Rex Resources Corp. — Annual Report 2023

Jan 29, 2024

Rex Resources Corp.

Consolidated Financial Statements

For the years ended September 30, 2023 and 2022

Table of Contents

Independent Auditor’s Report	3-5
Consolidated Statements of Financial Position	6
Consolidated Statements of Changes in Equity	7
Consolidated Statements of Comprehensive Loss	8
Consolidated Statements of Cash Flows	9
Notes to the Consolidated Financial Statements	10-24

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Crowe MacKay LLP

1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687-4511 Fax +1 (604) 687-5805 www.crowemackay.ca

Independent Auditor's Report

To the Shareholders of Rex Resources Corp.

Opinion

We have audited the consolidated financial statements of Rex Resources Corp. (the "Group"), which comprise the consolidated statements of financial position as at September 30, 2023 and September 30, 2022 and the consolidated statements of changes in equity, comprehensive loss, and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2023 and September 30, 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Other than the matter described in the Material Uncertainty Related to Going Concern section, we have determined there are no key audit matters to be communicated in our report.

Other Information

Management is responsible for the other information. The other information comprises:

• Management's Discussion and Analysis

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent

with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the other information prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Kevin Kwan.

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Chartered Professional Accountants Vancouver, Canada January 29, 2024

REX RESOURCES CORP. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

		September 30,	September 30,
As at	Note	2023	2022
ASSETS		$	$
Current assets
Cash		32,024	278,881
Amounts receivable		15,371	17,139
		47,395	296,020
Reclamation deposit		-	11,800
Long-term prepaids		-	69,929
Exploration and evaluation assets	4	275,000	454,129
TOTAL ASSETS		322,395	831,878
LIABILITIES
Current liabilities
Accountspayable and accrued liabilities	4,6	214,469	39,835
SHAREHOLDERS’ EQUITY
Share capital	5	1,255,601	1,155,601
Reserves	5	180,048	180,048
Accumulated deficit		(1,327,723)	(543,606)
		107,926	792,043
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		322,395	831,878

Nature of operations and going concern (Note 1)

The accompanying notes are integral to these consolidated financial statements.

Approved on Behalf of the Board of Directors on January 29, 2024:

/s/CraigTaylor Director	/s/AnthonyZelen
	Director

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REX RESOURCES CORP. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars)

Share Capital

		Number of Class A
		Common			Accumulated
		Shares	Amount	Reserves	Deficit	Total
			$	$	$	$
	Note
Balance, September 30, 2021		11,189,285	785,806	111,395	(290,632)	606,569
Private placements	5	1,680,000	235,200	100,800	-	336,000
Share issuance costs	5	-	(2,552)	-	-	(2,552)
Shares issued for exploration and evaluation assets	4, 5	200,000	25,000	-	-	25,000
Stock option exercise	5	400,000	112,147	(32,147)	-	80,000
Net loss for theyear		-	-	-	(252,974)	(252,974)
Balance, September 30, 2022		13,469,285	1,155,601	180,048	(543,606)	792,043
Issuance of shares for the acquisition of				-
1414447 B.C. Ltd.	4, 5	1,000,000	100,000		-	100,000
Net loss for theyear		-	-	-	(784,117)	(784,117)
Balance, September 30, 2023		14,469,285	1,255,601	180,048	(1,327,723)	107,926

The accompanying notes are integral to these consolidated financial statements.

7

REX RESOURCES CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

		For the year ended	For the year ended
		September 30,	September 30,
	Note	2023	2022
		$	$
EXPENSES
Consulting	6	49,000	93,500
Marketing		-	12,094
Office and administrative		23,983	23,504
Professional fees	6	132,339	88,427
Regulatory		28,931	35,449
LOSS BEFORE OTHER EXPENSES		(234,253)	(252,974)
OTHER EXPENSES
Impairment of exploration and evaluation assets	4	(549,864)	-
NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR		(784,117)	(252,974)
Weighted Average Number of Shares Outstanding		13,751,477	13,081,559
Basic and Diluted Loss Per Share		(0.06)	(0.02)

The accompanying notes are integral to these consolidated financial statements.

