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RE Royalties Ltd. Management Reports 2025
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Management Reports
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RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
TABLE OF CONTENTS
1.1 Date and basis of presentation...4
1.2 Overview...5
1.2.1 Highlights...6
1.2.2 Renewable Energy Royalty Investments...6
1.2.3 Wholly-Owned Operating Entities...10
1.2.4 Disclosure of Environmental and Social Data...12
1.2.5 Distribution to shareholders...16
1.3 Selected annual information...17
1.4 Summary of quarterly results...17
1.5 Results of operations...21
1.5.1 Non-GAAP financial measures...26
1.6 Liquidity...27
1.7 Capital resources...29
1.8 Off-balance sheet arrangements...29
1.9 Transactions with related parties...29
1.10 Fourth quarter...30
1.11 Proposed transactions...30
1.12 Critical accounting estimates...30
1.13 Changes in accounting policies including initial adoption...30
1.14 Financial instruments and other instruments...30
1.15 Additional disclosure for venture issuers without significant revenue...31
1.16 Disclosure of outstanding share data...31
1.17 Internal controls over financial reporting and disclosure controls...31
1.18 Risk factors...31
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Cautionary Note to Investors Concerning Forward-looking Statements
This discussion includes certain statements that may be deemed "forward-looking information" or "forward-looking statements" within the meaning of Canadian and United States securities law. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions of future events or performance (often, but not always, using words or phrases including, but not limited to, "expects", "does not expect", "is expected", "anticipates", "does not anticipate", "plans", "estimates", "believes", "does not believe" or "intends", or stating that certain actions, events or results may, could, would, might or will be taken, occur or be achieved) are not statements of historical fact and may be "forward-looking information". This information represents predictions, and actual events or results may differ materially.
Forward-looking information may relate to the Company's future outlook and anticipated events or results and may include statements regarding the Company's financial results, future financial position, expected growth of cash flows, business strategy, budgets, projected costs, projected capital expenditures, taxes, plans, objectives, industry trends and growth opportunities. Forward-looking information contained in this discussion is based on certain assumptions regarding expected growth, results of operations, performance, industry trends and growth opportunities. In some cases, forward-looking information contained herein are based upon information received from or disseminated by third parties.
While management considers these assumptions to be reasonable, based on information available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving the renewable energy industry; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the renewable energy industry generally; income tax and regulatory matters; the ability of the Company to implement its business strategies including expansion plans; competition; currency and interest rate fluctuations; and the other risks discussed under the heading "Risk Factors" in this MD&A. The foregoing factors are not intended to be exhaustive.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date hereof and the Company and its directors, officers and employees disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. All forward-looking information is expressly qualified in its entirety by this cautionary statement. Forward-looking information and other information contained herein concerning management's general expectations concerning the renewable energy industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of any misstatements regarding any industry data or comparables presented herein, industry data and comparables are subject to change based on various factors. The Company has not independently verified any of this data from independent third party sources.
Any forward-looking statements contained in this discussion are made as of the date hereof and the Company does not undertake to update or revise them, except as may be required by applicable securities law.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.1 DATE AND BASIS OF PRESENTATION
This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited condensed consolidated interim financial statements of RE Royalties Ltd. ("RER" or the "Company") for the three and six months ended June 30, 2025 (the "Financial Statements") and the audited consolidated financial statements of the Company for the year ended December 31, 2024 and related MD&A (the "Annual MD&A") as publicly filed on SEDAR+ at www.sedarplus.ca.
The Company reports in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The following disclosure and associated Financial Statements are presented in accordance with IFRS. All monetary amounts herein are expressed in Canadian Dollars ("$" or "CAD"), unless stated otherwise. Other currencies mentioned include US dollars ("US$" or "USD").
Included throughout this MD&A are references to non-GAAP performance measures for which further explanation, including their calculations, are provided herein under section 1.5.1.
This MD&A is prepared as of August 26, 2025.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.2 OVERVIEW
Description of Business
RE Royalties Ltd., is a public company whose common shares are listed on the TSX Venture Exchange ("TSXV"), under the trading symbol "RE". The Company's common shares are also traded under the symbol RROYF on the OTCQX Best Market ("OTCQX"), which is the highest market tier operated by OTC Markets Group Inc.
The Company was incorporated on November 2, 2016, under the laws of the Province of British Columbia, Canada. The address of the Company's corporate office is 14th Floor, 1040 West Georgia Street, Vancouver, BC, V6E 4H1.
The Company provides short-term loans and acquires revenue-based royalties from renewable energy and clean technology companies, providing a non-dilutive royalty financing solution to privately held and publicly traded companies. The Company's business objectives are to acquire a portfolio of long-term, stable, and diversified renewable energy royalty streams to provide shareholders with capital appreciation and a growing, sustainable, long-term cash distribution. The Company also owns a rooftop solar system project and a portfolio of Battery Energy Storage Systems ("BESS") projects that were acquired by the Company in November 2024 pursuant to settlement of certain loans receivable.
Management has identified an underserviced segment in the renewable energy capital markets that lies between traditional debt and equity financing. For small to medium-sized renewable energy companies ("SMREs"), revenue-based royalty financing has many advantages with respect to flexibility, cost and contractual terms.
Traditional royalty-based financing has been used extensively in the North American natural resource, consumer service, industrial manufacturing, healthcare, music and food sectors. Management believes that there is significant demand among SMREs for non-dilutive royalty-based financing solutions due to a lack of innovation in the financing for renewable energy projects.
The Company's long-term objectives will be achieved by:
- Acquiring long-term renewable energy generation royalty streams backed by power purchase agreements or other revenue programs from credit worthy customers and/or facilities which operate in strong merchant markets with stable power pricing;
- Acquiring renewable energy royalties in high-growth areas of the low carbon energy sector including clean transportation, energy storage, and energy efficiency that are backed by offtake arrangements or customer sales and/or lease contracts from credit worthy counterparties;
- Reinvesting capital to acquire new royalties and to grow royalty and interest income;
- Utilizing debt financing and/or co-investment structures to acquire additional royalties in order to enhance financial returns for shareholders; and
- Maintaining a low operating cost structure.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.2.1 HIGHLIGHTS
The Company continues to expand on its portfolio of loans and revenue-based royalties from renewable energy projects.
On April 1, 2025, the Company announced that it had entered into a letter of intent for a secured loan of up to US$8 million with Revolve Renewable Power Corp. ("Revolve") to support Revolve's proposed acquisition (the "Proposed Acquisition") of a 95% interest in a 9.6 megawatt operating wind energy project in the United States. The proposed loan will have a term of 24 months and bear interest at 12% on drawn funds, with interest payable on a quarterly basis during the term. The Company will also receive a royalty of 5% on gross revenues generated by the wind project for its remaining life, which is expected to be until 2046.
Closing of the loan is expected to occur in the third quarter of 2025 and is subject to several closing conditions including the completion of the Proposed Acquisition.
On June 30, 2025, the Company transferred $11 million (US$8 million) into an escrow account, as further described herein.
