. In periods when the Company has generated a net loss, stock options and share purchase warrants are not included in the computation of diluted loss per share as they are anti-dilutive.
Share-based Payments
The Company grants stock options and restricted share units to employees and directors under its share-based compensation plan.
The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of stock options and other equity-settled share-based payment arrangements are recorded based on the estimated fair value at the grant date and charged to earnings over the vesting period. Where awards are forfeited because non-market based vesting conditions were not satisfied, the expense previously recognized is reversed in the period the forfeiture occurs.
Equity-settled share-based payments to employees are measured at the fair value of the equity instrument granted. The fair value of the options at the date of grant, measured using the Black-Scholes option pricing model, is charged to the statement of comprehensive loss over the vesting period using the graded vesting method. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Charges for options that are forfeited before vesting are reversed from share-based payment reserve. RSUs vest over the restriction period and accordingly, the expense is recognized over the restriction period.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received except where the fair value cannot be measured reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the Company receives the goods or the counter party renders the service.
All equity-settled share-based payments are reflected in share-based payment reserve, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in share-based payment reserve is credited to share capital, together with any consideration received.
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FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Share-based Payments (continued)
Stock options
The Company applies the fair value method of accounting for all stock option awards. Under this method, the Company recognizes a compensation expense for all stock options awarded to employees, based on the fair value of the options on the date of grant which is determined by using the Black-Scholes option pricing model. The fair value of the options is expensed over the graded vesting period of the options.
Restricted share units (RSUs)
The Company's RSUs are settled in either cash or equity, as determined by the Company's Board of Directors at the grant date and typically vest over three years.
For cash settled RSUs, the share-based payment expense is adjusted at each reporting period to reflect any change in the quoted market price of the Company's common shares and the vesting of each RSU grant, with a corresponding amount recorded in current liabilities, and non-current liabilities.
For equity-settled RSUs, the fair value is determined based on the quoted market price of the Company's common shares at the date of grant, and the fair value is recognized as a share-based payment expense over the vesting period with a corresponding amount recorded in equity reserves
Financial instruments
Financial instruments are measured on initial recognition at fair value, plus, in the case of financial instruments other than those classified as fair value through profit or loss ("FVTPL"), directly attributable transaction costs. Financial instruments are recognized when the Company becomes party to the contracts that give rise to them and are classified as amortized cost, fair value through profit or loss or fair value through other comprehensive income, as appropriate.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets not designated upon initial recognition as amortized cost or fair value through other comprehensive income ("FVOCI"). A financial asset is classified in this category principally for the purpose of selling in the short term, or if so designated by management. Transaction costs are expensed as incurred. On initial recognition, a financial asset that otherwise meets the requirements to be measured at amortized cost or FVOCI may be irrevocably designated as FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets measured at FVTPL are measured at fair value with changes in fair value recognized in the statements of operations and comprehensive loss. Marketable securities are classified as FVTPL.
Financial assets at FVOCI
On initial recognition of an equity investment that is not held for trading, an irrevocable election is available to measure the investment at fair value upon initial recognition plus directly attributable transaction costs and at each period end, changes in fair value are recognized in other comprehensive income ("OCI") with no reclassification to the statements of operations. The election is available on an investment by investment basis. Investments in equity securities, where the Company cannot exert significant influence, are designated as financial assets at FVOCI.
13 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial assets at amortized cost
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and is not designated as FVTPL. Financial assets classified at amortized cost are measured subsequent to initial recognition at amortized cost using the effective interest method. Cash and amount receivable is classified as and measured at amortized cost.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in net earnings when the liabilities are derecognized as well as through the amortization process. Borrowing liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date. Accounts payable are classified as and measured at amortized cost.
De-recognition of financial assets and liabilities
A financial asset is derecognised when either the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party. If neither the rights to receive cash flows from the asset have expired nor the Company has transferred its rights to receive cash flows from the asset, the Company will assess whether it has relinquished control of the asset or not. If the Company does not control the asset, then derecognition is appropriate. A financial liability is derecognised when the associated obligation is discharged or canceled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in net loss.
Impairment of financial assets:
A loss allowance for expected credit losses is recognized in OCI for financial assets measured at amortized cost. At each balance sheet date, on a forward-looking basis, the Company assesses the expected credit losses associated with its financial assets carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The impairment model does not apply to investment in equity instruments.
The expected credit losses are required to be measured through a loss allowance at an amount equal to the 12 month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date) or full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument). A loss allowance for full lifetime expected credit losses is required for a financial instrument if the credit risk of that financial instrument has increased significantly since initial recognition.
14 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
Financial instruments (continued)
Financial instruments recorded at fair value:
The fair value of quoted investments is determined by reference to market prices at the close of business on the statement of financial position date. Where there is no active market, fair value is determined using valuation techniques. These include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis; and, pricing models.
Financial instruments that are measured at fair value subsequent to initial recognition are grouped into a hierarchy based on the degree to which the fair value is observable as follows:
- Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 - valuation techniques based on 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. derived from prices); and
- Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company’s financial instruments include cash, amounts receivable (excluding GST receivable), and marketable securities, and accounts payable and accrued liabilities. See Note 9 for fair value disclosures.
