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Totec Resources Ltd. — Interim / Quarterly Report 2025
Mar 3, 2025
48391_rns_2025-03-03_374ce1a7-a929-4650-a3e3-90c48bb28323.pdf
Interim / Quarterly Report
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TOTEC RESOURCES LTD.
(A Capital Pool Company)
Condensed Interim Financial Statements
(Expressed in Canadian Dollars)
For the nine months ended December 31, 2024
(UNAUDITED)
NOTICE OF NO AUDITOR REVIEW OF 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 condensed 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 condensed financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor Davidson & Company LLP 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 condensed financial statements by an entity's auditor.
March 3, 2025
TOTEC RESOURCES LTD.
Interim Statement of Financial Position
(Expressed in Canadian dollars)
(Unaudited)
As at
| December 31, 2024 | March 31, 2024 | |
|---|---|---|
| ASSETS | ||
| Current | ||
| Cash and cash equivalents (Note 5) | $ 193,269 | $ 226,852 |
| Prepaid expenses | 2,625 | - |
| Receivables | 3,421 | 9,039 |
| 199,315 | 235,891 | |
| $ 199,315 | $ 235,891 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities | $ 33,044 | $ 26,073 |
| Shareholders' equity | ||
| Share capital (Note 7) | 351,604 | 351,604 |
| Reserves (Note 7d) | 37,691 | 37,691 |
| Deficit | (223,024) | (179,477) |
| 166,271 | 209,818 | |
| $ 199,315 | $ 235,891 |
Nature of business and continuing operations (Note 1)
Approved on Behalf of the Board on March 3, 2025:
"Deepak Varshney"
Deepak Varshney, Director
"James Walker"
James Walker, Director
The accompanying notes are an integral part of these unaudited interim financial statements.
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TOTEC RESOURCES LTD.
Interim Statement of Loss and Comprehensive Loss
(Expressed in Canadian dollars)
(Unaudited)
| Three months ended December 31, 2024 | Three months ended December 31, 2023 | Nine months ended December 31, 2024 | Nine months ended December 31, 2023 | |
|---|---|---|---|---|
| EXPENSES | ||||
| Office and miscellaneous | $ 1,140 | $ 5,789 | $ 3,858 | $ 18,092 |
| Professional fees (Notes 6, 9) | 3,628 | 8,745 | 22,516 | 20,408 |
| Regulatory and filing fees | - | 864 | 2,665 | 7,704 |
| Rent and administration charges | 7,500 | 7,500 | 22,500 | 15,000 |
| 12,268 | 22,898 | 51,539 | 61,204 | |
| Interest income | (1,863) | (1,346) | (7,992) | (3,268) |
| Loss and comprehensive loss for the period | $ 10,405 | $ 21,552 | $ 43,547 | $ 57,936 |
| Basic and diluted loss per common share (Note 8) | $ 0.00 | $ 0.01 | $ 0.01 | $ 0.02 |
| Weighted average number of common shares outstanding - basic and diluted (Note 8) | 3,426,000 | 3,426,000 | 3,426,000 | 3,426,000 |
The accompanying notes are an integral part of these unaudited interim financial statements.
TOTEC RESOURCES LTD.
Interim Statement of Changes in Equity
(Expressed in Canadian dollars)
(Unaudited)
| | Share Capital
(Note 7) | | | | |
| --- | --- | --- | --- | --- | --- |
| | Shares | Amount | Reserves | Deficit | Total Shareholders’ Equity |
| Balance, March 31, 2023 | 6,126,000 | $ 351,604 | $ 37,691 | $ (96,371) | $ 292,924 |
| Loss and comprehensive loss for the period | - | - | - | (57,936) | (57,936) |
| Balance, December 31, 2023 | 6,126,000 | $ 351,604 | $ 37,691 | $ (154,307) | $ 234,988 |
| Balance, March 31, 2024 | 6,126,000 | $ 351,604 | $ 37,691 | $ (179,477) | $ 209,818 |
| Loss and comprehensive loss for the period | - | - | - | (43,547) | (43,547) |
| Balance, December 31, 2024 | 6,126,000 | $ 351,604 | $ 37,691 | $ (223,024) | $ 166,271 |
The accompanying notes are an integral part of these unaudited interim financial statements.