1.2.2 RENEWABLE ENERGY ROYALTY INVESTMENTS
As of the date hereof, the Company owned a portfolio of 107 royalties on various solar, wind, battery storage, energy efficiency and renewable natural gas projects operating or in development in Canada, the United States, Mexico and Chile. A summary of the Company's portfolio of royalty interests is as follows:
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Location | # of Royalties^{(a)} | Expected Expiration/ Term | Royalty as % of Revenue | Energy Type | Status | Generating/ Storage Capacity | Original Investment (C$ million) | |
|---|---|---|---|---|---|---|---|---|
| Completed subsequent to fiscal 2024 and to the date hereof | ||||||||
| Clear Blue Technologies | ON, Canada | 1 | 15 years | 0.75% | Solar Battery | Operational | 1MW^{(b)} | $ 0.5 |
| Completed in fiscal 2024 | ||||||||
| SolarBank | ON, Canada | 3 | 20 years | 0.4% | Battery | Construction | 14.97 MW | $ 3.0 |
| Alpin Sun | AB, Canada | 1 | 25 years | $0.25 / MWh | Solar | Development | 200MWAC | $ 6.3 |
| Abraxas | Maldives | 2 | 15 years | 2% | Solar | Operational | 0.77MWDC | $ 1.02 |
| Revolve (Rooftop Solar) | Mexico | 1 | 15 years | 5% | Solar | Operational | 0.45 MW | $ 0.42 |
| Revolve WindRiver^{(a)} | AB, BC Canada | 3 | 11 to 35 years | 1% | Wind Hydro | Operational | 23 MW | $ 4.00 |
| Clean Communities | AB, Canada | 1 | 20 years | 5% | Solar | Operational | 4 MW | $ 1.70 |
| Completed in fiscal 2023 | ||||||||
| Cleanlight^{(a)} | Chile | 1 | 2033 | 5% | Solar Battery | Operational | 1.7 MW | $ 3.40^{(c)} |
| AlbertaCo | AB, Canada | 1 | 11 Years | $0.40/ MWh | Wind | Operational | 100 MW | $ 0.94 |
| Completed before fiscal 2023 | ||||||||
| Delta Energy Partners | PR, USA | 1 | 2035 | Fixed^{(c)} | ||||
| $206,976 per year | Solar | Development | Not applicable | $ 5.33^{(c)} | ||||
| Revolve (Cancun)^{(f)} | Mexico | 2 | 2033 | 6% | Battery Storage | Operational | 1.9 MW | $ 1.90 |
| Revolve (Solar 1)^{(f)} | Mexico | 6 | 2030-2033 | 6% | Solar | Operational | 2.4 MW | $ 1.60 |
| NOMAD^{(a)} | VT, USA | 6 | 2027 | 3.5% | Battery storage | Operational | 3.5 MW | $ 7.58^{(c)} |
| OCEP^{(a)} | WI, USA | 1 | 2035 | Fixed^{(c)} | ||||
| $242,880 per year | Renewable Natural Gas | Operational | 2 MW (equiv.) | $ 6.01^{(c)} | ||||
| FuseForward Solutions | BC, Canada | 1 | 2031 | Fixed $284,000 per year | Energy Efficiency | Operational | Not applicable | $ 3.00 |
| Aeolis Wind | BC, Canada | 1 | 2035 | 1% | Wind | Operational | 102 MW | $ 1.24 |
| OntarioCo^{(a)} | ON, Canada | 59 | 2040 | 2% | Solar | Operational | 18 MW | $ 5.00 |
| Northland Power Inc. | ON, Canada | 4 | 2033 | 1% | Solar | Operational | 40 MW | $ 1.87 |
| Scotian Windfields^{(a)} | NS, Canada | 12 | 2036 | 8% | Wind | Operational | 40 MW | $ 4.64 |
| Switch Power (Solar)^{(d)} | ON, Canada | See section 1.2.4 Wholly-owned operating entities | ||||||
| Switch Power 1^{(d)} | ON, Canada | |||||||
| Total | 107 | $ 59.45^{(b)} |
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RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(a) As of the date of this MD&A, the Company had received full repayment of the loans advanced to a private group ("OntarioCo") ($5.0 million), Scotian Windfields ($3.3 million), NOMAD (US$5.6 million) and the Revolve Windriver loan ($4.0 million) and partial repayment from OCEP (US$1.79 million) and Revolve Cancun ($342,000). The royalties associated with these investments remain in place.
(b) As of the date of this MD&A, the total amount of investments listed above, net of repayments in (a) above, was approximately $36.29 million.
(c) Based on exchange rate of 1 US$: 1.36 C$
(d) The maturity dates of Switch Power Loan 1, 2 and 3 as well as the Switch Power (Solar) loan were extended to November 30, 2023. In December 2023, the Company issued the demand notices for all loans at an increased interest rate of 16% p.a. Effective November 1, 2024, the Switch Power Loan and the Switch Power (Solar) Loan were settled as the Company retained the shares of SPOBOC and SPOSOC (the underlying entities for these assets). Consequently, SPOBOC and SPOSOC became wholly owned subsidiaries of the Company, and the Company will operate the underlying assets.
(e) In April 2024, the Company advanced a further US$ 800,000 under the Cleanlight Loan agreement.
(f) In June 2024, the Company entered into a modification agreement to extend the maturity date of the Revolve (Solar 1) loan to October 25, 2024 and consequently increased the interest rate to 12% p.a. compounded monthly. In October 2024, the Company further extended the maturity date on the Revolve (Solar 1) loan and the Revolve (Cancun) loan by an additional six months to April 25, 2025. As a result of this extension, the royalty rate on the Revolve (Solar 1) and the Revolve (Cancun) loans increased to 6%. In April 2025, the Revolve (Solar 1) Loan and the Revolve Cancun Loan were further extended to July 31, 2025, and the interest rate on both the loans increased to 13% per annum. In July 2025, the outstanding balance of the Revolve Loan, Revolve Cancun Loan and Revolve Rooftop Solar Loan were consolidated into a single loan agreement, and the maturity date was extended till July 31, 2026. The interest rate on the consolidated loan amount is 13% per annum.
(g) Certain of these royalties are not currently generating revenue, or may not generate revenue in future, due to delay or deterioration in the underlying business activities, as discussed in the Annual MD&A.
(h) This is an approximate preliminary estimate based on historical deployments.
Opportunities under Evaluation
The Company has a robust backlog of potential royalty financing opportunities and is in advanced due diligence on several opportunities. These opportunities include the following:
- Construction financing for a portfolio of solar and storage projects in the eastern United States.
- Construction financing for a large solar project in central Canada.
- Construction financing for rooftop solar in South Asia.
- Interconnection financing for a solar project in northeastern United States.
- Interconnection financing for a portfolio of solar and storage projects in eastern United States.
These opportunities under evaluation are still subject to completion of due diligence, definitive documents, conditions precedent for each transaction and approval of the Company's Board of Directors. There is no assurance that any of the opportunities under evaluation will result in a completed transaction.
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RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Royalty-Based Investment Transactions in fiscal 2025 to the date hereof
A. Revolve Letter of Intent
On April 1, 2025, the Company announced that it had entered into a letter of intent for a secured loan (the "Revolve Wind Project Loan") with Revolve Renewable Power Corp. (TSX.V: REVV) ("Revolve"), a North American owner, operator and developer of renewable energy projects, of up to US$8,000,000 to support Revolve's proposed acquisition (the "Proposed Acquisition") of a 95% interest in a 9.6 megawatt ("MW") operating wind energy project in the United States (the "Revolve Wind Project").
The Revolve Wind Project consists of six 1.6 MW wind turbines generating revenue through a Power Purchase Agreement with a regional utility. Closing of the Revolve Wind Project Loan is expected to occur in the third quarter of this calendar year and is subject to several closing conditions including the completion of the Proposed Acquisition. The Revolve Wind Project Loan will have a term of 24 months and bear interest at 12% on drawn funds, with interest payable on a quarterly basis during the term. The Company will also receive a royalty of 5% on gross revenues generated by the Revolve Wind Project for its remaining life.
The Revolve Wind Project is Revolve's first acquisition of an operating renewable energy asset in the United States and builds on their current operating portfolio of 12.33 MW in Canada and Mexico. It includes a lease agreement for 127 acres of land with a project life until 2046. The Proposed Acquisition, once completed, will add 9.6 MW of net operational capacity to Revolve's portfolio, bringing the total under operation to 22 MW.
On June 30, 2025, pursuant to the terms of the Revolve Wind Project Loan agreement, the Company deposited $10,927,200 (US$8,000,000) into an escrow account, whereby the funds will be released to Revolve upon its fulfillment of the conditions precedent to the Proposed Acquisition of the Revolve Wind Project. The Company will commence earning interest from July 1, 2025 onwards.
B. Clear Blue Technologies
In April 2025, the Company completed a loan and royalty transaction with Clear Blue Technologies International Inc. ("Clear Blue") to support the restructuring of its existing bank debt. Clear Blue has over 9000 smart off-grid solar / battery systems in the field across 37 countries, providing clean, remotely managed solutions to global customers including satellite networks and remote internet, lighting, industrial controls, security, emergency power, and IoT.
The Company provided $500,000 to purchase Clear Blue's existing bank debt and provide working capital to Clear Blue. The financing was structured into three components: a $375,000 term loan with annual interest rate of 12%; a 15-year royalty of 0.75% on gross consolidated revenues (total cumulative royalty
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
payments capped at $750,000); and 1,388,889 equity units (each comprised of one common share and one common share purchase warrant exercisable at $0.30 for 24 months).
The Clear Blue Loan is secured by a first ranking senior security over all present and after acquired property of Clear Blue and its subsidiaries, and a second ranking position on Intellectual Property and key-person Life Insurance policy.
1.2.3 WHOLLY-OWNED OPERATING ENTITIES
As of the date hereof, the Company had the following wholly-owned operating entities:
| Entity | Location | Energy Type/Technology | Contracts | # of Projects |
|---|---|---|---|---|
| SPOBOC | ON, Canada | Battery Energy Storage Systems (BESS) | Energy Service Agreements (ESA) | 9 |
| SPOSOC | ON, Canada | Rooftop Solar Systems | Feed-in tariff (FIT) | 1 |
A. Switch Power Ontario Battery Operations Corp. ("SPOBOC")
During the year ended 2021, the Company entered into three loan agreements ("Switch Loan Agreements") for an aggregate principal sum of $7.4 million and a royalty agreement ("Switch Royalty Agreement") with SPOBOC to provide funding for the acquisition of a portfolio (the "Switch Portfolio") of "behind the meter" battery energy storage systems ("BESS") located in Ontario.