Recent accounting pronouncements
In January 2020, the IASB issued amendments to IAS 1, Presentation of Financial Statements, to provide a more general approach to the presentation of liabilities as current or non - current based on contractual arrangements in place at the reporting date.
These amendments:
- specify that the rights and conditions existing at the end of the reporting period are relevant in determining whether the Company has a right to defer settlement of a liability by at least twelve months;
- provide that management’s expectations are not a relevant consideration as to whether the Company will exercise its rights to defer settlement of a liability; and
- clarify when a liability is considered settled.
On October 31, 2022, the IASB issued a deferral of the effective date for the new guidance by one year to annual reporting periods beginning on or after January 1, 2024 and is to be applied retrospectively. Adoption of this standard had no impact on the financial statements.
IFRS 18 Presentation and Disclosure in Financial Statements, which will replace IAS 1, Presentation of Financial Statements aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company has not yet determined the impact of this amendment on its consolidated financial statements.
15 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
The effect of a change in an accounting estimate is recognized prospectively by including it in net loss in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both.
Determining Amount and Timing of Reclamation Provisions
A reclamation provision represents the present value of estimated future costs for the reclamation of the Company's mineral properties. These estimates include assumptions as to the future activities, cost of services, timing of the reclamation work to be performed, inflation rates and interest rates. The actual cost to reclaim a mine or exploration property may vary from the estimated amounts because there are uncertainties with respect to the extent of required future remediation activities, as studies are currently ongoing, and uncertainties in factors used to estimate the cost and potential changes in regulations or laws governing the reclamation of a mineral property. Management periodically reviews the reclamation requirements and adjusts the liability as new information becomes available and will assess the impact of new regulations and laws as they are enacted.
Going Concern
The assessment of the Company's ability to execute its strategy by funding future working capital requirements involves judgement. Management monitors future cash requirements to assess the Company's ability to meet these future funding requirements. Further information regarding going concern is outlined in Note 1.
Share-based payment transactions
The Company uses the Black-Scholes Option Pricing Model for valuation of share-based compensation and other equity based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's earnings and equity reserves.
5. MARKETABLE SECURITIES
The fair value of marketable securities are determined at the end of each reporting period.
| Investment in marketable securities | Number of shares/Units Held | Investment Cost | Fair Value at June 30, 2025 | Number of shares/Units Held | Investment Cost | Fair Value at June 30, 2024 |
|---|---|---|---|---|---|---|
| # | $ | $ | # | $ | $ | |
| Public Companies | ||||||
| Portofino Resources Inc. | 161,500 | 18,573 | 1,615 | 161,500 | 18,573 | 4,037 |
| Marvel Discovery Corp. | 1,500,000 | 75,000 | 45,000 | 1,500,000 | 75,000 | 45,000 |
| Power One Resources Corp. | 300,000 | - | 4,500 | 300,000 | - | 13,500 |
| Carmanah Minerals Corp. | 4,000,000 | 120,000 | 80,000 | 4,000,000 | 120,000 | 80,000 |
| Carmanah – Warrants | 4,000,000 | 74,500 | 44,100 | 4,000,000 | 74,500 | 74,500 |
| Private Company | ||||||
| Latamark Resources Corp. | 5,000,000 | 15,878 | 1 | 5,000,000 | 15,878 | 1 |
| Total | 14,961,500 | 303,951 | 175,216 | 14,961,500 | 303,951 | 217,038 |
16 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
5. MARKETABLE SECURITIES (continued)
On January 16, 2024, the Company received 4,000,000 common shares and 4,000,000 share purchase warrants pursuant to a property option agreement. The share purchase warrants enables the holder of each warrant to subscribe for one common share of Carmanah at a price of $0.10 for a period of three years from the date of issue. The Carmanah shares were valued at the market price of $0.06 for a value of $120,000 and the warrants were valued at $74,500 using a volatility of 116%, interest rate of 4.10%, share price at the date of issuance of $0.10, expected life of 3 years and dividend yield of 0.00%. The warrants were re-valued at June 30, 2025 using a volatility of 165%, interest rate of 3.15%, share price at the date of $0.02, expected life of 1.55 years and dividend yield of 0.00%.
During the year ended June 30, 2025, the Company recognized an unrealized loss on marketable securities of $41,822 (2024-$96,423).
6. EXPLORATION AND EVALUATION PROPERTIES
During the year ended June 30, 2025 and 2024, the following Exploration and Evaluation expenditures were incurred by the Company:
| 2025 | 2024 | |
|---|---|---|
| Property payments | $ 7,215 | $ 68,099 |
| Exploration costs | ||
| Geophysics | 289,305 | 66,320 |
| Drilling | 237,726 | 50,000 |
| Surveys & assays | 4,300 | 614,916 |
| Airborne survey | 75,000 | - |
| Reports | 2,050 | 302,825 |
| Other | 159,857 | 32,495 |
| Amounts recovered | (84,530) | - |
| Total | $ 690,923 | $ 1,134,655 |
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
6. EXPLORATION AND EVALUATION PROPERTIES (continued)
Central Canada Property
On January 10, 2018, the Company entered into an option agreement to acquire 100% of the Central Canada Property consisting of a claim group located in Ontario. The Central Canada Property consists of various unpatented mining claims. As consideration, the Company issued 325,000 common shares and made cash payments totalling $141,500 and incurred $100,000 in exploration and evaluation expenditures. During the year ended June 30, 2023, the Company earned its 100% interest in the property.
