AI assistant
Resolute Resources Ltd. — Interim / Quarterly Report 2025
Feb 28, 2025
48193_rns_2025-02-28_e32f7609-8b58-4556-bf79-768abc2476b9.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Unaudited Interim Condensed Consolidated Financial Statements
RESOLUTE RESOURCES LTD.
For the period ended December 31, 2024
Notice of disclosure of non-auditor review of condensed interim financial statements pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators.
The accompanying interim condensed financial statements of the Company for the three and six month periods ended December 31, 2024 and 2023 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards and are the responsibility of the Company's management.
The Company's auditors have not performed an audit or a review of these interim condensed consolidated financial statements.
1
RESOLUTE RESOURCES LTD.
Interim Condensed Consolidated Statements of Financial Position
Stated in Canadian dollars (unaudited)
| Note | As at December 31, 2024 | As at June 30, 2024 | |
|---|---|---|---|
| Assets | |||
| Current: | |||
| Cash | 3 | $ 46,748 | $ 260,202 |
| Prepaid expenses | 3 | 12,243 | 101,785 |
| GST receivable | 3 | 1,137 | 264,918 |
| Exploration and evaluation assets | 3 | - | 370,624 |
| 60,128 | 997,529 | ||
| Total assets | $ 60,128 | $ 997,529 | |
| Liabilities | |||
| Current: | |||
| Accounts payable and accrued liabilities | 3 | $ 31,215 | $ 711,074 |
| Decommissioning liability | 3 | - | 211,454 |
| 31,215 | 922,528 | ||
| Total liabilities | $ 31,215 | $ 922,528 | |
| Shareholders’ Equity | |||
| Share capital | 4 | 7,363,047 | 7,363,047 |
| Warrants | 4 | 1,398,568 | 1,398,568 |
| Contributed surplus | 4 | 256,646 | 250,532 |
| Deficit | (8,989,348) | (8,937,146) | |
| Total shareholders’ equity | 28,913 | 75,001 | |
| Total liabilities and shareholders’ equity | $ 60,128 | $ 997,529 |
Going concern (note 2)
See accompanying notes to the unaudited interim condensed consolidated financial statements.
RESOLUTE RESOURCES LTD.
Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Stated in Canadian dollars (unaudited)
| Note | Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| Expenses (recovery): | |||||
| Continuing operations | |||||
| General and administrative | $ 33,091 | $ 269,986 | $ 46,091 | $ 394,289 | |
| Stock based compensation (recovery) | 4 | 318 | (7,109) | 6,115 | 7,109 |
| Loss from continuing Operations | (33,409) | (262,877) | (52,206) | (401,398) | |
| Discontinued operations | |||||
| General and administrative (recovery) | (9,836) | 94,827 | 144,623 | 392,167 | |
| Listing Expense | - | - | - | 898,037 | |
| Impairment | - | 172,238 | - | 172,238 | |
| Accretion | - | 548 | - | 548 | |
| Amortization | - | 639 | - | 639 | |
| Total expenses | 23,573 | 268,252 | 144,623 | 1,463,629 | |
| Loss from operations (consolidated) | (23,573) | (531,129) | (196,829) | (1,865,027) | |
| Gain on sale of subsidiary | 3 | 144,627 | - | 144,627 | - |
| Interest and other income | - | 20,367 | - | 62,087 | |
| Income (loss) before income taxes | 121,054 | (510,762) | (52,202) | (1,802,940) | |
| Net Income (loss) and comprehensive Income (loss) | $ 121,054 | $ (510,762) | (52,202) | ($1,802,940) | |
| Net loss per common share | |||||
| Basic and diluted | 4 | $0.00 | $0.01 | $0.00 | $0.03 |
See accompanying notes to the unaudited interim condensed consolidated financial statements.
RESOLUTE RESOURCES LTD.