The Switch loans were secured by, among other things, a pledge of the shares of SPOBOC in favor of the Company and a general security agreement providing the Company with a security interest over all present and after-acquired personal property (collectively referred herein as the "SPOBOC Pledge").
In December 2023, the Company provided a default notice relating to all loans under the Switch Loan Agreements, as the aggregate principal sum and interest accrued thereon remained unpaid after they became due for repayment. Accordingly, the Company recorded a provision for expected credit losses of $1,017,221 in Q4 2023.
Effective November 1, 2024, pursuant to the SPOBOC Pledge, the Company exercised its right whereby it acquired the ownership of the shares of SPOBOC in full and final settlement of the Switch Loans. As a result, SPOBOC became a wholly-owned subsidiary of the Company, and the financial statements of SPOBOC are included in the Company's Financial Statements since November 1, 2024. On November 1, 2024, the Company derecognized the Switch Loans and the Switch Power Royalty, and as a result, recorded an additional credit loss of $4,778,209 and an impairment loss of $260,058, respectively.
SPOBOC's principal activity is energy storage as a service, providing behind-the-meter solutions to nine industrial and real estate customers to realize global adjustment savings, and to provide grid resiliency and ancillary services through respective Energy Service Agreements ("ESA"), as listed below:
| Customer/site | Location | Host | ESA expiry date | Remaining term (1) (years) | Capacity (kW) | Capacity (kWh) |
|---|---|---|---|---|---|---|
| The West Mall 1 | Toronto, ON | Office Tower | October 2028 | 3.8 (3) | 490 | 1,115 |
| Robert Speck 2 | Mississauga, ON | Office Tower | May 2030 | 5.3 (3) | 490 | 1.115 |
| Yonge St 1 | Toronto, ON | Office Tower | November 2030 | 5.8 (3) | 500 | 1,039 |
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Customer/site | Location | Host | ESA expiry date | Remaining term (1) (years) | Capacity (kW) | Capacity (kWh) |
|---|---|---|---|---|---|---|
| Bloor 1 | Toronto, ON | Office Tower | April 2033 | 8.3 (3) | 490 | 1,115 |
| Rakely 1 | Etobicoke, ON | Factory | July 2033 | 8.5 (2) | 490 | 1,250 |
| Robert Speck 1 | Mississauga, ON | Office Tower | July 2032 | 7.5 (3) | 500 | 1,104 |
| Robert Speck 3 | Mississauga, ON | Office Tower | July 2032 | 7.5(3) | 500 | 1,104 |
| Belleville 1 | Belleville, ON | Factory | June 2033 | 8.4 (2) | 840 | 2,208 |
| Mitchell 1 | Mitchell, ON | Factory | June 2034 | 9.4 (2) | 980 | 2,300 |
(1) This remaining term only refers to the initial term as of December 31, 2024.
(2) Subject to an unlimited number of renewal for additional 5 year terms at the Host's option.
(3) Subject to an unlimited number of renewal for additional 5 year terms with mutual written consent of SPOBOC and the Host.
Revenue earned under the ESAs is primarily from the abatement of Ontario's Global Adjustment ("GA") demand charge, as described below, combined with revenues from participation in Ontario's wholesale electricity market including demand response, operating reserve, energy arbitrage, and capacity. A select few projects also provide much needed grid resiliency support for client operations, under fixed capacity payment revenues.
Global Adjustment
The GA in Ontario is a fee paid by all electricity customers to cover the costs of building new infrastructure, maintaining existing generation, and supporting energy efficiency programs. It's an additional charge on top of the Hourly Ontario Energy Price ("HOEP"), and its value fluctuates based on the market. Generally, the GA is lower when HOEP is higher, and vice-versa. SPOBOC's customers pay their share of the GA based on their Peak Demand Factor ("PDF"), which reflects their contribution to peak demand, based on the top five peak demand hours during a 12-month base period. The PDF is then used to allocate GA charges for the following 12-month adjustment period. Accordingly, there is an approximate one-year lag in determining revenue associated with the abatement of GA.
GA Abatement
SPOBOC helps its customers in reducing their grid consumption during the peak events, thereby reducing their PDF, by utilizing battery storage and energy management solutions, including a third-party software designed to optimize the use of BESS during peak periods. The reduction in PDF entails significant cost savings on account of GA charges payable by its customers, which savings are then shared with SPOBOC under respective ESAs.
B. Switch Power Ontario Solar Operating Corp. ("SPOSOC")
In August 2022, the Company entered into a loan agreement with SPOSOC for $1.3 Million (the "Switch Solar Loan"), which was used to finance the acquisition of an operational rooftop solar generation project located in Vaughan, Ontario (the "Switch Solar Project"). The Company had first-ranking security interest over the Switch Solar Project, including a lien over its assets, and pledge of shares in SPOSOC (the "SPOSOC Pledge"). The
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Company also received a gross revenue royalty on the Switch Solar Project for the remainder of the contract term (the "Switch Solar Royalty").
In December 2023, the Company sent a default notice as the principal sum and interest accrued thereon remained unpaid after the Switch Solar Loan became due for repayment. The Company assessed the Switch Solar Loan for expected credit losses as of December 31, 2023 and recorded $210,275 as ECL.
Effective November 1, 2024, pursuant to the SPOSOC Pledge, the Company exercised its right whereby it acquired the ownership of the shares of SPOSOC in full and final settlement of the Switch Solar Loan. As a result, SPOSOC became a wholly-owned subsidiary of the Company, and the financial statements of SPOSOC are included in the Financial Statements from November 1, 2024. On November 1, 2024, the Company derecognised the Switch Solar Loan and the Switch Solar Royalty, and as a result, recorded an additional credit loss of $4,459 and an impairment loss of $13,408, respectively.
SPOSOC's principal activity is solar power generation from Rooftop Solar Systems (having original capacity of 0.38 MW) in Ontario under a long-term feed-in-tariff contract with a remaining term, as of November 1, 2024, of 10.46 years (April 17, 2035).
1.2.4 DISCLOSURE OF ENVIRONMENTAL AND SOCIAL DATA
The Company's vision is to provide capital to an underserved section of the renewable energy market and enable significant GHG emissions reductions. With climate change a pressing issue globally, the Company has become an important source of capital for the low carbon energy transformation. In addition, the Company has a positive impact on the local community in which it operates, through local hiring, charitable programs and other events.
A. Environmental Impact Summary
The following table summarizes the estimated total positive environmental impact generated (or expected) by the projects in the Company's portfolio (not pro-rated) as of the date of this MD&A, including clean power capacity, average annual generation, and average annual carbon emissions reduction for the associated projects. Environmental impacts projected are ex-ante estimates from the time of investment.
| Client | Location | Projects | Energy Type | Clean Power Capacity (MW_{AC}) | Annual Clean Generation (MWh) | Annual GHG Offset (tCO_{2e}) | Annual Homes Powered |
|---|---|---|---|---|---|---|---|
| Operational | |||||||
| Aeolis Wind | BC, Canada | 1 | Wind | 102 | 193,000 | 2,393 | 21,578 |
| OntarioCo | ON, Canada | 59 | Solar | 18 | 25,566 | 639 | 3,099 |
| Northland Power | ON, Canada | 4 | Solar | 40 | 59,413 | 1,485 | 7,202 |
| Scotian Windfields | NS, Canada | 12 | Wind | 40 | 131,700 | 88,239 | 12,510 |
| Switch (RE subs) | ON, Canada | 10 | Battery, Solar | 6 | 623 | 242 | 76 |
| FuseForward | BC, Canada | 1 | Energy Efficiency | 0 | 0 | 0 | 0 |
| OCEP* | WI, USA | 1 | RNG | 2.1 | 18,170 | 17,989 | 2,794 |
| NOMAD | VT, USA | 6 | Battery | 28 | 11,397 | 4,852 | 1,675 |
| Revolve | Canada, Mexico | 10 | Solar, Hydro, Wind, Battery | 25 | 72,432 | 12,340 | 10,282 |
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RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Client | Location | Projects | Energy Type | Clean Power Capacity (MW_{AC}) | Annual Clean Generation (MWh) | Annual GHG Offset (tCO_{2e}) | Annual Homes Powered |
|---|---|---|---|---|---|---|---|
| AlbertaCo | AB, Canada | 1 | Wind | 145 | 498,600 | 294,174 | 73,867 |
| Cleanlight | Chile | 1 | Solar | 1.7 | 2,370 | 1,903 | 1,531 |
| Clean Communities | AB, Canada | 1 | Solar | 3.3 | 6,310 | 3,723 | 935 |
| Abraxas | Maldives | 2 | Solar | 0.8 | 1,257 | 993 | 687 |
| Clear Blue** | Global | 1 | Solar, Battery | 1 | 1,300 | 1,044 | 840 |
| Operational Subtotal | 110 | 413 | 1,022,138 | 430,016 | 137,073 |
- Equivalent energy production capacity based on annual energy content of fuel produced, presented for consistency against electricity projects.