The Company made a pre-production advance royalty cash payment of $20,000 and is required to make cash payments of $5,000 on each anniversary of the approval date.
The Central Canada Property is subject to a 2.0% net smelter return in favour of the previous owner of the claims. The Company may purchase the one-half of the net smelter return for an aggregate amount of $1,000,000 at any time prior to the commencement of production.
Spitfire and Sunny Boy
The Company holds a 100% interest in Spitfire and Sunny Boy claims in south central British Columbia.
The property is subject to a 2% net smelter royalty (NSR). The Company will have the right to purchase 0.5% of the total NSR 1% at any time up to commencement of production for a one-time payment of $400,000.
Gaspard Claims
During the year ended June 30, 2021, the Company acquired 100% interest in the Gaspard Claims which are located in British Columbia.
The property was subject to a 2% net Smelter Returns ("NSR") and the Company may at any time purchase 1% NSR for $1,500,000.
During fiscal 2024, the Gaspard claims were allowed to lapse, and the Company no longer has any interest in the property.
Hope Brook
During the year ended June 30, 2021, the Company staked claims in Newfoundland. During year ended June 30, 2022, the Company staked additional claims. During fiscal 2023, it was determined that some of the claims comprising the Hope Brook property would be allowed to lapse. During fiscal 2024, the Company staked additional claims at a cost of $10,200.
Baie Verte Area
During the year ended June 30, 2022, the Company staked various claims in Newfoundland for a total cost of $62,045.
During the 2023 fiscal year, the Company entered into an option agreement with Carmanah Minerals Corp. ("Carmanah") with respect to various claims whereby the Company will receive cash payments of $62,000 over a four-year period and 4,000,000 common shares and 4,000,000 common share purchase warrants of Carmanah with each share purchase warrant exercisable for one common share at $0.10 per share for a period of three years from the date of issue. In addition, the Company will retain a 2.5% NSR of which Carmanah may purchase 1% for $1,000,000 at any time. The transaction was subject to approval by the TSX Venture Exchange as the Company and Carmanah are related parties as a result of common officers and directors. (See Note 8).
18 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
6. EXPLORATION AND EVALUATION PROPERTIES (continued)
Baie Verte Area (continued)
The transaction with Carmanah was completed during the year ended June 30, 2024 and the Company received 4,000,000 common shares and 4,000,000 common share purchase warrants of Carmanah. (See Note 5) During the year ended June 30, 2025 the Company received a cash payment of $5,000 with respect to the option as final payment with respect to the transaction.
Springpole West Project
On August 25, 2020, the Company staked various mining claims in Ontario at a cost of $11,850.
Subsequent to the year ended June 30, 2025, the claims were allowed to lapse.
Great Burnt
During the year ended June 30, 2021 the Company staked various claims in Newfoundland at a cost of $5,915.
During the year ended June 30, 2025 the Company staked various claims in Newfoundland at a cost of $7,215.
Viernes Project
On December 16, 2021, the Company entered into a property option agreement to acquire 100% interest in the Viernes Project in the Republic of Chile from Excava Holding SpA, a Chilien company ("Excava").
During the year ended June 30, 2024, the Company determined that the project did not factor in its future plans and terminated the agreement.
Gander South
During the year ended June 30, 2022, the Company various staked claims in Gander Newfoundland for a total cost of $37,180.
Subsequent to the year ended June 30, 2025, these claims were allowed to lapse.
Other properties
Gander North
During the year ended June 30, 2021, the Company various staked claims in Gander Newfoundland for a total cost of $26,390.
Subsequent to the year ended June 30, 2025, these claims were allowed to lapse.
Camilleri Project
The Company holds a 100% interest in the Camilleri project which is located in Ontario, Canada. The Camilleri project is subject to a 1% net smelter return which the Company may purchase back for $300,000 at any time.
Holmstead Project
The Company holds a 100% interest in the Holmstead project which is located in Quebec, Canada. The Holmstead project is subject to a 1% net smelter return which the Company may purchase back for $300,000 at any time.
19 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
6. EXPLORATION AND EVALUATION PROPERTIES (continued)
HSP Claims
The Company holds a 100% interest in the HSP Claims located in Quebec, Canada.
The claims are subject to a 1% NSR which the Company may buy back for $400,000 at any time. The Company agreed to give the vendor the first right of refusal on technical work to a maximum of $50,000 for a twelve month term.
Subsequent to the year ended June 30, 2025, these claims were allowed to lapse.
Nickel North Project
The Company holds a 100% interest in the Nickel North project which is located in Quebec, Canada. The Nickel North project is subject to a 1% net smelter return which the Company may purchase back for $400,000 at any time.
Area 51 Claims
On January 12, 2023, the Company acquired 100% interest in the Area 51 Claims which are located in the Republic of Chile.
During the year ended June 30, 2024, the Area 51 claims were allowed to lapse and the Company has no further interest in the property.
Robb & Turnbull Property
The Company holds a 100% interest in the Robb & Turnbull Property, located in Ontario.
Esperanza Property
On February 3, 2021, the Company entered into an option agreement to re-acquire 80% interest in Esperanza property, which is comprised of various mineral concessions in Argentina.
