Rex Resources Corp. — Interim / Quarterly Report 2023

Jun 1, 2023

Rex Resources Corp.

Condensed Interim Financial Statements

For the Six Months Ended March 31, 2023 (unaudited)

Table of Contents

Notice of No Auditor Review of the Condensed Interim Financial Statements	3
CondensedInterim Statementsof Financial Position	4
Condensed Interim Statementsof Changes in Equity	5
Condensed Interim Statementsof Comprehensive Loss	6
Condensed Interim Statementsof Cash Flow	7
Notes to the Condensed Interim Financial Statements	8-16

NOTICE OF NO AUDITOR REVIEW OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

REX RESOURCES CORP. CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars)

		March31,	September 30,
As at	Note	2023	2022
		(unaudited)	(audited)
ASSETS		$	$
Current assets
Cash		96,372	278,881
Sales tax receivable		25,744	17,139
Prepaid expenses		45,335	-
		167,454	296,020
Reclamation deposit		11,800	11,800
Long-term prepaids		-	69,929
Exploration and evaluation assets	4	563,614	454,129
TOTAL ASSETS		742,865	831,878
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	6	24,474	39,835
SHAREHOLDERS' EQUITY
Share capital	5	1,155,601	1,155,601
Reserves	5	180,048	180,048
Accumulated deficit		(617,258)	(543,606)
		718,391	792,043
TOTAL LIABILITIES ANDSHAREHOLDERS' EQUITY		742,865	831,878

The accompanying notes are integral to these condensed interim financial statements.

Approved on Behalf of the Board of Directors on June 1, 2023:

/s/ Craig Taylor /s/ Anthony Zelen

Director Director

REX RESOURCES CORP. CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars - Unaudited)

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 1,680,000 336,000 - - 336,000 Issuance of shares for mineral property (note 4) 200,000 30,000 - - 30,000 Stock option exercise (note 5) 400,000 112,147 (32,147) - 80,000 Net loss for the period - - - (209,054) (209,054) Balance, March 31, 2022 13,469,285 1,263,953 79,248 (499,686) 843,515 Balance, September 30, 2022 13,469,285 1,155,601 180,048 (543,606) 792,043 Net loss for the period - - - (73,652) (73,652) Balance, March 31, 2023 13,469,285 1,155,601 180,048 (617,258) 718,391

The accompanying notes are integral to these condensed interim financial statements.

REX RESOURCES CORP. CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in Canadian Dollars - Unaudited)

		For the three months	For the three months	For the six months	For the six months
		ended March 31,	ended March 31,	ended March 31,	ended March 31,
	Note	2023	2023	2022	2022
		$	$	$	$
EXPENSES
Consulting	6	7,000	91,125	7,000	112,125
Marketing		-	8,395	-	8,395
Office and administrative		9,125	138	11,855	22,099
Professional	6	31,639	20,286	31,639	30,830
Regulatory		22,998	31,994	23,158	35,605
NET LOSS AND COMPREHENSIVE LOSS FOR THE					(209,054)
PERIOD		(70,763)	(151,938)	(73,652)
Weighted Average Number of Shares Outstanding		13,469,285	13,144,841	13,469,285	12,700,933
Basic and DilutedLoss Per Share		(0.01)	(0.01)	(0.01)	(0.02)

The accompanying notes are integral to these condensed interim financial statements.

REX RESOURCES CORP. CONDENSED INTERIM STATEMENTS OF CASH FLOW

(Expressed in Canadian Dollars - Unaudited)

	For thesixmonths	For thesixmonths
	ended March 31,	ended March 31,
	2023	2022
	$	$
CASH FLOWS (USED IN) FROMOPERATING ACTIVITIES
Net loss for the period	(73,652)	(209,054)
Changes in non-cash working capital items:Sales tax receivable	(8,604)	(1,975)
Prepaid	(45,335)	8,879
Accounts payable and accrued liabilities	(90,928)	(14,371)
	(218,519)	(216,521)
CASH FLOWS USED IN INVESTINGACTIVITIES
Exploration and evaluation acquisition	-	(50,018)
Prepaid –long term	69,929	-
Exploration and evaluation expenditures	(33,919)	(20,948)
	36,010	(70,966)
CASH FLOWS FROM (USED IN) FINANCINGACTIVITIES
Proceeds from private placements	-	336,000
Option exercises	-	80,000
	-	416,000
Netincrease in cash	(182,509)	128,513
Cash, beginning of the period	278,881	267,707
Cash, end of theperiod	96,372	396,220
Supplemental information:
Interest paid	-	-
Income taxes paid	-	-
Shares issued for mineral property		30,000

The accompanying notes are integral to these condensed interim financial statements.

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 1M3.