** Approximate preliminary estimates based on historical deployments, to be updated.
| Development Stage | |||||||
|---|---|---|---|---|---|---|---|
| Switch (RE subs) | ON, Canada | 4 | Battery | 15 | 602 | 542 | 73 |
| Delta | Puerto Rico | 1 | Solar | 0.5 | 949 | 565 | 188 |
| Revolve | Mexico | 2 | Solar, Battery | 1.1 | 1,018 | 540 | 498 |
| SolarBank | Ontario | 3 | Battery | 15 | 639 | 305 | 77 |
| Alpin Sun | Alberta | 1 | Solar | 200 | 386,000 | 227,740 | 57,185 |
| Development Subtotal | 11 | 231 | 389,207 | 229,692 | 58,022 | ||
| PORTFOLIO TOTAL | 121 | 107 royalties + 14 owned | 644 | 1,411,345 | 659,708 | 195,095 | |
| --- | --- | --- | --- | --- | --- | --- |
Emission Reduction Equivalents
142,526
Passenger Vehicles
203,564
Tonnes of waste recycled
10,908,414
Trees planted
Methodology
Annual Energy
The estimated annual energy produced is determined ex-ante (prior to investment) by reviewing project-specific technical studies, designs and/or operating forecasts specific to a given project. In the case of projects with operating history, an annual average may be used, but is still an ex-ante estimate of future performance that is not guaranteed.
Greenhouse Gas Avoided Emissions
For projects in development, the data is based on the planned installed capacity and resource assessment or operational forecast for the project. For electricity generation projects, the GHG offset is calculated based on the estimated annual energy delivered by the project or products in a year, multiplied by the GHG intensity of the electricity grid where the project is based (less any emissions generated if applicable), leveraging grid carbon intensities from individual regions (individual Canadian provinces and US states) and national government databases or the IFI GHG Harmonized Dataset for national grids. Energy storage projects follow a similar approach but also consider the GHG intensity of the electricity source required to charge the batteries (for example off-peak periods with lower carbon emissions intensity) when determining the net avoided GHG emissions for energy delivered to the grid (or facility). For projects or products that are not grid-connected, the calculation is based on the GHG emissions intensity of the project versus the energy source being displaced (such as diesel generators). In the case of renewable fuels, the avoided emissions data is sourced from a lifecycle carbon intensity pathway for the fuel and its use where available, relative to the benchmark fuel (such as diesel, natural gas or gasoline). Additional demonstrative equivalencies are based on available data for residential electricity consumption by region (homes powered) and the US EPA GHG Equivalencies dataset (for equivalent trees planted, vehicle kilometres traveled, or waste recycled).
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Environmental Data Sources:
Annual GHG Emissions Offset
The Company uses the following emission intensity data sources to estimate annual GHG emissions offset depending on region:
-
Canada's Official Greenhouse Gas Inventory, Provincial data
https://data-donnees.ec.gc.ca/data/substances/monitor/canada-s-official-greenhouse-gas-inventory/ -
US EPA Emissions & Generation Resource Integrated Database, Subregion Level 2021 Data (eGRID) https://www.epa.gov/egrid
-
International Financial Institutions Technical Working Group on GHG Accounting Default Grid Factors 2021 v3.2
https://unfccc.int/sites/default/files/resource/Harmonized_IFI_Default_Grid_Factors_2021_v3.2_0.xlsx -
Switch Battery Projects: SDTC Environmental Benefits Report 2021 (specific to project)
-
OCEP RNG: Project-specific emissions intensity pathway for delivery to California LCFS market.
-
Diesel Offgrid (Cleanlight, Clear Blue): World Resources Institute GHG Protocol Emission Factors
https://ghgprotocol.org/sites/default/files/2023-03/Stationary_combustion_tool_%28Version4-1%29.xlsx
Homes Powered
The table presents an estimate of the number of homes that could be powered based on the annual energy delivered (or projected to be delivered) by the projects or products, divided by the average annual residential electricity consumption in the project's local region. The Company uses the following datasets on regional energy consumption to perform this calculation:
-
Canada: Statistics Canada. Table 25-10-0060-01 Household energy consumption, Canada and provinces
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2510006001 -
US: US Energy Information Agency Average Residential Monthly Bills
https://www.eia.gov/electricity/sales_revenue_price/pdf/table5_a.pdf -
Mexico: Gobierno de Mexico Balance Nacional de Energia 2021
https://www.gob.mx/cms/uploads/attachment/file/805509/BNE-2021.pdf -
Puerto Rico: NREL Puerto Rico Energy Efficiency Scenario Analysis Tool
https://www.nrel.gov/state-local-tribal/preesat.html -
Chile: C. Agostini et al 2015. "Elasticities Of Residential Electricity Demand In Chile," ILADES-UAH Working Papers
https://EconPapers.repec.org/RePEc:ila:ilades:inv312. -
Maldives: A. Laila 2019 "Housing and Housing Characteristics – Household Income & Expenditure Survey 2019," National Bureau of Statistics Maldives
https://statisticsmaldives.gov.mv/nbs/wp-content/uploads/2021/04/Housing-Household-Characteristics-Updated.pdf
Emission Reduction Equivalents
- US EPA Greenhouse Gas Equivalencies Calculator https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator
Environmental Risks
Specific environmental factor risks are discussed in the Risk Factors section of this MD&A, within the following categories:
-
General Risks Involved in the Operations of a Power Generation Facility
-
Natural Disasters and Other Catastrophic Events
-
Environmental Laws and Regulations
-
Changes in Supply of Water, Levels of Winds, Irradiation and Other Natural Variables
-
Health, Safety and Environmental Risks
B. Social Summary
Giving back, in the form of volunteering, donating to charitable causes, or attending community-led charitable events, is an integral part of the culture at RE Royalties. All permanent staff, including senior management, were hired from the local region and/or local universities.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Gender Diversity
Board of Directors: The Company has one (1) female board member of 7 (14%)
Team: The Company has nine (9) team members, of which three (3) are female (33%)
Charitable Activity
We believe in supporting organizations with causes that resonate with our values.
In Q2, 2025, the company donated $25,000 (in addition to prior donations) to Zajac Ranch for Children, which is committed to improving the lives of children and young adults with medical conditions and disabilities. Zajac's programs and activities aim to empower campers, boost their confidence and self-esteem, and enhance their social and life skills as they experience the joys of the outdoors and of recreation in a safe, all-inclusive and adaptable camp environment.
In Q3 2024, the Company donated $36,000 to the Bring Back Hope initiative which supports life-saving spine and heart surgeries for vulnerable Ethiopian children, capacity-building in trauma care, and the development of a national Spine Centre in Ethiopia. Contributions also strengthen local medical training through a partnership with UBC's Branch for International Surgical Care.
In Q2 2024, the Company donated $25,000 to Zajac Ranch for Children, in addition to prior donations.
In Q4 2023 and Q1 2024, the Company donated $5,000 and $25,000 respectively to the Holy Trinity Romanian Orthodox Parish Society to help fund the construction of an annex, which will provide safe space, meals and accommodation to individuals and families facing hardship in the local community.
Social Risks
Specific social factor risks are discussed in the Risk Factors section of the Company's Annual MD&A as publicly filed on SEDAR+ at www.sedarplus.ca, within the following categories:
- Local Public Opposition
- Negative Public or Community Response
-
Health, Safety and Environmental Risks
-
15 -
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.2.5 DISTRIBUTION TO SHAREHOLDERS
As of the date hereof, and since the first quarter of 2019, the Company has made regular quarterly cash distributions of $0.01 per share to its shareholders. The following table summarizes the distributions made in the fiscal year 2024 and 2025 to the date of this MD&A:
| Declaration date | Record date | Payment date | Amount | |
|---|---|---|---|---|
| Per share ($) | Total ($) | |||
| Up to Q2 2025 | ||||
| July 23, 2025 | August 13, 2025 | September 3, 2025 | 0.01 | $ 433,768 |
| April 9, 2025 | April 30, 2025 | May 21, 2025 | 0.01 | $ 433,768 |
| Total for 2025 | $ 867,536 | |||
| Fiscal Year 2024 | ||||
| January 8, 2025 | January 29, 2025 | February 19, 2025 | 0.01 | $ 433,768 |
| October 9, 2024 | October 30, 2024 | November 20, 2024 | 0.01 | 432,620 |
| July 10, 2024 | July 31, 2024 | August 21, 2024 | 0.01 | 432,620 |
| April 10, 2024 | May 1, 2024 | May 22, 2024 | 0.01 | 432,620 |
| Total for 2024 | $ 1,731,628 |
(1) In the Financial Statements, the dividends are recorded based on the date of declaration, as opposed to the fiscal quarter to which dividend pertains.