On June 16, 2022, the Company entered into an arrangement agreement with its wholly owned subsidiary, Latamark Resources Corp. ("Latamark"). Pursuant to the arrangement agreement, the Company will transferred its interest in the option agreement concerning the Esperanza gold project to Latamark in exchange for (i) Latamark issuing to the shareholders of the Company one common share in the capital of Latamark for every 5.8 common shares held in the company; (ii) Latamark issuing five million common shares to the Company; and (iii) Latamark assuming certain liabilities incurred, exploring or maintaining the property. The arrangement was completed on November 22, 2022.
During the year ended June 30, 2024, the Company terminated the option agreement for the Esperanza property.
Bruce Lake Property
On September 6, 2019, the Company entered into an option agreement to acquire 100% interest in the Bruce Lake Property located in Ontario.
The Bruce Lake Property is subject to a 1.5% net smelter return ("NSR") in favour of the previous owner of the claims. The Company may purchase the one-half of the NSR for an aggregate amount of $400,000 at any time prior to the commencement of production.
20 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
6. EXPLORATION AND EVALUATION PROPERTIES (continued)
Bruce Lake Property (continued)
On June 20, 2020, the Company entered into property assignment agreement with Portofino Resources Inc. ("Portofino") whereby the Company has assigned 100% of the interest in the Bruce Lake Property. As consideration, the Company received 650,000 common shares of Portofino valued at $74,750 and Portofino will assume the remaining cash payments of $50,000 commencing on September 6, 2020.
The Company will receive an additional 0.5% NSR for a total of 2% NSR of which 1.5% is payable to the previous owner.
Burton Property
The Burton Property consists of a 49% interest in a claim group located in Ontario, Canada. The Burton Property consists of 16 unpatented mining claims and 6 patented claims in a largely contiguous block.
The Burton Property is subject to a 2.5% net smelter return and a 10% net profits interest in favour of the previous owner of the claims. The Company may purchase sixty percent of the net smelter return for an aggregate amount of $1,500,000 at any time.
7. SHARE CAPITAL
a) Authorized
Unlimited shares without par value.
b) Issued
During the year ended June 30, 2025:
On July 17, 2024, the Company issued 600,000 flow-through shares at $0.05 per share for cash proceeds of $30,000. The Company recognized a flow-through premium of $6,000 on this private placement.
On July 24, 2024, the Company issued 2,600,000 units for total proceeds of $130,000. Each unit consists of one common share and one common share purchase warrant exercisable at $0.07 for a period of three years from the date of issue. The Company recognized a value of $26,000 to the warrants using the residual value method.
On August 29, 2024, the Company issued 300,000 common shares pursuant to the exercise of stock options for cash proceeds of $15,000. In connection with the exercise, the Company transferred $9,000 from reserves to equity.
On October 21, 2024, the Company issued 150,000 common shares at $0.05 per share pursuant to the exercise of warrants.
On October 28, 2024, the Company issued 5,000,000 flow-through units at $0.04 per unit for gross proceeds of $200,000. Each flow-through unit consists of one common share designated as a flow-through share and one-half share purchase warrant, with each whole share purchase warrant exercisable for one common share at $0.08 for a period of two years from the date of issue. The Company recognized a flow-through premium of $25,000 on this private placement. In addition, the Company issued 1,000,000 non-flow-through units at $0.035 per unit for gross proceeds of $35,000. Each non-flow-through unit consists of one common share and one common share purchase warrant exercisable at $0.05 for a period of four years from the date of issue.
21 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
7. SHARE CAPITAL (continued)
b) Issued (continued)
method. In connection with this private placement, the company paid $16,450 in share issuance costs, and issued 420,000 broker warrants. Each broker warrant entitled the holder to purchase an additional common share at a price of $0.08 per share for a period of two years. The broker warrants were valued at $12,600 using the Black Scholes option pricing model with the following assumptions: volatility of 144%, interest rate of 3.09%, share price at date of issuance of $0.045, expected life of 2 years and dividend yield of 0.00%.
On November 20, 2024, the Company issued 9,000,000 flow-through units at $0.04 per unit for gross proceeds of $360,000. Each flow-through unit consists of one common share designated as a flow-through share and one-half share purchase warrant, with each whole share purchase warrant exercisable for one common share at $0.08 for a period of two years from the date of issue. The Company recognized a flow-through premium of $45,000 on this private placement and a residual value of $nil to the warrants. In connection with this private placement, the company paid $25,200 in share issuance costs, and issued 1,096,333 broker warrants. Each broker warrant entitled the holder to purchase an additional common share at a price of $0.08 per share for a period of two years. The broker warrants were valued at $21,933 using the Black Scholes option pricing model with the following assumptions: volatility of 144%, interest rate of 3.27%, share price at date of issuance of $0.035, expected life of 2 years and dividend yield of 0.00%.
On December 9, 2024, the Company issued 6,666,660 flow-through units at $0.045 per unit for gross proceeds of $300,000. Each flow-through unit consists of one common share designated as a flow-through share and one-half share purchase warrant, with each whole share purchase warrant exercisable for one common share at $0.08 for a period of two years from the date of issue. The Company recorded a cash finder's fee of $21,000. The Company recognized a flow-through premium of $100,000 on this private placement and a residual value of $nil to the warrants.