8

REX RESOURCES CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

	For the year ended	For the year ended
	September 30,	September 30,
	2023	2022
	$	$
CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES
Net loss for the year	(784,117)	(252,974)
Impairment of exploration and evaluation assets	549,864	-
Changes in non-cash working capital items:
Amounts receivable	13,568	(10,320)
Accountspayable and accrued liabilities	59,634	5,895
	(161,051)	(257,399)
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash paid for acquisition of 1414447 B.C. Ltd.	(60,000)	(50,000)
Long-term prepaids	-	(42,496)
Exploration and evaluation expenditures	(39,556)	(52,379)
BC METC received	13,750	-
	(85,806)	(144,875)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from private placements	-	336,000
Share issuance costs	-	(2,552)
Proceeds from stock options exercised	-	80,000
	-	413,448
Net (decrease) increase in cash	(246,857)	11,174
Cash, beginning of theyear	278,881	267,707
Cash, end of theyear	32,024	278,881
Supplemental information:
Interest paid	-	-
Income taxes paid	-	-
Shares issued for acquisition of 1414447 B.C. Ltd.	100,000	-
Shares issued for exploration and evaluation assets	-	25,000
Reclassification of refundable reclamation deposit to
amounts receivable	11,800	-
Amounts payable for acquisition of 1414447 B.C. Ltd. in
accounts payable and accrued liabilities	115,000	-
Long-term prepaids used for exploration and evaluation
expenditures	69,929	-

The accompanying notes are integral to these consolidated financial statements.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Rex Resources Corp. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 29, 2020. On June 2, 2021, the Company completed its initial public offering (“IPO”) and commenced trading on the TSX Venture Exchange (“TSXV”) on June 4, 2021 under the trading symbol “OWN”. The Company is primarily engaged in mineral exploration activities in British Columbia, Canada. The head office and the principal address of the Company are located at 1570 – 505 Burrard Street, Vancouver, BC, Canada V7X 1M5.

These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. During the year ended September 30, 2023, the Company had a net loss of $784,117 (2022 - $252,974), and as of that date, an accumulated deficit of $1,327,723 (2022 - $543,606), had not advanced its mineral properties to commercial production, and is not able to finance day to day activities through operations. The Company’s continuation as a going concern is dependent upon results from its mineral property exploration activities, its ability to attain profitable operations, generate funds from and/or raise equity capital or borrowings sufficient to meet current and future obligations and ongoing operating losses. The Company’s business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Geopolitical events and potential economic global challenges such as the risk of the higher inflation and energy crises, may create further uncertainty and risk with respect to the prospects of the Company’s business. These uncertainties may cast a significant doubt on the ability of the Company to continue operations as a going concern. Management intends to finance operating costs over the next twelve months with its proceeds from its initial public offering of its shares, loans from directors and companies controlled by directors and/or additional private placement of common shares. These consolidated financial statements do not include any adjustments that might result from this uncertainty. Such adjustments could be material.

2. BASIS OF PRESENTATION

Statement of compliance

These consolidated financial statements for the year ended September 30, 2023 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). These statements are presented in Canadian Dollars, which is the Company’s and its subsidiary’s functional currency.

These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments classified as financial instruments at fair value through profit or loss, which are stated at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The consolidated financial statements were authorized for issue by the Board of Directors on January 29, 2024.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

2. BASIS OF PRESENTATION (Continued)

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, 1414447 B.C. Ltd. Control occurs when the Company is exposed to, or has the right to, variable returns from its involvement with an investee and has the ability to affect those returns through its power over the investee. All inter-company transactions and balances have been eliminated in the consolidated financial statement presentation. The Company owns 100% (2022 – 0%) of 1414447 B.C. Ltd., which is the registered tenure holder of the Company’s mineral interests in its Rex Property.