The Company's decision to pay distributions will be reviewed from time to time by the Board in the context of the Company's earnings, financial condition, and other relevant factors.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.3 SELECTED ANNUAL INFORMATION
Not required.
1.4 SUMMARY OF QUARTERLY RESULTS
The following information is derived from the Company's accompanying Financial Statements which have been prepared in accordance with IFRS as issued by the IASB effective for the respective reporting periods of the Company and are expressed in thousands of Canadian dollars.
| Fiscal Quarter Ending | ||||||||
|---|---|---|---|---|---|---|---|---|
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | |
| Royalty revenue | $ 442 | $ 180 | $ 691 | $ 314 | $ 254 | $ 209 | $ 218 | $ 237 |
| Finance income | 1,048 | 1,369 | 1,470 | 1,378 | 1,574 | 2,428 | 2,413 | 1,676 |
| Energy revenue | 394 | 178 | 269 | - | - | - | - | - |
| Total revenue and income | 1,884 | 1,727 | 2,430 | 1,692 | 1,828 | 2,637 | 2,631 | 1,913 |
| Net (loss) income after tax | (564) | (479) | (9,079) | (195) | (657) | 659 | (722) | (2,769) |
| Net (loss) income attributable to the Company's shareholders | (713) | (636) | (8,309) | (444) | (958) | 358 | (1,135) | (3,031) |
| Net (loss) income per share | $ (0.02) | $ (0.01) | $ (0.19) | $ (0.01) | $ (0.02) | $ 0.01 | $ (0.03) | $ (0.07) |
Trends with respect to the Company's Financial Results
| General | Since its inception in 2016, the Company has been pursuing its growth strategy as reflected in the increasing trends in its total assets and revenue. The timing difference between sourcing of capital and its deployment is inherent in the Company's business. The Company's operating results follow a similar trend whereby the Company would incur various expenses (salaries, consulting, etc.) with respect to asset evaluation and due diligence activities for several months leading up to the completion of a new investment transaction and before any revenue or income from such investment can be recorded. |
|---|---|
| Royalty Revenue | The Company earns royalty revenue from several sustainable energy generation sources and through energy efficiency projects, which exhibit seasonal behaviors individually but tend to counterbalance each other in a well-diversified portfolio. For instance, wind power generation is stronger in winter than in summer. The opposite is true for solar power generation. Similarly, within a given renewable power generation source, geographical diversification across the Northern and Southern Hemispheres reduces overall seasonality. Currently, the majority of the Company's royalty interests are held in renewable assets located in the Northern Hemisphere. |
| The Company also earns revenue from certain royalty interests (NOMAD, Cleanlight, Clear Blue) on business operations that involve manufacturing and/or sale of energy efficiency/storage equipment, and the timing of the Company's royalty revenue earned from these royalty interests is driven by the underlying manufacturing and sales activities of these businesses. | |
| Finance Income | The company's finance income generally follows the same trend as the size of its portfolio of performing secured loans. |
- 17 -
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| | Other factors that may impact the Company's finance income in a fiscal quarter include: a) prepayment of secured loans; and b) changes in the Company's estimates with respect to the timing of the future cash flows associated with its secured loans, as further described below:
The Company typically enters into secured loans and royalty acquisition agreements concurrently in a single transaction. Accordingly, as per its accounting policy, the Company records financial assets representing secured loans and non-financial assets for royalty interests acquired. Upon initial recognition of the Company's investment in such transactions, the Company allocates total investment amounts to the secured loans to the extent of their fair value, determined using the investees' borrowing rates (effective interest rates), and records any residual amounts as royalty interests.
The aforementioned accounting treatment generally results in the secured loan recorded at a discount off the principal sum of the loan, which discount is accreted over the term of the loan. When a loan is prepaid (before its contractual maturity date), if allowed under the loan agreement, any unrecorded accretion is recognized at the time of prepayment. Moreover, when the Company's estimates for the future cash flows attributable to a loan change after its initial recognition, the Company records an adjustment within finance income due to the difference between the effective interest rate and the stated rate as per the loan agreement. |
| --- | --- |
| Energy Revenue | The Company earns energy revenue by operating a portfolio of Battery Energy Storage Systems (BESS) and rooftop solar system.
The level of activity in the Canadian independent power and Ontario Global Adjustment industries are influenced by seasonal weather patterns related to the natural resource or commercial or market structure relative to the technology deployed. Seasonal factors and unexpected weather patterns may lead to declines in power related activities and result in corresponding declines in the demand for power.
SPOBOC's energy revenue primarily comprises its share of savings generated through GA abatement, as described in 1.2.3 Wholly-Owned Operating Entities, which savings are a function of the following:
• Reduction in the PDF for SPOBOC's customers;
• Actual GA costs, as determined by Independent Electricity System Operator (IESO) and published on their website (www.ieso.ca), to which the PDF is applied; and
• Ratios applied to the GA abatement amount under respective ESAs to determine SPOBOC's share of savings generated through GA abatement. |
| Operating Expenses | The Company's operating expenses are mostly incurred evenly through a fiscal year. However, the timing of certain expenses is driven by the underlying activities. For instance, the Company's activities and related expenses with respect to its annual audited financial statements and other annual reports, and annual general meeting are higher in the second fiscal quarter.
Moreover, certain expenses are incurred to support the Company's marketing, financing and investing activities and accordingly fluctuate with the timing of such activities. |
| Finance Expenses | The Company's finance expenses vary with changes in its outstanding debt capital, mainly Green Bonds, and related borrowing rates. |
- 18 -
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Analysis of Quarterly Results
| Quarter ended | Analysis |
|---|---|
| June 2025 | |
| (Q2/2025) | During Q2/2025, the Company completed a loan and royalty transaction with Clear Blue amounting to $500,000. |
The increase in the royalty revenue in Q2/2025 was mainly due to revenue from the NOMAD royalty recorded in this quarter. However, the decrease in the finance income, as compared to Q1/2025, is mainly on account of repayment of the Windriver loan in January 2025.
Refer to the following section (1.5 Results of Operations) for a detailed analysis of this quarter's results. |
| March 2025
(Q1/2025) | No additional investment transactions were closed during Q1/ 2025. |
| December 2024
(Q4/2024) | During Q4/2024, the Company completed three transactions deploying approximately $10.3 million of its available capital, thereby further expanding its loan and royalty portfolio as well as its revenue and income base. Moreover, commencing in Q4/2024, energy revenue was added to the Company's revenue base. However, in Q4/2024, the Company recorded a net loss of $9.08 million mainly due to credit losses recorded in the quarter.
In Q4/2024, the Company closed the second and the final tranche of its Series-4 Green Bonds. |
| September 2024
(Q3/2024) | No additional investment transactions were closed during Q3/ 2024. |
| June 2024
(Q2/2024) | During Q2/2024, the Company provided the second advance to Cleanlight amounting to US$800,000.
The royalty revenue increased as compared to the Prior Year Quarter due to new transactions closed by the Company in fiscal year 2023 and till Q2/2024.
The finance income decreased as compared to Q1/2024 due to additional income accrued on account of early repayment of the NOMAD loan in Q1/2024. |
| March 2024
(Q1/2024) | During Q1/2024, the Company closed three additional royalty based investments and deployed approximately $6.12 million to expand the existing portfolio.
In February 2024, the Company received an early repayment of the NOMAD loan. |
| December 2023
(Q4/2023) | During Q4/2023, the Company recorded a net loss of $0.7 million, mainly due to a provision for expected credit loss of $1.2 million relating to its investment in Switch Power and Switch Solar loans. This loss was offset by an increase in finance income.
Royalty revenue for the Q4/2023 decreased as compared to the Q4/2022, due to the net effect of reduction in royalty income in FY 2023 from royalty buyout from Jade in December 2022 and the royalty received in Q4 2022 from NOMAD offset against the increase in royalty revenue from new transactions closed by the Company during the course of the Company's fiscal year 2023.
Similar to Q2/2023 and Q3/2023, the Company's expenses increased during Q4/2023, mainly due to the increase in finance expenses and the share-based payment expense with |
- 19 -
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
respect to the share-based award granted in May 2023 and also due to increase in wages as compared to Q4/2022.
There were no new transactions closed during the quarter.
September 2023
(During Q3/2023, the Company recorded a net loss, because of a provision for expected credit loss of $3,078,279, relating to the Company's investment in FuseForward.)
(Q3/2023)
In August 2023, the Company closed the transaction with Cleanlight, as described herein. The royalty revenue and the finance income for the Q3/2023 increased as compared to the Q3/2022 ended on September 30, 2022 in line with the expansion of the Company's portfolio of investments.
Similar to Q2/2023, the Company's expenses increased during the Q3/2023, mainly due to the increase in finance expenses and the share-based payment expense with respect to the share-based award granted in May 2023.
- 20 -
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.5 RESULTS OF OPERATIONS
The analysis herein is based on total expenditure, including amounts attributable to non-controlling interests.