TOTEC RESOURCES LTD.
Interim Statement of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
| Nine months ended December 31, 2024 | Nine months ended December 31, 2023 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss and comprehensive loss for the period | $ (43,547) | $ (57,936) |
| Changes in non-cash working capital items: | ||
| (Increase) decrease in accounts receivable | 5,618 | (2,956) |
| (Increase) in prepaid expenses | (2,625) | (2,625) |
| Increase (decrease) in accounts payable and accruals | 6,971 | (55,784) |
| Net cash and cash equivalents used in operating activities | (33,583) | (119,301) |
| Decrease in cash and cash equivalents for the period | (33,583) | (119,301) |
| Cash and cash equivalents, beginning of period | 226,852 | 353,879 |
| Cash and cash equivalents, end of period | $ 193,269 | $ 234,578 |
| Cash paid during the period for interest | $ - | $ - |
| Cash paid during the period for income taxes | $ - | $ - |
The accompanying notes are an integral part of these unaudited interim financial statements.
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TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
1. NATURE OF BUSINESS AND CONTINUING OPERATIONS
TOTEC RESOURCES LTD. (the "Company") was incorporated on January 25, 2022, under the laws of British Columbia. The Company was classified as a Capital Pool Company ("CPC") as defined in the TSX Venture Exchange ("Exchange") Policy 2.4 on March 10, 2023. The head office and registered records office is located at Bentall 5, 550 Burrard Street, Suite 1008, Vancouver, BC, V6C 2B5.
On March 10, 2023, the Company completed its initial public offering (the "Offering") and issued 3,426,000 common shares for gross proceeds of $342,600 pursuant to the Offering. The common shares commenced trading on the Exchange on March 14, 2023, under the trading symbol "TOTC.P".
Since incorporation on January 25, 2022, the Company has had no active business operations. As a CPC, the Company's business objective will be to identify and evaluate assets or businesses with a view to potential acquisition or participation by completing a Qualifying Transaction ("QT"), as defined in Exchange Policy 2.4 subject, in certain cases, to shareholder approval and acceptance by the Exchange.
As a CPC, the proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to $3,000 per month may be used for reasonable general and administrative expenses of the Company. These restrictions will apply until completion of a QT by the Company as defined under the policies of the Exchange.
The Company has a loss of $10,405 for the three months December 31, 2024, which resulted in an accumulated deficit of $223,024 as at December 31, 2024. The Company's ability to continue its operations is dependent upon obtaining additional financing sufficient to cover its operating costs and finance any business acquisition. The Company will require additional financing to accomplish its long-term strategic objectives. All the preceding indicates the existence of a material uncertainty that may cast substantial doubt about the Company's ability to continue as a going concern.
There are many external factors that can adversely affect general workforces, economies and financial markets globally. Examples include but are not limited to the inflationary pressures, rising interest rates, the global financial climate and the conflicts in Ukraine and the Middle East are affecting current economic conditions and increasing economic uncertainty, which may impact the Company's operating performance, financial position and the Company's ability to raise funds at this time. So far, the Company has had minimal or no impact due to these issues.
These unaudited interim financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of
TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
business and at amounts different from those reflected in the accompanying unaudited interim financial statement.
2. STATEMENT OF COMPLIANCE
These unaudited interim financial statements have been prepared in accordance IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB"). These unaudited interim financial statements follow the same accounting policies and methods of application as the Company's March 31, 2024 annual audited financial statements however do not include all financial information required for full annual financial statement presentation and should be read in conjunction with the annual financial statements for the year ended March 31, 2024.