Significant estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and judgments concerning the future. The Company’s management reviews these estimates and judgments on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Significant estimates and judgments about the future and other sources of estimation uncertainty that management has made at the reporting date that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from estimates and judgments made, relate to, but are not limited to the following:

Ability to continue as a going-concern

Management assesses the Company's ability to continue as a going concern at each reporting date, using all quantitative and qualitative information available. This assessment, by its nature, relies on estimates of future cash flows and other future events (as discussed in Note 1), whose subsequent changes could materially impact the validity of such an assessment.

Recoverability of the carrying value of exploration and evaluation assets

Assets or cash-generating units (“CGUs”) are evaluated at each reporting date to determine whether there are any indications of impairment. The Company considers both internal and external sources of information when making the assessment of whether there are indications of impairment for the Company’s exploration and evaluation assets.

Significant judgment is required when determining whether facts and circumstances suggest that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The retention of regulatory permits and licenses, the Company’s ability to obtain financing for exploration and development activities and its future plans on the exploration and evaluation assets, current and future metal prices, and market sentiment are all factors considered by the Company.

In respect of the carrying value of exploration and evaluation assets recorded on the consolidated statements of financial position, management has determined that it continues to be appropriately recorded, as there are no indications that the value of the assets have declined more than its carrying amount.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

Exploration and evaluations assets

The Company may hold interests in mineral property interests in various forms, including prospecting licenses, exploration and exploitation concessions, mineral leases and surface rights, and property options. Option payments are recorded as property costs or recoveries when the payments are made or received. The Company capitalizes all acquisition costs and direct exploration expenditures on mineral properties in which it has a continuing interest. Mineral property interest acquisition costs are recorded at historical cost. Exploration and evaluation expenditures incurred on properties prior to obtaining legal rights to explore the specific area are charged to operations as incurred.

The carrying values of exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The carrying value of the exploration and evaluation asset is reviewed for indications of impairment at each reporting date. When impairment indicators exist, the asset’s recoverable amount is estimated. If it is determined that the estimated recoverable amount is less than the carrying value of an asset, then a write-down is made with a charge to operations.

An impairment loss is reversed if there is indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized.

Mining exploration tax credits for certain exploration expenditures, including the British Columbia mining exploration tax credit (“BC METC”), are treated as a reduction of the exploration and development costs of the respective resource property. The amounts are recorded in the year received due to uncertainty in collectability.

Income taxes

Current income tax:

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax:

Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Rehabilitation provisions

The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The Company records the present value of the estimated costs of legal and constructive obligations required to restore the exploration sites in the period in which the obligation is determined. The nature of the rehabilitation activities includes restoration, reclamation and re-vegetation of the affected exploration sites.

The rehabilitation provision generally arises when the environmental disturbance is subject to government laws and regulations. When the liability is recognized, the present value of the estimated costs is capitalized by increasing the carrying amount of the related mineral property. Over time, the discounted liability is increased for the changes in present value based on current market discount rates and liability specific risks and the change is recorded to profit and loss. Additional environmental disturbances or changes in rehabilitation costs will be recognized as additions to the corresponding assets and rehabilitation liability in the period in which they occur. As at September 30, 2023 and 2022, management is not aware of any reportable rehabilitation provisions.

Equity instruments

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares are classified as equity instruments. Common shares issued for consideration other than cash are valued at the fair value of the assets received or the services rendered. If the fair value of the assets received or services rendered cannot be reliably measured, common shares issued for consideration will be valued at their fair value on the date of issuance. Where the Company issued common shares and warrants together as units, value is allocated first to share capital based on the market value of common shares on the date the units are priced, with any residual value from the proceeds being allocated to the warrants. The value of expired and unexercised warrants remains in reserves.

Stock-based compensation

The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital.

In situations where equity instruments are issued to non-employees the transaction is measured at fair value of the goods or services received. If value of goods or services received cannot be accurately determined, the transaction is measured at the fair value of the stock-based compensation.

All equity-settled share-based payments are reflected in reserves until exercised. Upon exercise, shares are issued from treasury and the amount reflected in reserves is credited to share capital along with any consideration paid.

Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest, except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense. On expiration of options, the previously recognized amount is left in the reserves.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments

Financial assets

Initial recognition and measurement

A financial asset is measured initially at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost – A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment allowance if the financial assets are held within a business whose objective is to hold financial assets to collect contractual cash flows; and the terms of the financial assets must provide on specified dates cash flows solely through the collection of principal and interest. The Company’s amounts receivable and reclamation deposit are classified as measured at amortized cost.

Fair value through profit or loss (“FVTPL”) – Financial assets subsequently measured at fair value through profit or loss are carried in the consolidated statement of financial position at fair value with changes in fair value therein, recognized in profit or loss. The Company classifies cash as fair value through profit or loss.

Fair value through other comprehensive income (“FVTOCI”) – Financial assets subsequently measured at fair value through other comprehensive income are recognized initially at fair value less transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income remain within accumulated other comprehensive income when the financial instrument is derecognized or its fair value substantially decreases. The Company does not have any financial assets measured at FVTOCI.

Derecognition of financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss.

Financial liabilities

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable. The Company’s financial liabilities include accounts payable and accrued liabilities and is classified as amortized cost.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (continued)

Offsetting financial assets and liabilities

Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Company has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

Fair value hierarchy

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 - Valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company’s financial instruments classified as Level 1 in the fair value hierarchy is cash.

Loss per share

Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the period. The diluted loss per share are calculated based on the weighted average number of common shares outstanding during the period, plus the effects of the dilutive common share equivalents. This method requires that the dilutive effect of outstanding options and warrants issued be calculated using the treasury stock method. This method assumes that all common share equivalents have been exercised at the beginning of the period (or at the time of issuance, if later), and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of common shares during the period.

Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Asset acquisition

Management determines whether assets acquired and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Transactions that do not constitute a business combination are accounted for as an asset acquisition, whereby the cost of the acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the assets acquired and liabilities assumed are assigned a carrying amount based on their relative fair values. No goodwill is recognized on acquisitions that represent the purchase of assets.

New accounting standards issued but not yet effective

The following accounting standards and amendments are effective for future periods. The Company is in the process of assessing the impacts of the adoption of these standards and amendments in the Company’s consolidated financial statements.

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date.

These amendments are effective for reporting periods beginning on or after January 1, 2024.

Amendments to IAS 8 – Definition of Accounting Estimates

These amendments clarify how companies distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates. The distinction between the two is important because changes in accounting policies are applied retrospectively, whereas changes in accounting estimates are applied prospectively. Further, the amendments clarify that accounting estimates are monetary amounts in the financial statements subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy.

These amendments are effective for reporting periods beginning on or after January 1, 2023.

Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies

These amendments continue the IASB's clarifications on applying the concept of materiality. These amendments help companies provide useful accounting policy disclosures, and they include: requiring companies to disclose their material accounting policies instead of their significant accounting policies; clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and do not need to be disclosed; and clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material. The IASB also amended IFRS Practice Statement 2 to include guidance and examples on applying materiality to accounting policy disclosures.

These amendments are effective for reporting periods beginning on or after January 1, 2023.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

4. EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation assets comprise the following accumulated expenditures:

	Rex	Kalum	Total
	Property	Project
	$	$	$
Balance at September 30, 2021	-	326,750	326,750
Acquisition costs	-	75,000	75,000
Administration	-	7,000	7,000
Camp costs	-	39,737	39,737
Geological	-	5,642	5,642
Balance at September 30, 2022	-	454,129	454,129
Acquisition costs	275,000	-	275,000
Camp costs	-	15,186	15,186
Geological	-	68,569	68,569
Reports	-	25,730	25,730
BC METC received	-	(13,750)	(13,750)
Impairment	-	(549,864)	(549,864)
Balance at September 30, 2023	275,000	-	275,000

Kalum Project

On August 12, 2020, as amended November 4, 2020, November 23, 2020, December 16, 2020, March 16, 2021, April 22, 2021, October 4, 2021, March 17, 2022, and December 21, 2022, the Company entered into a purchase option agreement (“Option Agreement” or “Option”) with Eagle Plains Resources Ltd. (“Eagle Plains”), whereby the Company was granted exclusive rights to acquire 60% of Eagle Plain’s 4 mining claims located in the Terrance area of British Columbia, Canada.