The Company recorded a net loss of $564,000 for the three months ended June 30, 2025 ("Current Quarter"), compared to a net loss of $657,000 recorded for the three months ended June 30, 2024 ("Prior Year Quarter"). During the Current Quarter, net loss attributable to shareholders of the Company was $713,000, compared to a net loss of $958,000 attributable to shareholders of the Company for the Prior Year Quarter.
The Company recorded a net loss of $1,043,000 for the six months ended June 30, 2025 ("Current Period"), compared to a net income of $1,600 recorded for the six months ended June 30, 2024 ("Prior Period"). During the Current Period, net loss attributable to shareholders of the Company was $1,349,000, compared to a net loss of $600,000 attributable to shareholders of the Company for the Prior Period.
Additional details regarding the Company's operating results are provided below.
Unless stated otherwise, the following discussions and analysis relating to the Current Period also applies to the Current Quarter.
REVENUE AND INCOME
| Note | Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|---|
| 2025 | 2024 | ||||
| Royalty revenue | (1) | $ 441,894 | $ 254,189 | $ 187,705 | 74% |
| Finance income | (2) | 1,048,254 | 1,573,671 | (525,417) | (33%) |
| Energy revenue | (3) | 394,463 | - | 394,463 | N/A |
| Revenue and income | $ 1,884,611 | $ 1,827,860 | $ 56,751 | 3% | |
| Loss on revaluation of derivative financial asset | (4) | $ (5,000) | $ (5,674) | $ 674 | (12%) |
| Gain on revaluation of financial asset at FVTPL | (5) | $ 22,304 | $ 4,991 | $ 17,313 | 347% |
| Note | Six months ended June 30, | ||||
| --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | Change ($) | Change (%) | ||
| Royalty revenue | (1) | $ 622,379 | $ 463,022 | $ 159,357 | 34% |
| Finance income | (2) | 2,417,325 | 4,001,579 | (1,584,254) | (40%) |
| Energy revenue | (3) | 572,806 | - | 572,806 | N/A |
| Revenue and income | $ 3,612,510 | $ 4,464,601 | $ (852,091) | (19%) | |
| Loss on revaluation of derivative financial asset | (4) | $ (5,000) | $ (8,079) | $ 3,079 | (38%) |
| Gain on revaluation of financial asset at FVTPL | (5) | $ 34,705 | $ 7,775 | $ 26,930 | 346% |
The above-mentioned changes in the Company's revenue and income are summarized below:
(1) Royalty revenue for the Current Period increased, mainly due to revenue from the NOMAD royalty recorded, which revenue is based on proceeds from sale of units by NOMAD. In the Prior Period, no revenue from the NOMAD royalty was recorded by the Company, as NOMAD did not complete any sale of units in the Prior Year.
(2) The decrease in finance income is due to the net effect of the following: (i) the acquisition of SPOBOC and SPOSOC in November 2024, following which event, total energy revenue of these entities is included in the Financial Statements; (ii) as a result of expected credit losses recorded in the fourth quarter of fiscal year 2024, finance income decreased in the Current Quarter, as the
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
Company accrued finance income on the net carrying amount, net of expected credit losses, of the loans, which decrease was offset by an increase in the finance income due to new transactions closed by the Company in Q4 2024 up to Q2 2025. Moreover, in the Prior Period, the Company received prepayment of the NOMAD loan thereby recording $709,000 as accelerated accretion in finance income for the quarter. In the Current Period, the Company recorded $214,000 as accelerated accretion in finance income upon receiving full prepayment against the Revolve Windriver loan.
(3) Energy revenue relates to the revenue generated from operations of SPOBOC and SPOSOC for the Current Period. No energy revenue was recorded in the Company's Financial Statements during the Prior Period due to the timing of acquisition of these entities by the Company.
(4) The loss on revaluation of derivative financial asset represents a mark-to-market adjustment relating to the warrants and equity investment in Clear Blue Technologies in the Current Quarter.
(5) Gain on revaluation of Aeolis Loan mainly resulted from changes in risk-free interest rates in the Current Period.
OPERATING EXPENSES - BESS AND SOLAR PROJECTS
| Note | Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|---|
| 2025 | 2024 | ||||
| Operating expenses – BESS | |||||
| Software maintenance services | (1) | $ 21,076 | $ - | $ 21,076 | N/A |
| Operations and maintenance | (2) | 138,285 | - | 138,285 | N/A |
| Insurance | 23,205 | - | 23,205 | N/A | |
| Depreciation and amortization | 133,930 | - | 133,930 | N/A | |
| $ 316,496 | $ - | $ 316,496 | N/A | ||
| Operating expenses – Rooftop Solar Systems | |||||
| Leases, and operations and maintenance | (3) | $ 10,607 | $ - | $ 10,607 | N/A |
| Depreciation and amortization | 22,091 | - | 22,091 | N/A | |
| $ 32,698 | $ - | $ 32,698 | N/A | ||
| $ 349,194 | $ - | $ 349,194 | N/A | ||
| Note | Six months ended June 30, | Change ($) | Change (%) | ||
| --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | ||||
| Operating expenses – BESS | |||||
| Software maintenance services | (1) | $ 48,450 | $ - | $ 48,450 | N/A |
| Operations and maintenance | (2) | 166,732 | - | 166,732 | N/A |
| Insurance | 46,410 | - | 46,410 | N/A | |
| Depreciation and amortization | 267,860 | - | 267,860 | N/A | |
| $ 529,452 | $ - | $ 529,452 | N/A | ||
| Operating expenses – Rooftop Solar Systems | |||||
| Leases, and operations and maintenance | (3) | $ 15,956 | $ - | $ 15,956 | N/A |
| Depreciation and amortization | 44,182 | - | 44,182 | N/A | |
| $ 60,138 | $ - | $ 60,138 | N/A | ||
| $ 589,590 | $ - | $ 589,590 | N/A |
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(1) Peak Power Inc. provides software maintenance services, predicting the co-incident peaks related to Global Adjustment abatement in Ontario, in order for the Company to continue providing energy as outlined in the agreements with clients. The term of each software maintenance service agreement aligns with respective energy service agreement's term detailed herein and consists of an annual fixed fee of $92,300 and an additional variable fee based on the energy discharged each month.
(2) Operations and maintenance services mainly include the annual maintenance charges and charges for system upgrades for Eneon sites.
(3) Operating expenses for SPOSOC majorly include lease payments, operations & maintenance (O&M) contract expenses, and insurance.
EXPENSES - OTHERS
| Note | Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|---|
| 2025 | 2024 | ||||
| Salaries and benefits | (1) | $ 335,930 | $ 312,943 | $ 22,987 | 7% |
| Administration | (2) | 128,208 | 128,568 | (360) | (0%) |
| Marketing and stakeholder communication | (3) | 109,017 | 142,056 | (33,039) | (23%) |
| Audit and audit related | (4) | 225,538 | 286,416 | (60,878) | (21%) |
| Consulting – Financing | (5) | 20,000 | 16,789 | 3,211 | 19% |
| Consulting – Other | (6) | 69,918 | 36,416 | 33,502 | 92% |
| Regulatory and transfer agency | (7) | 17,373 | 24,486 | (7,113) | (29%) |
| Office lease and information technology | (8) | 31,171 | 13,059 | 18,112 | 139% |
| Legal | (9) | 24,481 | 40,273 | (15,792) | (39%) |
| Donation | (10) | 25,000 | 25,000 | - | 0% |
| Total | $ 986,636 | $ 1,026,006 | $ (39,370) | (4%) | |
| Note | Six months ended June 30, | Change ($) | Change (%) | ||
| --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | ||||
| Salaries and benefits | (1) | $ 650,933 | $ 583,089 | $ 67,844 | 12% |
| Administration | (2) | 291,602 | 234,135 | 57,467 | 25% |
| Marketing and stakeholder communication | (3) | 162,188 | 262,602 | (100,414) | (38%) |
| Audit and audit related | (4) | 315,400 | 349,107 | (33,707) | (10%) |
| Consulting – Financing | (5) | 20,000 | 33,578 | (13,578) | (40%) |
| Consulting – Other | (6) | 112,308 | 113,460 | (1,152) | (1%) |
| Regulatory and transfer agency | (7) | 66,168 | 50,502 | 15,666 | 31% |
| Office lease and information technology | (8) | 44,577 | 24,400 | 20,177 | 83% |
| Legal | (9) | 30,441 | 45,505 | (15,064) | (33%) |
| Donation | (10) | 25,000 | 50,000 | (25,000) | (50%) |
| Total | $ 1,718,617 | $ 1,746,378 | $ (27,761) | (2%) |
The above-mentioned changes in the Company's operating expenses are summarized below:
(1) The increase in salaries and benefits in the Current Period was mainly due to the hiring of additional resources by the Company to support its growing business that entailed a decrease in its marketing and stakeholder communication expenses (see (3) below), as the new hiring reduced the Company's reliance on the services of certain consultants in this functional area.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(2) The increase in administration expenses during the Current Period was mainly attributable to the initial setup and transition related matters with respect to the Company's acquisition of SPOBOC and SPOSOC.