On December 30, 2024, the Company issued 450,000 non-flow-through units at $0.035 per unit for gross proceeds of $15,750. Each unit consists of one common share and one share purchase warrant, with each whole share purchase warrant exercisable for one common share at $0.05 for a period of four years from the date of issue. The Company recognized a value of $4,500 to the warrants using the residual value method.
On January 6, 2025, the Company issued 1,836,442 non-flow-through units at $0.035 per unit for gross proceeds of $64,276 of which $26,276 is included in subscription receivable at June 30, 2025. Each unit consists of one common share and one share purchase warrant, with each whole share purchase warrant exercisable for one common share at $0.05 for a period of four years from the date of issue. The Company recognized a value of $18,364 to the warrants using the residual value method.
On January 16, 2025, 1,000,000 common shares were issued in connection with the vesting and exercise of RSU's. In connection with the issuance, $25,000 was transferred from reserves to share capital.
During the year ended June 30, 2024
On November 20, 2023, pursuant to the terms of an option agreement, the Company issued 500,000 common shares following the exercise of stock options for proceeds of $25,000. In connection with the exercise, the Company transferred $10,000 from contributed surplus to equity.
On December 20, 2023, the Company completed a non-flow-through private placement of 2,166,667 units at a price of $0.03 per unit for total proceeds of $65,000. Each unit consisted of one non-flow-through common share and one share purchase warrant, along with 116,666 broker warrants. Each share purchase warrant entitled the holder to purchase one additional non-flow-through common share at a price of $0.05 per share for a period of five years expiring on December 20, 2028.
22 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
SHARE CAPITAL (continued)
b) Issued (continued)
The Company recorded a cash finder's fee of $3,500. The Company recognized a value of $nil to the warrants using the residual value method. Each broker warrant entitled the holder to purchase an additional non-flow-through common share at a price of $0.05 per share for a period of two years expiring on December 20, 2025. The broker warrants were valued at $2,333 using a volatility of 125%, interest rate of 3.94%, share price at date of issuance of $0.035, expected life of 2 years and dividend yield of 0.00%.
On February 8, 2024, the Company completed a non-flow-through private placement of 1,000,000 units at a price of $0.03 for total proceeds of $27,900. Each unit consisted of one non-flow-through common share and one share purchase warrant, along with 70,000 broker warrants. Each share purchase warrant entitled the holder to purchase one additional non-flow-through common share at a price of $0.05 per share for a period of five years expiring on February 8, 2029. The Company recognized a value of $nil to the warrants using the residual value method. Each broker warrant entitled the holder to purchase an additional non-flow-through common share at a price of $0.05 per share for a period of two years expiring on February 8, 2026. The broker warrants were valued at $700 using a volatility of 129%, interest rate of 4.3%, share price at date of issuance of $0.03, expected life of 2 years and dividend yield of 0.00%.
On February 16, 2024, the Company completed a non-flow-through private placement of 4,315,167 units at a price of $0.03 for total proceeds of $129,455. Each share purchase warrant entitled the holder to purchase one additional non-flow-through common share at a price of $0.05 per share for a period of five years expiring on February 16, 2029. The Company recognized a value of $nil to the warrants using the residual value method.
On March 27, 2024, pursuant to the terms of the Viernes Property Option Agreement, the Company issued 250,000 common shares fair valued at $10,000 and issued 250,000 share purchase warrants exercisable at $0.10 over a two-year period. The Company fair valued the 250,000 share purchase warrants at $5,000 using the Black Scholes option pricing model with the following assumptions – Share price on grant date of $0.035; Risk-free interest rate of 4.16%; Dividend yield of nil; Expected volatility of 134%; Expected life of two year and forfeiture rate of 0%.
On April 25, 2024, the Company completed a flow-through private placement of 9,000,000 common shares at a price of $0.05 per unit for total proceeds of $450,000, along with 630,000 broker warrants. The Company recorded a cash finder's fee of $31,500. The Company recognized a flow-through premium of $nil on this private placement. Each broker warrant entitled the holder to purchase one warrant share at a price of $0.10 per share for a period of two years expiring on April 25, 2026. The broker warrants were valued at $18,900 using a volatility of 139%, interest rate of 4.34%, share price at date of issuance of $0.06, expected life of 2 years and dividend yield of 0.00%. Volatility was determined based on the Company's historical data.
On May 24, 2024, the Company completed a non-flow-through private placement of 1,662,000 units at a price of $0.05 for total proceeds of $83,100. Each share purchase warrant entitled the holder to purchase one additional non-flow-through common share at a price of $0.07 per share for a period of three years expiring on May 24, 2027. The Company recognized a value of $nil to the warrants using the residual value method.
On May 29, 2024, pursuant to the terms of a warrant agreement, the Company issued 472,500 common shares for proceeds of $23,625.