Interim Condensed Consolidated Statements of Changes in Equity
Stated in Canadian dollars (unaudited)
| Note | Share Capital | Warrants | Contributed surplus | Deficit | Total shareholders’ equity | |
|---|---|---|---|---|---|---|
| Balance at July 1, 2023 | $2,779,048 | $31,250 | $204,676 | $(1,257,150) | $1,757,824 | |
| Net loss and comprehensive loss | – | – | – | (1,802,940) | (1,802,940) | |
| Reverse take over transaction | 1,673,912 | 70,161 | 116,929 | – | 1,861,002 | |
| Common shares issued | 4 | 3,768,315 | – | – | – | 3,768,315 |
| Stock options exercised | 11,250 | – | (11,250) | – | – | |
| Stock options forfeited | 4 | – | – | (21,328) | – | (21,328) |
| Warrants issued | 4 | – | 938,143 | – | – | 938,143 |
| Share issue costs | 4 | (490,019) | – | 8,976 | – | (481,043) |
| Stock based compensation | – | – | 28,437 | – | 28,437 | |
| Balance at December 31, 2023 | 7,742,506 | $1,039,554 | $326,440 | $(3,060,090) | $6,048,410 | |
| Balance at July 1, 2024 | $7,363,047 | $1,398,568 | $250,532 | $(8,937,146) | $75,001 | |
| Net loss | – | – | – | (52,202) | (52,202) | |
| Stock options forfeited | 4 | – | – | (5,309) | – | (5,309) |
| Stock based compensation | 4 | – | – | 11,423 | – | 11,423 |
| Balance at December 31, 2024 | 7,363,047 | $1,398,568 | $256,646 | $(8,989,348) | $28,913 |
See accompanying notes to the unaudited interim condensed consolidated financial statements.
RESOLUTE RESOURCES LTD.
Interim Condensed Consolidated Statements of Cash Flows
Stated in Canadian dollars (unaudited)
| Note | Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| Cash provided by (used in): | |||||
| Operating Activities: | |||||
| Net income (loss) | $ 121,054 | $ (510,762) | $ (52,202) | $(1,802,940) | |
| Items not affecting cash: | |||||
| Amortization | - | 639 | - | 639 | |
| Accretion | - | 548 | - | 548 | |
| Stock based compensation | 317 | (7,109) | 6,114 | 7,109 | |
| Listing expense | - | - | - | 898,037 | |
| Gain on sale of subsidiary | 3 | (144,627) | - | (144,627) | - |
| Impairment of Exploration and Evaluation assets | - | 172,238 | - | 172,238 | |
| Decrease (increase) in prepaid expenses | (12,348) | 45,047 | (14,276) | (93,966) | |
| Decrease (increase) in GST receivable | (540) | (112,861) | 258,749 | (275,663) | |
| Decrease in accounts payable and accrued liabilities | (75,719) | 37,687 | (115,470) | (424,619) | |
| Cash used in operating activities | (111,863) | (374,573) | (61,712) | (1,518,617) | |
| Investing Activities: | |||||
| Proceeds on sale of subsidiary | 3 | 75,000 | 75,000 | - | |
| Cash disposed on sale of subsidiary | 3 | (226,742) | - | (226,742) | - |
| Additions of property and equipment | - | - | - | (7,673) | |
| Exploration and evaluation asset expenditures | - | (2,193,953) | - | (4,683,006) | |
| Change in non-cash working capital | 83,612 | (121,867) | - | 1,406,768 | |
| Cash used in investing activities | (68,130) | (2,315,820) | (151,742) | (3,283,911) | |
| Financing Activities: | |||||
| Cash acquired on acquisition | - | - | - | 957,369 | |
| Issue of common shares, net of issue costs | 4 | - | 74,898 | - | 4,104,054 |
| Issue of warrants | 4 | - | 121,360 | - | 121,360 |
| Change in non-cash working capital | - | - | - | 236,448 | |
| Cash used in financing activities | - | 196,258 | - | 5,419,231 | |
| Increase (decrease) in cash during the period | (179,993) | (2,494,135) | (213,454) | 616,703 | |
| Cash, beginning of period | 226,741 | 3,736,779 | 260,202 | 625,941 | |
| Cash, end of period | $ 46,748 | $1,242,644 | $ 46,748 | $1,242,644 |
See accompanying notes to the unaudited interim condensed consolidated financial statements.