(3) The marketing and stakeholder communication expenses decreased in the Current Period, compared to the Prior Period, mainly because the Company employed a full-time resource to assist with its marketing and investor relations activities that were previously undertaken by consultants.
(4) The audit and audit related expenses were lower in the Current Period, compared to the Prior Period, due to the timing of work completed with respect to the audit of the Company's Financial Statements.
(5) In the Prior Period, the Company retained the services of a consultant to assist with its financing activities, and no such services were retained in the Current Period, leading to the decrease in consulting expenses. However, the Company engaged a new consultant in Q2 2025 leading to the increase in the Current Quarter.
(6) Other consulting expenses remained consistent with the Prior Period. However, the increase in other consulting expenses in the Current Quarter was mainly due to a change in the status of an employee to consultant.
(7) The regulatory expenses vary with the timing of the Company's compliance requirements.
(8) The office lease and information technology expenses relate to the Company's corporate office. Office lease expenses for the Current Period include the depreciation charges relating to the right-of-use asset and common area maintenance expenses that have remained consistent with the Prior Period. The information technology expenses have increased in the Current Period due to the IT transition to a new IT service provider in Q2 2025.
(9) Certain legal expenses pertaining to existing and prospective transactions as well as the legal expenses relating to acquisition of the Switch entities, which were expensed in the Prior Period, were not incurred in the Current Period.
(10) No donations were made by the Company in Q1 2025. Refer to section 1.2.5 Disclosure of Environmental and Social Data for details of the Company's charitable activities.
FINANCE EXPENSES
| Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Finance expenses relating to: | ||||
| Green Bonds | $ 1,103,931 | $ 904,970 | 198,961 | 22% |
| Loan payable (BESS) | 5,894 | - | 5,894 | N/A |
| Accretion of asset retirement obligation (BESS and Solar) | (29,165) | - | (29,165) | N/A |
| Office Lease | 415 | 876 | (461) | (53%) |
| Other finance expenses | 100,000 | - | 100,000 | N/A |
| Total | $ 1,181,075 | $ 905,846 | $ 275,229 | 30% |
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Six months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Finance expenses relating to: | ||||
| Green Bonds | $ 2,200,625 | $ 1,808,464 | $ 392,161 | 22% |
| Loan payable (BESS) | 11,860 | - | 11,860 | N/A |
| Accretion of asset retirement obligation (BESS and Solar) | (24,023) | - | (24,023) | N/A |
| Office Lease | 948 | 1,853 | (905) | (49%) |
| Other finance expenses | 100,000 | - | 100,000 | N/A |
| Total | $ 2,289,410 | $ 1,810,317 | $ 479,093 | 26% |
Finance expenses, including amortization of transaction costs, increased in the Current Period, due to the completion of Series-4 Green Bonds financing in Q4 2024.
DEPLETION AND AMORTIZATION, FOREIGN EXCHANGE DIFFERENCES, AND SHARE-BASED PAYMENT
| Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Depletion and depreciation | $ 206,693 | $ 108,853 | $ 97,840 | 90% |
| Foreign exchange gain | (311,371) | (86,276) | (225,095) | 261% |
| Equity-settled share-based payments | 9,861 | 41,982 | (32,121) | (77%) |
| Change in fair value of cash-settled share-based payments | (49) | (368) | 319 | (87%) |
| Total | $ (94,866) | $ 64,191 | $ (159,057) | (248%) |
| Six months ended June 30, | Change ($) | Change (%) | ||
| 2025 | 2024 | |||
| Depletion and depreciation | $ 298,632 | $ 212,338 | $ 86,294 | 41% |
| Foreign exchange gain | (308,942) | (308,978) | 36 | (0%) |
| Equity-settled share-based payments | 19,723 | 89,924 | (70,201) | (78%) |
| Change in fair value of cash-settled share-based payments | 122 | (2,132) | 2,254 | (106%) |
| Total | $ 9,535 | $ (8,848) | $ 18,383 | (208%) |
Depletion is recorded on a straight-line basis, and the increase in the Current Period, as compared to the Prior Period, was mainly due to depletion of royalty interest for NOMAD, offset by a decrease due to impairment of the Cleanlight royalty and due to derecognition of the SPOBOC and SPOSOC royalties recorded in the fourth quarter of 2024.
Foreign exchange gain recorded in the Current Period and the Prior Period represents the net effect of translation of the Company's US-Dollar denominated assets and liabilities, and due to the appreciation of the Canadian Dollar during the Current Period.
The equity-settled share-based payment expense for the Current Period represents amortization of the fair value of the share-based awards granted by the Company in May 2023 in line with the vesting terms of the awards. The cash-settled share-based payment expense in the Current Period and the Prior Period represents the change in the fair value of the underlying DSUs issued in 2022.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
CURRENT AND DEFERRED INCOME TAX
| Three months ended June 30, | Change ($) | Change (%) | ||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Current income tax expense | $ 43,570 | $ 77,202 | $ (33,632) | (44%) |
| Deferred income tax expense | - | 90,000 | (90,000) | (100%) |
| Total | $ 43,570 | $ 167,202 | $ (123,632) | (74%) |
| Six months ended June 30, | Change ($) | Change (%) | ||
| 2025 | 2024 | |||
| Current income tax expense | $ 77,955 | $ 154,204 | $ (76,249) | (49%) |
| Deferred income tax expense | - | 143,000 | (143,000) | (100%) |
| Total | $ 77,955 | $ 297,204 | $ (219,249) | (74%) |
The total income tax expense during the Current Period as well as the Prior Period related to the Company's wholly-owned subsidiary – RE Royalties (USA) Inc. – which owns equity interests in FP OCEP Invest, LLC and FP Puerto Rico Invest, LLC.
1.5.1 NON-GAAP FINANCIAL MEASURES
This MD&A includes the following non-GAAP performance measures that do not have a standardized meaning prescribed by IFRS:
- Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") is a measure that may differ from, and may not be comparable to, similar measures used or reported by other issuers. The Company believes that EBITDA is commonly used by certain investors, in conjunction with conventional IFRS measures, to enhance their understanding of the Company's performance.
- Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("Adjusted EBITDA") is presented as a supplemental measure of the Company's performance and ability to service debt. Adjusted EBITDA is frequently used by certain investors and other interested parties for evaluation of the Company's results and measuring its ability to meet debt service obligations. Adjusted EBITDA eliminates the impact of a number of items that are not considered indicative of ongoing operating performance. Certain items of expense are added and certain items of income are deducted from net income that are not likely to recur or are not indicative of the Company's underlying operating results for the reporting periods presented or for future operating performance.
These non-GAAP measures have been derived from the Company's financial statements and applied on a consistent basis. These measures are intended to provide additional information, not to replace IFRS measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
The tables below reconcile net loss as per the Financial Statements to EBITDA and Adjusted EBITDA:
| Three months ended June 30, | ||
|---|---|---|
| 2025 | 2024 | |
| Net loss after income tax, as presented in the Financial Statements | $ (563,694) | $ (657,469) |
| Adjustments: | ||
| Finance expenses | 1,181,075 | 905,846 |
| Income tax expense (recovery) | 43,570 | 167,202 |
| Depletion of royalty interests | 201,824 | 103,984 |
| Depreciation and amortization - BESS and solar | 156,021 | - |
| Depreciation of right-of-use asset | 4,869 | 4,869 |
| EBITDA | $ 1,023,665 | $ 524,432 |
| Additional adjustments: | ||
| Consulting – financing | 20,000 | 16,789 |
| Equity-settled share-based payments | 9,861 | 41,982 |
| Change in fair value of cash-settled share-based payments | (49) | (368) |
| Provision for expected credit loss | - | 321,401 |
| Net income attributable to non-controlling interests | (149,651) | (301,002) |
| Adjusted EBITDA | $ 903,826 | $ 603,234 |
| Six months ended June 30, | ||
| --- | --- | --- |
| 2025 | 2024 | |
| Net (loss) income after income tax, as presented in the Financial Statements | $ (1,042,892) | $ 1,575 |
| Adjustments: | ||
| Finance expenses | 2,289,410 | 1,810,317 |
| Income tax expense (recovery) | 77,955 | 297,204 |
| Depletion of royalty interests | 288,893 | 202,599 |
| Depreciation and amortization - BESS and solar | 312,042 | - |
| Depreciation of right-of-use asset | 9,739 | 9,739 |
| EBITDA | $ 1,935,147 | $ 2,321,434 |
| Additional adjustments: | ||
| Consulting – financing | 20,000 | 33,578 |
| Equity-settled share-based payments | 19,723 | 89,924 |
| Change in fair value of cash-settled share-based payments | 122 | (2,132) |
| Provision for expected credit loss | - | 617,671 |
| Net income attributable to non-controlling interests | (306,412) | (601,805) |
| Adjusted EBITDA | $ 1,668,580 | $ 2,458,670 |
1.6 LIQUIDITY
At June 30, 2025, the Company had a cash and cash equivalents balance of $6.54 million (December 31, 2024 – $16.5 million), of which, cash balance subject to various restrictions as described in the Financial Statements is $6.54 million (December 31, 2024 – $16.5 million). At June 30, 2025, the Company had working capital of $12.24 million (December 31, 2024 – $18.8 million).