In order to exercise the option, the Company must meet the following commitments:

• a. Pay to Eagle Plains an aggregate of $250,000 as follows: i. $10,000 within 10 days after execution of a letter of intent (paid);

• ii. $15,000 by 10 days after execution of the Option Agreement (paid);

• iii. $25,000 by May 31, 2021 (paid);

• iv. $50,000 by March 31, 2022 (paid);

• v. $75,000 by June 30, 2023; and vi. $75,000 in cash or shares, at the discretion of the Company, by December 31, 2023.

• b. Issue to Eagle Plains an aggregate of 1,100,000 common shares of the Company as follows:

• i. 200,000 shares 3 days after TSX Venture has provided notice of approval of the listing of the Company’s shares (issued);

• ii. 200,000 shares by May 31, 2021 (issued);

• iii. 200,000 shares by March 31, 2022 (issued);

• iv. 300,000 shares by June 30, 2023; and

• v. 200,000 shares by December 31, 2023.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

4. EXPLORATION AND EVALUATION ASSETS (Continued)

Kalum Project (Continued)

• c. Incur no less than $3,000,000 of exploration expenditures as follows:

• i. $100,000 by December 31, 2020 (completed); ii. $150,000 by December 31, 2022 (completed); iii. $1,000,000 by December 31, 2023; and iv. $1,750,000 by December 31, 2024.

If the Company exercises the Option and acquires 60% rights, title and interest in the claims, Eagle Plains will be entitled to 2.0% net smelter royalty (one-half of which may be repurchased for $1,000,000) and both parties will form a joint venture for the purpose of continued exploration and, if warranted, development of the property.

During the year ended September 30, 2023, the Company decided not to pursue the Kalum Project in order to focus on the Rex Property, and wrote off capitalized expenditures of $549,864.

Rex Property

On June 19, 2023, the Company closed an acquisition transaction to acquire for all the issued and outstanding shares of 1414447 B.C. Ltd., an arm's length private B.C. company that holds an undivided 100% interest in eight contiguous mineral claims located near Port Alberni, British Columbia, generally known as the Rex Property.

The Company acquired 1414447 B.C. Ltd. for the sole purpose of acquiring the Rex Property. Based on the number of shares acquired and the Company’s decision making power, the Company was determined to be the acquirer. The acquisition was determined to be an asset acquisition because 1414447 B.C. Ltd. did not meet the definition of a business. Upon closing of the transaction, 1414447 B.C. Ltd. became a subsidiary of the Company. The total consideration paid totaled $275,000 and has been allocated to the assets and liabilities acquired based on their estimated fair values on June 19, 2023 as follows:

Consideration: Shares issued Deferred cash payable included in accounts payable and accrued liabilities Cash paid Allocated: Rex Property Accounts payable Excess allocated to the Rex Property	Total $
	100,000 115,000 60,000 1 (1)
	275,000

The Company issued 1,000,000 common shares with a fair market value price of $0.10 per share. The deferred cash payable of $115,000 was due on December 18, 2023, and the Company is negotiating with the vendor to extend the payment date.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

5. SHARE CAPITAL

Authorized:

Unlimited number of fully paid Class A common shares without par value and with voting rights (“Common shares”). Unlimited number of Class B Preferred Shares without par value – none issued.

Issued:

For the year ended September 30, 2023

On June 19, 2023, the Company issued 1,000,000 common shares with a fair market value price of $0.10 per share for acquisition of 1414447 B.C. Ltd (Note 4).