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
- Reporting entity and description of the business:
Resolute Resources Ltd. ("Resolute" or the "Company") (formerly Crossover Acquisitions Inc. ("Crossover")) is a public company trading on the NEX Exchange ("NEX") under the symbol RRL.H. Crossover was incorporated under the laws of the Province of Ontario on May 27, 2019 and was a private company until October 15, 2021 when Crossover closed its initial public offering. The Company was originally classified as a Capital Pool Company as defined in the TSX Venture Exchange. The mailing address for the Company is: #100, 111 5th AVE SW Suite 204, Calgary, AB T2P 3Y6. The principal place of business for the Company is: 3300, 205 5th AVE SW, Calgary AB, T2P 2V7.
a) Sale of Subsidiaries and Change in Financial Reporting Scope
On July 25, 2024, the Company entered into a purchase and sale agreement (the "Sale Agreement") with an arm's-length private purchaser (the "Purchaser") to sell all issued and outstanding shares of its wholly owned subsidiary, Resolute Resources Limited (the "Subsidiary"). The Subsidiary held all of the Company's oil and gas assets and was the parent of Resolute Resources Corp. (the "BC Subsidiary"), which together represented all operating assets of the Company.
Under the Sale Agreement, the Company sold the Subsidiary and its indirect subsidiary, the BC Subsidiary, for total cash consideration of $75,000. As part of the transaction all abandonment and reclamation obligations, environmental liabilities related to the oil and gas assets, and corporate and tax liabilities of the BC Subsidiary remained with the Subsidiary and were assumed by the Purchaser.
The sale was completed on October 4, 2024 (refer to Note 3 – Sale of Subsidiaries).
b) Financial Statement Presentation for the Six-Month Period Ended December 31, 2024
These financial statements cover the six-month period from July 1, 2024, to December 31, 2024, and reflect the following reporting structure:
- For the period from July 1, 2024, to October 4, 2024 (effectively September 30, 2024), the financial statements are consolidated, including the results of the Subsidiary and its indirect subsidiary.
- From October 5, 2024, to December 31, 2024, the financial statements reflect only the Parent Company as a result of the disposal of the Subsidiary.
Following the sale of the Subsidiary, the Company no longer has operating assets and is focused on identifying and evaluating new business opportunities for potential acquisitions or mergers to maximize shareholder value.
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
2. Basis of presentation:
(a) Basis of presentation and statement of compliance:
These financial statements have been prepared in accordance with the requirements of International Accounting Standard ("IAS") 34, Interim Financial Reporting. These Financial Statements do not include all information required for annual financial statements and should be read in conjunction with the audited annual financial statements of the Company as at and for the year ended June 30, 2024.
These condensed interim financial statements have been prepared on a historical cost basis. These financial statements are presented in Canadian dollars, which is the functional currency of the Company.
The accounting policies, basis of measurement, critical accounting judgments and significant estimates to prepare the audited annual financial statements as at and for the year ended June 30, 2024 have been applied in the preparation of these financial statements, with the exception of the following significant accounting policies which have been adopted subsequent to June 30, 2024.
(b) Approval of financial statements:
These financial statements were approved by the Board of Directors on February 27, 2025.
(c) Principles of consolidation:
The consolidated financial statements include the accounts of Resolute Resources Ltd. and its wholly owned subsidiaries, Resolute Resources Limited, and Resolute Resources Corp until October 4, 2024 which is the date of the sale of the wholly owned subsidiaries. All intercompany transactions, balances, and unrealized gains and losses from intercompany transactions are eliminated on consolidation.
(d) Going concern:
These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue operating for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
As at December 31, 2024, the Company had working capital totaling $28,913 (June 30, 2024 - $75,001). For the six months ended December 31, 2024, the Company incurred a net loss $52,202 (2023 - $1,802,940), and cash used in operations of $61,712 (2023 - $1,518,617).
7
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
2. Basis of presentation (continued):
(d) Going concern (continued):
The Company has generated no operating revenues to date. The Company will require capital to pursue future acquisition/merger opportunities. As a result, the Company will be required to raise additional capital or seek alternatives such as debt financing to develop the properties. There can be no assurance that such funding will be available to the Company when needed, or if available that it will be on acceptable terms. If adequate funds are not available, the Company may not be able to advance any merger/acquisition opportunities or discharge its liabilities in the normal course of operations.
As a result of these conditions there is a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.
Management believes the use of the going concern assumption is appropriate based upon the assumption the Company will have sufficient cash resources to meet ongoing obligations as they become due in the normal course of activities. The Company has successfully raised financing in the past and will continue on a best efforts basis to raise the necessary financing in the future.