23 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
7. SHARE CAPITAL (continued)
c) Share purchase warrants
The following share purchase warrants entitle the holders thereof the right to purchase one share for each share purchase warrant. Warrant transactions are summarized as follows:
| Number of Warrants | Weighted Average Exercise Price | |
|---|---|---|
| Balance June 30, 2023 | 27,032,332 | $0.15 |
| Issued | 10,210,500 | $0.06 |
| Exercised | (472,500) | $0.05 |
| Expired | (6,000,000) | $0.09 |
| Balance, June 30, 2024 | 30,770,332 | $0.12 |
| Issued | 17,736,438 | $0.07 |
| Exercised | (150,000) | $0.05 |
| Expired | (8,307,167) | $0.22 |
| Balance, June 30, 2025 | 40,049,603 | $0.08 |
The following warrants are outstanding at June 30, 2025:
| Number of warrants | Exercise price per warrant | Expiry date |
|---|---|---|
| 2,058,500 | $0.11 | October 13, 2025* |
| 6,666,665 | $0.12 | January 14, 2026 |
| 4,000,000 | $0.10 | August 17, 2025* |
| 1,694,167 | $0.05 | December 20, 2028 |
| 116,666 | $0.05 | December 20, 2025* |
| 1,000,000 | $0.05 | February 8, 2029 |
| 70,000 | $0.05 | February 8, 2026 |
| 4,165,167 | $0.05 | February 16, 2029 |
| 250,000 | $0.10 | March 27, 2026 |
| 630,000 | $0.10 | April 25, 2026 |
| 1,662,000 | $0.07 | May 24, 2027 |
| 2,600,000 | $0.07 | July 24, 2027 |
| 2,500,000 | $0.08 | October 28, 2026 |
| 1,000,000 | $0.05 | October 28, 2028 |
| 420,000 | $0.08 | October 28, 2026 |
| 4,500,000 | $0.08 | November 20, 2026 |
| 781,666 | $0.08 | November 20, 2026 |
| 315,000 | $0.08 | November 20, 2026 |
| 3,333,330 | $0.08 | December 9, 2026 |
| 450,000 | $0.05 | December 30, 2028 |
| 1,836,442 | $0.05 | January 6, 2029 |
| 40,049,603 |
- Expired subsequently, see note 11.
24 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
7. SHARE CAPITAL (continued)
d) Stock options
The Company has an omnibus security-based compensation plan ("Plan") in accordance with the policies of the TSX Venture Exchange (the "Exchange"). The plan includes authorization to grant options to directors, officers, employees and consultants to purchase shares of the Company, and to grant restricted share units and deferred share units to officers, directors, employees and consultants to acquire shares of the Company or to be settled in cash. The stock option component of the plan is a rolling plan and the maximum number of authorized but unissued shares available to be granted shall not exceed 10% of its issued and outstanding shares. Each stock option granted is for a term not exceeding five years unless otherwise specified. Outstanding options vest immediately at date of grant. Options granted to investor relations personnel vest in accordance with Exchange regulations. The fixed security based compensation component of the plan is limited to 11,301,778 shares.
On September 15, 2023, the Company granted 3,000,000 incentive stock options to directors, officers, and consultants. The options vested on date of grant, have a term of five years and are exercisable at $0.05 per common share. The fair value of the stock options of $60,000 was determined using the Black Scholes option pricing model with the following assumptions – Share price on grant date of $0.025; Risk-free interest rate of 4.33%; Dividend yield of nil; Expected volatility of 125%; Expected life of 5 years and forfeiture rate of 0%. Volatility was determined based on the Company's historical data. During the year ended June 30, 2025, the Company recorded share-based payments expense of $nil (2024: $60,000) related to this grant.
On March 1, 2024, the Company granted 300,000 incentive stock options to a consultant. The options vest quarterly over the term of two years and are exercisable at $0.05 per common share. The fair value of the stock options of $9,000 was determined using the Black Scholes option pricing model with the following assumptions – Share price on grant date of $0.04; Risk-free interest rate of 4.1%; Dividend yield of nil; Expected volatility of 133%; Expected life of two years and forfeiture rate of 0%. Volatility was determined based on the Company's historical data. During the year ended June 30, 2025, the Company recorded share based payments expense of $nil (2024: $9,000) related to this grant. On August 29, 2024 the options were exercised and 300,000 common share were issued with 75,000 having trading restrictions as of June 3, 2025 in accordance with the vesting conditions.
The following table summarizes the continuity of the Company's stock options:
| Weighted Average Exercise Price | ||
|---|---|---|
| Balance, June 30, 2023 | 9,580,000 | $0.09 |
| Granted | 3,300,000 | $0.05 |
| Exercised | (500,000) | $0.05 |
| Expired | (1,900,000) | $0.12 |
| Balance, June 30, 2024 | 10,480,000 | $0.07 |
| Exercised | (300,000) | $0.05 |
| Expired | (3,080,000) | $0.08 |
| Balance, June 30, 2025 | 7,100,000 | $0.07 |
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
7. SHARE CAPITAL (continued)
d) Stock options
As at June 30, 2025, the Company had stock options outstanding enabling holders to acquire the following:
| Number of options | Number exercisable | Exercise price per option | Expiry date |
|---|---|---|---|
| 900,000 | 900,000 | $0.135 | September 16, 2025* |
| 1,700,000 | 1,700,000 | $0.10 | August 31, 2026 |
| 2,000,000 | 2,000,000 | $0.05 | January 31, 2027 |
| 2,500,000 | 2,500,000 | $0.05 | September 15, 2028 |
| 7,100,000 | 7,100,000 |
- Expired subsequently, see note 11.