For the year ended September 30, 2022

On November 3, 2021, the Company completed a private placement of 1,680,000 Units at a price of $0.20 per Unit for gross proceeds of $336,000, with $235,200 assigned to common shares and $100,800 assigned to warrants reserves using the residual method. Each Unit comprised of one common share and one share purchase warrant exercisable for twenty-four months at $0.25 per share. No finder fees were paid in connection with this private placement.

On March 31, 2022, the Company issued 200,000 common shares with a fair value of $25,000 in accordance with the Kalum Project Option Agreement (Note 4).

During the year ended September 30, 2022, the Company issued 400,000 common shares for proceeds of $80,000 from the exercise of stock options and transferred $32,147 from reserves.

Escrow shares

On December 22, 2020, the Company executed an escrow agreement with an escrow agent and a certain security holders where they have agreed to deposit 2,250,000 common shares in escrow. Under the escrow agreement, 25% of the shares were released upon completion of the IPO and an additional 15% will be released on each of the dates which are 6 months, 12 months, 18 months, 24 months, 30 months, and 36 months following the initial release. As at September 30, 2023, the Company had 750,000 (2022 – 1,500,000) shares held in escrow.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

5. SHARE CAPITAL (Continued)

Stock options

On October 5, 2020, the Company adopted the Incentive Stock Option Plan (the “Plan”). The shares issuable under the Plan are as follows:

• The term of any options granted may not exceed 10 years from the date of grant;

• The aggregate number of shares (“Optioned Shares”) that may be issuable pursuant to options granted under the

• Plan will not exceed 10% of the number of issued shares of the Company at the time of the granting of options under the Plan;

• No more than 5% of the issued shares of the Company, calculated at the date the option is granted, may be granted

• to any one Optionee (as hereinafter defined) in any 12-month period;

• No more than 2% of the issued shares of the Company, calculated at the date the option is granted, may be granted

• to any one Consultant in any 12-month period; and

• No more than an aggregate of 2% of the issued shares of the Company, calculated at the date the option is granted,

• may be granted to all Employees and/or Consultants conducting "Investor Relations Activities" (as that term is defined in TSX Venture Exchange Policy 1.1) in any 12-month period.

A continuity schedule of stock options is as follows:

	Number of	Weighted average
	options	exerciseprice($)
Options outstanding, September 30, 2021	1,075,000	0.20
Exercised	*(400,000)	0.20
Options outstanding, September 30, 2022	675,000	0.20
Expired	(675,000)	0.20
Options outstanding, September 30, 2023	-	-

• The share price on the date of exercise was $0.14.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

5. SHARE CAPITAL (Continued)

Warrants

A continuity schedule of share purchase warrants is as follows:

			Number of	Weighted average
			warrants	exerciseprice($)
Warrants outstanding, September	30,	2021	276,000	0.15
Issued			1,680,000	0.25
Warrants outstanding, September	30,	2022	1,956,000	0.24
Expired			(276,000)	0.15
Warrants outstanding, September	**30, **	2023	1,680,000	0.25

Details of outstanding warrants at September 30, 2023 are as follows:

Exercise Price	Expiration Date	Number of warrants
$0.25	November 3, 2023	1,680,000

As at September 30, 2023, the weighted average remaining contractual life of the warrants was 0.09 years. Subsequent to September 30, 2023, 1,680,000 warrants expired on November 3, 2023 unexercised.

6. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. The Company has identified its directors and officers as its key management personnel.

During the year ended September 30, 2023, $42,000 (2022 - $93,500) was paid or accrued to the Chief Executive Officer for consulting fees, which included a bonus of $Nil (2022 - $65,000).

During the year ended September 30, 2023, $Nil (2022 - $32,500) was paid to the former Chief Financial Officer for professional fees, which included a bonus payment of $Nil (2022 - $15,000).

As at September 30, 2023, $10,500 (2022 - $Nil) was payable to related parties. The amounts payable are included in accounts payable and accrued liabilities, and are unsecured, non-interest bearing and payable on demand.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

7. FINANCIAL AND CAPITAL RISK MANAGEMENT

			September 30,	September 30,
	Level	Ref.	2023	2022
			$	$
Other financial assets	1	a	43,824	290,681

a. Comprises cash, amounts receivable excluding refundable goods and services tax and reclamation deposit

The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies.