These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
(e) Use of estimates and judgements:
The preparation of consolidated financial statements inconformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the period. These estimates are reviewed periodically and, as adjustments become necessary, are reported in the period in which they become known. By their nature, these estimates and related future cash flows are subject to measurement uncertainty, and the impact on future consolidated financial statements could be material. A full list of the key sources of estimation uncertainty can be found in the Company's annual financial statements for the year ended June 30, 2024.
Other than noted below, there have been no significant changes to the use of estimates, judgements or assumptions since the June 30, 2024 financial statements, as detailed in note 2 of the audited consolidated financial statements for the year ended June 30, 2024.
8
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
3. Sale of Subsidiaries
On October 4, 2024 Resolute Resources Ltd. ("the Company" or "the Parent Company") completed the sale of its 100% interest in Resolute Resources Limited and Resolute Resources Corp, to an arms length purchaser for total consideration of $75,000 in cash. As a result, the Company no longer consolidates the financial results of these subsidiaries after that date.
(a) Net Assets of Subsidiaries Derecognized in Consolidation
The carrying amounts of assets and liabilities derecognized upon disposal were:
| Net Assets Derecognized in Consolidation | Amount |
|---|---|
| Assets: | |
| Cash | $226,742 |
| GST receivable | 5,137 |
| Prepayments | 103,713 |
| Exploration and Evaluation assets | 370,624 |
| Total Assets | 706,219 |
| Liabilities: | |
| Accounts payable and accrued liabilities | (564,392) |
| Decommissioning liability | (211,454) |
| Total Liabilities | (775,846) |
| Net Liabilities Derecognized (Deficit Disposed) | $ (69,627) |
(b) Impact on Consolidated financial statements
As the parent Company no longer hold an interest in these subsidiaries, the carrying amount of the investment was written off as follows:
| Item | Amount |
|---|---|
| Cash consideration received | $ 75,000 |
| Less: | |
| Carrying amount of net liabilities disposed | (69,627) |
| Gain on disposal of subsidiaries | $144,627 |
The financial statements from October 4, 2024 onwards only reflect the activities of the Parent Company.
9
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital:
(a) Authorized:
Unlimited number of common shares
(b) Issued:
As at December 31, 2024 and June 30, 2024, the Company had the following common shares issued and outstanding:
| Common shares | Number | Share capital |
|---|---|---|
| Balance for Resolute Resources, June 30, 2023 | 42,068,200 | 2,779,048 |
| Opening balance for Crossover | 16,500,000 | 1,147,075 |
| 2:1 share consolidation for Crossover | (8,250,000) | - |
| Exchanged as part of RTO | (8,250,000) | (1,147,075) |
| Issued as part of RTO | 8,250,000 | 1,240,387 |
| Issued on private placement | 18,040,800 | 3,703,199 |
| Issued on exercise of common share purchase warrants | 55,000 | 5,500 |
| Issued on exercise of compensation options | 688,032 | 83,616 |
| Transfer of value attributed to stock options exercised | - | 11,250 |
| Issued on exercise of stock options | 187,500 | 18,750 |
| Share issue costs | - | (478,703) |
| Balance, June 30, 2024 and December 31, 2024 | 69,289,532 | $ 7,363,047 |
Shares issued on closing of RTO
On August 23, 2023 Resolute Resources completed the RTO with Crossover to form the resulting issuer, continuing as Resolute Resources Ltd. Pursuant to the RTO Transaction, Crossover consolidated its shares on a 2:1 basis, and each Class A common share of Resolute Resources was cancelled and exchanged for one fully paid and non-assessable common share of the resulting issuer. The resulting issuer changed its name to Resolute Resources Ltd. and is carrying on the business of Resolute Resources.
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital (continued):
(b) Issued (continued):
The Private Placement
In conjunction with the RTO, Resolute completed the private placement offering (the "Offering") of subscription receipts of Resolute at a price of $0.25 per subscription receipt for aggregate gross proceeds of $4,510,200, and 18,040,800 subscription receipts received. Upon the closing of the RTO, each subscription receipt was exchanged for one Resolute unit. Each Resolute unit consists of one Resolute common share and one-half Resolute warrant. Each full warrant will entitle the holder to purchase one Resolute common share at an exercise price equal to $0.50 until a date that is 60 months following the date of the RTO Closing, subject to acceleration of the expiry date if certain conditions are satisfied.