These 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 six months ended March 31, 2023, the Company had a net loss of $73,652 (March 31, 2022 - $209,054 net loss), and as of that date, an accumulated deficit of $617,258 (September 30, 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 the successful exercise of its mineral property option agreement, results from its mineral property exploration activities and its ability to attain profitable operations and generate funds from and/or raise equity capital or borrowings sufficient to meet current and future obligations and ongoing operating losses. 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 financial statements do not include any adjustments that might result from this uncertainty. Such adjustments could be material.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. The impact of the COVID-19 pandemic has major implications for all economic activities, including that of the Company. At this time, it is not possible to predict the duration or magnitude of the adverse results of the outbreak; however, management believes that the impact to the Company will be limited mainly to the curtailment of travel and access to mineral projects due to travel and social distancing restrictions as well as its ability to raise financing. There has been no material disruption to the Company's current operations to date. Access to the Company's project located in British Columbia, Canada has not been prohibited.

2. BASIS OF PRESENTATION

Statement of compliance

The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by the IASB. The same accounting policies and methods of computation are followed in these unaudited condensed interim financial statements as compared with the most recent annual financial statements as at and for the year ended September 30, 2022. Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending September 30, 2023 could result in the restatement of these condensed interim financial statements.

2. BASIS OF PRESENTATION (Continued)

Significant estimates and judgments

The preparation of 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 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.

3. NEW ACCOUNTING POLICIES

New accounting standards issued but not yet effective

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, 2023.

4. EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation assets comprise the following accumulated expenditures:

	Kalum
	Project
	$
Balanceat September 30, 2021	326,750
Acquisition costs	75,000
Administration	7,000
Camp costs	39,737
Geological	5,642
Balance at September 30, 2022	454,129
Camp costs	15,186
Geological	68,569
Reports	25,730
Balance at March 31, 2023	563,614

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.

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.

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 period ended March 31, 2023

No activity.

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.

5. SHARE CAPITAL (Continued)

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 25% of the shares will be released every six months following listing. As at March 31, 2023, the Company had no (September 30, 2022 – 1,500,000) shares held in escrow.

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.

On August 16, 2021, the Company granted 1,075,000 stock options to directors, officers and consultants with an exercise price of $0.20 per common share for two years from the date of grant. These options had a fair value of $86,395 calculated using the Black Scholes model with the following inputs: i) exercise price: $0.20; ii) share price: $0.20; iii) term: 2 years; iv) volatility: 114%; v) discount rate: 0.41%. Of the fair value calculation, approximately $70,322 has been attributed to related parties of the Company.

The volatility is based on historical observations of comparable companies. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options' expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. The Company has not paid and does not anticipate paying dividends on its common stock. Companies are required to utilize an estimated forfeiture rate when calculating the expense for the reporting period. Based on the best estimate, management applied the estimated forfeiture rate of nil% in determining the expense recorded.

5. SHARE CAPITAL (Continued)

Stock Options (Continued)

A continuity schedule of stock options is as follows:

	Number of	Weighted average
	options	exercise price ($)
Options outstanding,September 30, 2021	1,075,000	0.20
Exercised	(400,000)	0.20
Options outstanding,September 30, 2022	675,000	0.20
Options outstanding,March 31, 2023	675,000	0.20

Details of outstanding and exercisable stock options at March 31, 2023 are as follows:

Exercise Price	Expiration Date	Number of options
$0.20	August 16, 2023	675,000

As at March 31, 2023, the weighted average remaining contractual life of the stock options was 0.37 years.

Warrants

A continuity schedule of share purchase warrants is as follows:

	Number of	Weighted average
	warrants	exercise price ($)
Warrantsoutstanding,September 30, 2021	276,000	0.15
Issued	1,680,000	0.25
Warrantsoutstanding,September 30, 2022	1,956,000	0.24
Warrantsoutstanding,March 31, 2023	1,956,000	0.24

Details of outstanding warrants at March 31, 2023 are as follows:

Exercise Price	Expiration Date	Number of warrants
$0.15	June2, 2023	276,000
$0.25	November3, 2023	1,680,000
		1,956,000

As at March 31, 2023, the weighted average remaining contractual life of the warrants was 0.53 years.

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 six months ended March 31, 2023, $7,000 (December 31, 2021 - $28,000) was paid to the Chief Executive Officer for consulting fees.

During the six months ended March 31, 2023, $Nil (December 31, 2021 - $5,000) was paid to the former Chief Financial Officer for professional fees.

7. FINANCIAL AND CAPITAL RISK MANAGEMENT

			March 31,	September 30,
	Level	Ref.	2023	2022
			$	$
Otherfinancial assets	1	a	96,372	278,881

a. Comprises cash

The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies; however, considerable judgment is required to develop these estimates. The fair values of the Company's financial instruments are not materially different from their carrying values due to the short-term 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. Risk associated with cash is managed through the use of major banks which are high credit quality financial institutions as determined by rating agencies. The Company is not exposed to significant credit risk.

7. FINANCIAL AND CAPITAL RISK MANAGEMENT (Continued)

Management of Financial Risk (Continued)

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations when they become due. The Company ensures that there is sufficient capital in order to meet short-term operating requirements, after taking into account the Company's holdings of cash. 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 March 31, 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 is subject to normal market risks including fluctuations in foreign exchange rates and interest rates. While the Company manages its operations in order to minimize exposure to these risks, the Company has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure.

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.

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 period ended March 31, 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 March 31, 2023, the Company has certain commitments and obligations related to its mineral property in order to exercise the option (Note 4).