The fair values of the Company’s financial instruments are not materially different from their carrying values due to the shortterm maturity nature of the financial instruments.

Management of financial risk

The Company’s financial instruments are exposed to certain financial risks, which include the following:

Credit risk

Credit risk is the risk of loss due to the counterparty's inability to meet its obligations. The Company’s exposure to credit risk is on its cash and amounts receivable. Risk associated with cash is managed through the use of major banks which are high credit quality financial institutions as determined by rating agencies. Amounts receivable are due from the Canada Revenue Agency and a third party vendor which management believes there to be a low risk of default. The Company is not exposed to significant credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations when they become due. The Company will require financing from lenders, shareholders and other investors to generate sufficient capital to meet its short term operating requirements. The Company’s cash is held in corporate bank accounts available on demand. The Company’s accounts payable and accrued liabilities are due within 90 days of September 30, 2023. Liquidity risk has been assessed as high.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and price risk.

Currency risk

The Company may be exposed to foreign currency risk on fluctuations related to cash, and accounts payable and accrued liabilities that are denominated in a foreign currency. As at September 30, 2023, the Company did not have any accounts in foreign currencies and considers foreign currency risk insignificant.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk.

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

7. FINANCIAL AND CAPITAL RISK MANAGEMENT (Continued)

Price risk

The Company is exposed to price risk with respect to equity prices. Price risk as it relates to the Company is defined as the potential adverse impact on the Company’s ability to raise financing due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

Capital management

The Company's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of components of shareholders' equity. There were no changes in the Company's approach to capital management during the period. The Company is actively looking to acquire an interest in a business or assets, and this involves a high degree of risk. The Company has not determined whether it will be successful in its endeavors and does not generate cash flows from operations. The Company’s primary source of funds comes from the issuance of common shares. The Company does not use other sources of financing that require fixed payments of interest and principal due to lack of cash flow from current operations and is not subject to any externally imposed capital requirements.

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern. Capital requirements are driven by the Company’s general operations. To effectively manage the Company’s capital requirements, the Company monitors expenses and overhead to ensure costs and commitments are being paid. There have been no changes to the Company’s approach to capital management during the year ended September 30, 2023.

8. SEGMENTED INFORMATION

The Company operates in one business segment being the exploration and development of resource properties. All assets of the Company are located in Canada.

9. COMMITMENTS

As at September 30, 2023, the Company had an obligation to pay $115,000 for the acquisition of 1414477 B.C. Ltd. by December 18, 2023, and the Company is negotiating with the vendor to extend the payment date (Note 4).

10. DEFERRED INCOME TAX

A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:

	September 30,	September 30,
	2023	2022
Net loss for theyear	$(784,117)	$(252,974)
Statutory tax rate	27%	27%
Expected income taxes (recovery) at the statutory tax
rate	(212,000)	(68,000)
Change in tax assets not recognized	212,000	68,000
Income tax expense(recovery)	$ -	$-

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REX RESOURCES CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 (Expressed in Canadian Dollars)

10. DEFERRED INCOME TAX (Continued)

The Company has the following deductible temporary differences for which no deferred tax asset has been recognized:

	Expiry	September 30,	Expiry	September 30,
		2023		2022
Temporary differences:		$		$
Non-capital loss carry forwards	2039-2043	739,000	2039-2042	490,000
Mineral properties	None	552,000	None	-
Share issuance costs	2024-2026	41,000	2023-2026	54,000
		1,332,000		544,000

Due to the uncertainty of realization of these loss carry-forwards, the tax benefit is not recognized in the consolidated financial statements.

As of September 30, 2023, the Company has unrecognized deferred tax liability of $275,000 (2022 - $Nil) due to temporary differences arising on the initial recognition of the acquisition of all of the issued and outstanding shares of 1414447 B.C. Ltd.

24