Other Share Issuances
On October 19, 2023 the Company issued 55,000 common shares on the exercise of 55,000 share purchase warrants for gross proceeds of $5,500.
On October 26, 2023 the Company issued 688,032 common shares on the exercise of 688,032 compensation options for gross proceeds of $172,008. The exercise of compensation options also resulted in the issue of 344,016 common share purchase warrants to the option holder which entitle such holder to purchase one common share for each common share purchase warrant held at an exercise price equal to $0.50. The common share purchase warrants expire in October 2028.
On November 23, 2023 the Company issued 187,500 common shares on the exercise of 187,500 stock options for gross proceeds of $18,750.
11
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital (continued):
(c) Common share purchase warrants ("Warrants"):
The following table provides a summary of the Company's share warrants
| Number | Weighed average exercise price | |
|---|---|---|
| $ | ||
| Outstanding, June 30, 2022 and June 30, 2023 | 625,000 | $ 0.10 |
| Crossover warrants outstanding(1) | 625,000 | 0.20 |
| Granted on Offering | 9,020,400 | 0.50 |
| Exercised | (55,000) | 0.10 |
| Issued | 344,016 | 0.50 |
| Outstanding, June 30 2024 and December 31, 2024 | 10,559,416 | $ 0.46 |
Weighted average remaining life 3.5 years
(1) The original 1,250,000 Crossover warrants converted to 625,000 Resolute warrants after the 2:1 share consolidation of Crossover.
The 625,000 warrants of Crossover were assigned a fair value of $70,161 estimated by using the Black-Scholes option pricing model, using the following assumptions: share price $0.19, exercise price of $0.20; risk free interest rate 4.45%; expected volatility 100.9%, dividend yield – 0% and expective life 3.15 years.
The 9,020,400 warrants issued with the offering were assigned a fair value of $1,169,139 estimated by using the Black-Scholes option pricing model, using the following assumptions: share price $0.19, exercise price of $0.50; risk free interest rate 4.02%; expected volatility 109.7%, dividend yield – 0% and expective life 5 years.
The 344,016 warrants issued on the exercise of compensation options were assigned a fair value of $44,722 estimated by using the Black-Scholes option pricing model, using the following assumptions: share price $0.19, exercise price of $0.50; risk free interest rate 4.12%; expected volatility 109.9%, dividend yield – 0% and expective life 5 years.
12
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital (continued):
(d) Stock options:
During the year ended June 30, 2022 the Company adopted a stock option plan for directors, employees and service providers. Under the plan, options may be granted to purchase up to 10% of the outstanding shares of Resolute and the maximum term of options granted is five years. The Board of Directors determines the vesting schedule at the time of grant. The outstanding options vest as to one-quarter each on the first, second and third anniversary dates of the date of grant. As at December 31, 2024 the Company may grant up to 6,928,935 options (June 30, 2023 – 4,206,820).
The following tables summarize stock options issued and outstanding:
| Number | Exercise price $ | |
|---|---|---|
| Resolute Resources balance outstanding, June 30, 2023 | 3,500,000 | 0.10 |
| Crossover options(1) | 825,000 | 0.10 |
| Exercise | (187,500) | 0.10 |
| Forfeit | (662,500) | 0.10 |
| Outstanding June 30, 2024 | 3,475,000 | 0.10 |
| Forfeit | (100,00) | 0.10 |
| Outstanding, December 31, 2024 | 3,375,000 | 0.10 |
(1) The original 1,650,000 Crossover warrants converted to 825,000 Resolute warrants after the 2:1 share consolidation of Crossover.
| Exercise price | Average Remaining term (years) | Number outstanding |
|---|---|---|
| $0.10 | 2.25 | 3,375,000 |
| Outstanding, December 31, 2024 | 2.25 | 3,375,000 |
As at December 31, 2024, 2,050,000 options are exercisable (2023- 1,512,500).