The Company's Series-1 Green Bonds are maturing between October 2025 and March 2026. The Company is currently in the process of re-financing the Green Bonds and are in active discussions with potential groups. The Company has also allocated certain maturing investments over the next few quarters to ensure that the Company meets its repayment obligations on the Series-1 Green Bonds.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Three months ended June 30, | ||
|---|---|---|
| 2025 | 2024 | |
| Cash generated by operating activities | $ 105,000 | $ 1,059,000 |
| Cash used in investing activities | (7,324,000) | (233,000) |
| Cash used in financing activities | (2,781,000) | (2,395,000) |
| Total | $ (10,000,000) | $ (1,569,000) |
During the Current Period, the Company generated $105,000 cash from its operating activities, compared to $1.06 million cash generated in the Prior Period.
The Company used $7.32 million cash from investing activities, mainly with respect to the amount advanced for the Clearblue transaction and the funds transferred to the escrow account for the Revolve Wind Project, offset by the amount received from the repayment of the Windriver Loan by Revolve. During the Prior Period, the Company used $0.23 million cash in investing activities mainly with respect to new investments and loans completed during the Prior Period, offset by the amount received from the repayment of loan by NOMAD partial repayment of the Revolve Cancun loan.
The Company's financing activities during Current Period used $2.68 million cash, mainly due to cash distributions ($0.87 million) to the Company's shareholders and interest payments ($1.74 million) on Green Bonds. Interest payments relating to Green Bonds were higher in the Current Period due to the issuance of Series 4 Green Bonds in 2024.
During the Prior Period, the Company's financing activities used $2.40 million cash, mainly due to cash distributions ($0.87 million) to the Company's shareholders and interest payments ($1.43 million) on Green Bonds.
The Company's financial liabilities and other liabilities are comprised of the following:
| As of June 30, 2025 | Carrying Amount | Contractual Cash Flows (i) | |||
|---|---|---|---|---|---|
| Total | Less than 12 months | Between 1 - 3 years | Between 4 - 5 years | ||
| Green Bonds (ii) | $43,909,602 | $53,882,739 | $12,543,042 | $33,458,378 | $7,881,319 |
| Lease liability | 18,837 | 19,387 | 19,387 | - | - |
| Loan payable | 401,351 | 401,351 | 401,351 | - | - |
| Government grant payable | 170,350 | 170,350 | 170,350 | - | - |
| Trade payables and accrued liabilities | 310,848 | 310,848 | 310,848 | - | - |
| $44,810,988 | $54,784,675 | $13,444,978 | $33,458,378 | $7,881,319 |
(i) The amounts presented in the table above are gross and undiscounted. These amounts include contractual interest payments.
(ii) Contractual cash flows relating to the US Dollar-denominated Green Bonds are converted into the reporting currency based on the exchange rate as of the reporting date.
Additionally, the BESS projects are subject to an annual fixed fee of $92,300 and an additional variable fee based on the energy discharged each month, under the software service agreements with Peak Power Inc., as described herein (see section 1.5 Results of operations).
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.7 CAPITAL RESOURCES
The Company has no lines of credit or other sources of financing.
Further advancement of the Company's business strategies and operations will require additional funding. The Company intends to pursue additional funding either through one or a combination of the following:
- Issuance of additional equity from treasury;
- Issuance of debt such as green bonds or convertible notes;
- Debt facilities from financial institutions; and/or
- Establishment of co-investment structures or funds, whereby the Company receives a portion of the royalties and interest income generated from the co-investment structures or funds.
Although management has a reasonable expectation that it can continue to raise funds, there can be no assurance to that effect.
The Company is required to maintain a debt to equity ratio of 3:1 as per the Green Bond indenture (the "Indenture"). For purposes of this financial covenant, the Indenture defines equity as paid-in capital.
The Indenture also requires the Company to maintain, subject to a cure period, a minimum debt coverage ratio ("Debt Coverage Ratio"), which is determined pursuant to the Indenture by dividing its quarterly earnings, before certain items such as interest, taxes, depreciation, amortization, and extraordinary items, by total interest expenses for a fiscal quarter.
At June 30, 2025, the Company was in compliance with all debt covenants.
At June 30, 2025, except for the annual fixed fee payable under the software service agreements (see section 1.6 Liquidity), the Company has no material capital lease obligations, or "Purchase Obligations" defined as any agreements to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
1.8 OFF-BALANCE SHEET ARRANGEMENTS
None.
1.9 TRANSACTIONS WITH RELATED PARTIES
This disclosure can be found in the accompanying Financial Statements of the Company, with additional details provided below.
The Company's related party transactions are comprised of remuneration for the Company's key management personnel ("KMP"), including its directors and executive officers that have the authority and responsibility for planning, directing and controlling the activities of the Company.
Transactions with KMP include the following:
- Directors' fees for the Company's non-executive directors, namely: Rene Carrier, Stephen Cheeseman, Gord Fretwell, Paul Larkin, Jill Leversage, and Marchand Snyman;
- Compensation for the Company's executive officers, including salaries and benefits of Bernard Tan, Chief Executive Officer, and Peter Leighton, Chief Operating Officer;
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
- Share-based payments in the form of share purchase options, granted to the Company's directors and officers, which share-based payments represent amortization of the grant date fair value of the options granted over their vesting term.
| Related party transactions | Three months ended June 30, | ||
|---|---|---|---|
| 2025 | 2024 | Change ($) Change (%) | |
| Short-term employment benefits (i) | $ 128,982 | $ 127,913 | $ 1,069 1% |
| Equity-settled share-based compensation | 1,507 | 1,745 | (238) (14%) |
| Cash-settled share-based compensation | (49) | (368) | 319 (87%) |
| Total | $ 130,440 | $ 129,290 | $ 1,150 1% |
(i) Includes executive salaries and directors' fees relating to the Company's key management personnel.
| Related party transactions | Six months ended June 30, | Change ($) | Change (%) | |
|---|---|---|---|---|
| 2025 | 2024 | |||
| Short-term employment benefits (i) | $ 256,900 | $ 252,311 | $ 4,589 | 2% |
| Equity-settled share-based compensation | 3,015 | 6,867 | (3,852) | (56%) |
| Cash-settled share-based compensation | 122 | (2,132) | 2,254 | (106%) |
| Total | $ 260,037 | $ 257,046 | $ 2,991 | 1% |
(i) Includes executive salaries and directors' fees relating to the Company's key management personnel.
The directors' fees and the compensation for its chief operating officer included in short-term employment benefits have remained consistent in the Current Quarter as compared to the Prior Year Quarter.
The equity-settled share-based payment expense for the Current Quarter represents amortization of the fair value of the share-based awards granted by the Company in May 2023.
Cash-settled share-based compensation represents the fair value of the Company's Deferred Share Units (DSU) granted to non-executive directors. No new cash-settled DSUs or RSUs were granted during the Current Quarter.
1.10 FOURTH QUARTER
Not required.
1.11 PROPOSED TRANSACTIONS
Except as discussed in this MD&A, there are no proposed transactions requiring disclosure under this section.
1.12 CRITICAL ACCOUNTING ESTIMATES
This disclosure can be found in the accompanying Financial Statements of the Company.
1.13 CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
This disclosure can be found in the accompanying Financial Statements of the Company.
1.14 FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
This disclosure can be found in the accompanying Financial Statements of the Company.
RE ROYALTIES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
1.15 ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE
Not applicable.
1.16 DISCLOSURE OF OUTSTANDING SHARE DATA
The following table details the share capital structure as of the date of this MD&A:
| Number | |
|---|---|
| Common shares | 43,376,804 |
| Share-purchase options | 2,030,000 |
| Share-purchase warrants | 1,298,196 |
| Deferred Share Units | 180,501 |
| Restricted Share Units | 157,000 |
1.17 INTERNAL CONTROLS OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS
Internal Controls over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Disclosure Controls and Procedures
The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the appropriate time periods and that required information is accumulated and communicated to the Company's management so that decisions can be made about the timely disclosure of that information.
1.18 RISK FACTORS
The required disclosure is provided in the "Risk Factors" section of the Company's Annual MD&A as publicly filed on SEDAR+ at www.sedarplus.ca.