The weighted average remaining contractual life of options outstanding at June 30, 2025 was 1.89 years (2024 – 2.11 years).
e) Restricted share units (RSUs)
On September 15, 2023, the Company granted 2,000,000 RSUs to a director. The RSUs have a term of three years and vest as follows:
September 15, 2024 1,000,000 (shares issued January 16, 2025)
September 15, 2025 500,000
September 15, 2026 500,000
The fair value of the RSUs at the date of grant was $50,000 which is being charged to expense on a graded vesting basis. Included in share-based payments expense is an amount of $29,653 (2024 - $13,989).
7. RELATED PARTY TRANSACTIONS
Related parties include the Board of Directors and officers, close family members and enterprises that are controlled by these individuals as well as certain consultants performing similar functions.
Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties).
The Company had the following transactions in the normal course of operations with related parties:
| 2025 | 2024 | |
|---|---|---|
| Management fees | $ 180,000 | $ 180,000 |
| General and administration - Rent | 25,354 | 60,392 |
| Professional fees - Accounting | 34,000 | 24,000 |
| Consultants | - | - |
| Share-based payments | 29,653 | 40,578 |
| $ 269,007 | $ 304,970 |
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FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
8. RELATED PARTY TRANSACTIONS (continued)
Prepaid expenses include $Nil (2024 - $11,622) in prepaid rent to the CEO.
Accounts payable and accrued liabilities include $4,841 (2024 - $1,987) due to the CEO. These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Accounts payable and accrued liabilities include $44,319 (2024 - $Nil) due to a company controlled by the CEO. These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Accounts payable and accrued liabilities include $24,930 (2024 - $2,260) due to a company controlled by the CFO. These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Included in amounts receivable are as follows:
a) Amounts receivable includes $nil due from a company controlled by the CEO (2024-$41,000). These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
b) During the year ended June 30, 2025, the Company paid an additional $Nil (June 30, 2024 - $5,024) in expenses on behalf of Marvel Discovery Corp., a company with common management. As of June 30, 2025, Marvel Discovery Corp. owes the Company $8,611. The balance is unsecured, non-interest bearing and due on demand.
c) During the year ended June 30, 2025, the Company paid an additional $9,903 (2024-$29,765) in expenses on behalf of Latamark Resources Corp., a company with common management. As of June 30, 2025, Latamark Resources Corp. owes the Company $nil. (2024-$nil). The Company recognized a write-off of amounts receivable related to this balance of $9,903 during the year ended June 30, 2025 (2024 - $29,765).
d) As of June 30, 2025, Carmanah Minerals Corp. owes the Company a $Nil cash payment pursuant to signing an agreement to acquire 100% interest in the Baie Verte area property (2024 - $5,000).
9. RISK MANAGEMENT, CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
- Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
- Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
- Level 3 – Inputs that are not based on observable market data.
Marketable securities not including warrants and private company investments are measured at fair value using level 1. Warrants are measured at Level 3. The carrying value of cash, amounts receivable and amounts payable, approximates their fair value due to the current nature of those financial instruments.
The Company is exposed to risks of varying degrees of significance from its use of financial instruments which could affect its ability to achieve its strategic objectives for growth and stakeholder returns. The principal risks to which the Company is exposed, and the actions taken to manage them, are described below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.
The Company manages its capital structure and makes adjustments to it based on the funds available to the Company in order to support future business opportunities. The Company defines its capital as shareholders' equity. The Board of Directors does not establish quantitative return on capital criteria for management, but
27 | Page
FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
9. RISK MANAGEMENT, CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
rather relies on the expertise of the Company's management to manage its capital to be able to sustain the future development of the Company's business.
The Company currently has no source of revenues, and therefore is dependent upon external financings to fund activities. In order to carry future projects and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the year ended June 30, 2025. The Company is not subject to externally imposed capital requirements.
The Company's risk exposure and the impact on the Company's financial instruments are summarized below:
(a) Credit risk
Concentration of credit risk exists with respect to the Company's cash as all amounts are held at major Canadian financial institutions.
The Company's concentration of credit risk and maximum exposure is as follows:
| 2025 | 2024 | |
|---|---|---|
| Cash | $ 42,723 | $ 55,748 |
| Amounts receivable | $ 77,569 | $ 91,955 |
The credit risk associated with cash is minimized by ensuring it is placed with a major Canadian financial institution with a strong investment-grade rating issued by a primary ratings agency.
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they fall due. The Company's approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required for operations and anticipated investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.
The business of mining and exploration involves a high degree of risk and there can be no assurance that exploration programs will result in profitable mining operations. The Company has insufficient cash to meet its requirements for administrative overhead, to conduct due diligence on mineral property acquisition targets, and to conduct exploration of its mineral properties and mineral properties that may be acquired.
The Company does not generate cash flows from operations to fund its activities and therefore relies principally upon the issuance of securities for financing. Future capital requirements will depend on many factors including the Company's ability to execute its business plan. The Company intends to continue relying upon the issuance of securities to finance its future activities but there can be no assurance that such financing will be available on a timely basis under terms acceptable to the Company.
(c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.
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FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
9. RISK MANAGEMENT, CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
(c) Market risk
- Interest rate risk
The Company's cash consist primarily of cash held in bank accounts or in a brokerage account. Due to the short-term nature of this financial instrument, fluctuations in market rates do not have a significant impact on estimated fair value as of June 30, 2025. The Company manages interest rate risk by maintaining an investment policy that focuses primarily on preservation of capital and liquidity. Accordingly, the Company is not subject to interest rate risk.