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital (continued):
(d) Stock options (continued):
The fair value of the Resolute stock options was estimated as at the grant date using the Black-Scholes option pricing model, with the following assumption ranges used for stock options issued:
| Assumption range | February 24, 2022 |
|---|---|
| Risk free interest rate (%) | 1.44 |
| Expected life (years) | 5.0 |
| Stock price ($) | 0.10 |
| Exercise price ($) | 0.10 |
| Expected volatility (%) | 75 |
| Fair value ($) | 0.06 |
The 825,000 stock options of Crossover were assigned a fair value of $116,929 estimated by using the Black-Scholes option pricing model, using the following assumptions: share price $0.20, exercise price of $0.10; risk free interest rate 2.97%; expected volatility 75%, dividend yield – 0% and expected life 3.8 years.
Stock based compensation related to stock options in the six months ended December 31, 2024, was $6,114 (2023 - $7,109).
(e) Compensation options
In connection with the private placement offering, the Company issued compensation options and advisory compensation options (collectively called "Compensation Options") to the agents. The following table summarizes Compensation Options issued, exercised and expired:
| Number | Exercise Price ($) | |
|---|---|---|
| Outstanding, June 30, 2023 | 694,032 | 0.25 |
| Issued | 81,600 | 0.25 |
| Exercised | (688,032) | 0.25 |
| Outstanding, June 30, 2024 and December 31, 2024 | 87,600 | 0.25 |
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
4. Share capital (continued):
(e) Compensation options (continued):
Each Compensation Option entitles the holder thereof to acquire one Resolute unit. Each Resolute unit consists of one Resolute common share and one-half Resolute warrant. Each full warrant will entitle the holder to purchase one Resolute common share at an exercise price equal to $0.50.
5. Financial risk management:
The Company's activities expose it to a variety of financial risks such as credit risk, liquidity risk and market risk that arise as a result of its exploration and financing activities. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk and the Company's management of capital. Further quantitative disclosures are included throughout these financial statements.
The Board of Directors oversees management's establishment and execution of the Company's risk management framework. Management has implemented and monitors compliance with risk management policies. The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and market conditions.
(a) Credit risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The carrying amount of the Company's cash, trade and other receivables represents the maximum credit exposure. With respect to trade and other receivables, the Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.
(b) Liquidity risk:
Liquidity risk relates to the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by cash as they become due. The Company's approach to managing liquidity risk is to ensure, as much as possible, that it has sufficient liquidity to meet its short-term and long-term financial obligations when due, under both normal and unusual conditions without incurring acceptable losses or risking harm to the Company's reputation.
All the Company's contractual financial liabilities can be settled in cash. Typically, the Company ensures that it has sufficient liquidity to meet expected operational expenses, including the servicing of financial obligations. At December 31, 2024 the Company had working capital totaling $28,913 (June 30, 2024 - $75,001). For the six months ended December 31, 2024,
15
RESOLUTE RESOURCES LTD.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
Stated in Canadian dollars (unaudited)
5. Financial risk management (continued):
(b) Liquidity risk (continued):
the Company incurred a net loss of $52,202 (2023 – $1,802,940), and cash used in operations of $61,712 (2023 – $1,518,617).
All the Company's financial liabilities can be settled in cash. Liabilities in the statement of financial position consist of accounts payable and accrued liabilities which are considered due within one year.
The Company is seeking new opportunities and consequently requires additional capital to pursue merger/acquisition opportunities (see note 2). Budgets and forecasts are subject to significant judgement and estimates relating to activity levels, future cash flows and the timing thereof and other factors which may or may not be within the control of the Company.
(c) Interest rate risk:
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company currently is not exposed to significant interest rate risk.
(d) Market risk:
Market risk is the risk that changes in market prices, such as commodity prices for crude oil and natural gas as well as costs of electricity consumption, foreign exchange rates and interest rates will affect the Company's valuation of financial instruments, the debt levels of the Company, as well as its income and cash flow from operations. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while maximizing the Company's returns.
(e) Capital management
The Company's policy is to have a capital structure that maintains financial flexibility and sustains the future development of the business. The Company manages its capital structure and makes adjustments relative to changes in economic conditions and the Company's risk profile. In order to maintain the capital structure, the Company may from time to time issue shares and adjust its capital spending to manage current and projected liabilities. The Company considers its capital structure to include working capital and equity.
16