- Foreign currency risk
During the year ended June 30, 2025 the Company was not exposed to material foreign currency risk.
- Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk, foreign currency risk or commodity price risk. The Company's marketable securities are exposed to other price risk.
10. INCOME TAXES
The difference between tax expense for the year and the expected income taxes based on the statutory tax rate arises as follows:
| 2025 | 2024 | |
|---|---|---|
| Loss before income taxes | $ (1,381,466) | $ (1,569,793) |
| Statutory tax rates | 27% | 27% |
| Recovery based on statutory rates | (373,000) | (424,000) |
| Non-deductible expenses and other items | 12,000 | 22,000 |
| Impact of flow-through shares | 240,000 | - |
| Share issue costs | (17,000) | - |
| Adjustment to prior years provision versus statutory tax returns | 928,000 | - |
| Change in unrecognized deferred tax assets | (791,000) | 402,000 |
| Deferred income tax recovery | $ - | $ - |
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FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
10. INCOME TAXES (continued)
The nature and tax effect of the taxable temporary differences giving rise to deferred tax assets and liabilities are summarized as follows:
| 2025 | 2024 | |
|---|---|---|
| Non-capital loss carry-forwards | $ 1,425,000 | $ 2,036,000 |
| Share issuance costs | 14,000 | 30,000 |
| Capital property | - | 13,000 |
| Investments | 15,000 | (1,000) |
| Mineral property | 530,000 | 676,000 |
| 1,984,000 | 2,754,000 | |
| Offset against deferred tax liabilities | - | - |
| Unrecognized deferred tax asset | (1,984,000) | (2,754,000) |
| Deferred tax assets | $ - | $ - |
The Company has accumulated Canadian non-capital losses of $5,276,470 to June 30, 2025 for income tax purposes, which may be deducted in the calculation of taxable income in future years. These losses will expire between the years 2030 to 2045. The Company has US tax losses of $150,000 expiring 2030 to 2039.
Flow-through
Flow-through common shares require the Company to spend an amount equivalent to the proceeds of the issued flow-through common shares on Canadian qualifying exploration expenditures. The Company may be required to indemnify the holders of such shares for any tax and other costs payable by them in the event the Company has not made the required exploration expenditures.
During the year ended June 30, 2024, the Company received $450,000 from the issuance of flow-through shares. These amounts will not be available to the Company for future deduction from taxable income. The Company renounced $450,000 to the subscribers. A flow-through premium of $nil was recognized initially, with $nil remaining at June 30, 2024. During fiscal 2024, $207,493 was recognized as other income which included $207,493 from previous year's flow-through premium. As at June 30, 2024, the Company has a commitment to incur $nil in exploration expenditures by December 31, 2024. As at June 30, 2025, the Company has a commitment to incur $350,000 in exploration expenditures by December 31, 2025.
During the year ended June 30, 2025, the Company received $30,000 from the issuance of flow-through shares. These amounts will not be available to the Company for future deduction from taxable income. The Company renounced $30,000 to the subscribers. A flow-through premium of $6,000 was recognized initially, with $nil remaining at June 30, 2025 and $6,000 was recognized as other income. As at June 30, 2025, the Company has $nil in exploration expenditures to incur by December 31, 2025.
During the year ended June 30, 2025, the Company received $200,000 from the issuance of flow-through shares. These amounts will not be available to the Company for future deduction from taxable income. The Company renounced $200,000 to the subscribers. A flow-through premium of $25,000 was recognized initially, with $nil remaining at June 30, 2025 and $25,000 recognized as other income. As at June 30, 2025, the Company has a commitment to incur $nil in exploration expenditures by December 31, 2025.
During the year ended June 30, 2025, the Company received $360,000 from the issuance of flow-through shares. These amounts will not be available to the Company for future deduction from taxable income. The Company renounced $360,000 to the subscribers. A flow-through premium of $45,000 was recognized initially, with $39,220 remaining at June 30, 2025 and $9,553 was recognized as other income. As at June 30, 2025, the Company has a commitment to incur $283,574 in exploration expenditures by December 31, 2025.
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FALCON GOLD CORP.
Notes to the Consolidated Financial Statements
June 30, 2025 and 2024
(Expressed in Canadian Dollars)
10. INCOME TAXES (continued)
During the year ended June 30, 2025, the Company received $300,000 from the issuance of flow-through shares. These amounts will not be available to the Company for future deduction from taxable income. The Company renounced $300,000 to the subscribers. A flow-through premium of $100,000 was recognized initially, with $100,000 remaining at June 30, 2025. As at June 30, 2025, the Company has a commitment to incur $300,000 in exploration expenditures by December 31, 2025.
11. SUBSEQUENT EVENTS
Subsequent to June 30, 2025
During the period from August 17, 2025 to December 20, 2025, 6,175,166 share purchase warrants expired unexercised.
On September 16, 2025, 900,000 stock options expired unexercised.
On October 24, 2025, the Company issued 500,000 common shares at $0.02 per share in connection with the vesting and exercise of RSU's.
On December 18, 2025, the Company received $25,000 of share subscriptions receivable.
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