3. BASIS OF PRESENTATION
These unaudited interim financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. The financial statements are presented in Canadian dollars, which is also the Company's functional currency. In addition, the financial statements have been prepared using the accrual basis of accounting except for cash flow information. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of unaudited interim financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, and expenses. Estimates and associated assumptions applied in determining asset or liability values are based on historical experience and various other factors including other sources that are believed to be reasonable under the circumstances but are not necessarily readily apparent or recognizable at the time such estimate or assumption is made. Actual results may differ from these estimates.
Estimates and underlying assumptions used in determining asset and liability values are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Information about critical accounting estimates and judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the financial statements are discussed below:
TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
Judgments
Going Concern
The Company's management has assessed the Company's ability to continue as a going concern and is satisfied that the Company has the resources to continue in business for the foreseeable future. The factors considered by management are disclosed in Note 1.
Estimates
Valuation of share-based payments
The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments and warrants recorded as marketable securities. Option pricing models require the input of subjective assumptions including expected price volatility, interest rates and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and Company's earnings and equity reserves.
Deferred tax assets and liabilities
Deferred tax assets are recognized in respect of tax losses and other temporary differences to the extent it is probable that taxable income will be available against which the losses can be utilized. Judgment is required to determine the amount of deferred tax assets that can be recognized based upon the likely timing and level of future taxable income together with future tax planning strategies.
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents of $193,269 (March 31, 2024 - $226,852) consist of:
| Nine months ended December 31, 2024 | Year ended March 31,2024 | |
|---|---|---|
| Bank balances | $ 4,162 | $ 14,199 |
| Short term deposits | 189,107 | 212,653 |
6. RELATED PARTY TRANSACTIONS
The aggregate amount of expenditures paid or payable to key management personnel consisting of directors, former directors or companies with common directors was as follows:
TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
| Name of the Key management personnel | Company's Name | Nature of Transaction | Nine months ended December 31, 2024 | Nine months ended December 31, 2023 |
|---|---|---|---|---|
| Khalid Naeem, CFO | Aterna Advisors Inc. | Accounting fees | $ 9,500 | $ 10,000 |
Accounts payable and accrued liabilities included $6,430 (2023: $3,005) owed to directors and officers of the Company for operating expenses paid on behalf of the Company during the nine months ended December 31, 2024.
7. SHARE CAPITAL
(a) Authorized
Unlimited number of common and preferred shares without par value.
(b) Issued and outstanding
As at December 31, 2024 the issued share capital was comprised of 6,126,000 common shares.
During the year ended March 31, 2024, the issued share capital was comprised of 6,126,000 common shares.
(c) Escrowed shares
As at December 31, 2024, 2,700,000 common shares issued at $0.05 per share are held in escrow pursuant to the requirements of the Exchange. Twenty five percent of the escrowed common shares will be released from escrow on the issuance of the Final Exchange Bulletin (as defined in the policies of the Exchange) (the "Initial Release") and an additional twenty five percent will be released on each of the dates which are six, twelve and eighteen months following the Initial Release.
All common shares acquired on exercise of stock options granted to directors and officers of the Company prior to completion of the QT, must also be deposited in escrow until the Final Exchange Bulletin is issued.
All common shares acquired in the secondary market prior to completion of a QT by a Control Person (as defined in the policies of the Exchange), are required to be deposited in escrow. Subject to certain permitted exemptions, all securities of the Company held by principals of the resulting issuer will also be subject to escrow.
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TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
(d) Stock options
The Company maintains a Stock Option Plan (the "Plan") under which it is authorized to grant stock options to directors, officers, employees, technical consultants of the Company and Eligible Charitable Organizations. The Stock Option Plan remains subject to the approval of the Exchange. The maximum numbers of shares that may be reserved for issuance under the Stock Option Plan is limited to 10% of the issued common shares of the Company at any time. The vesting period for all options is at the discretion of the Board of Directors. The exercise price will be set by the Board of Directors at the time of grant and cannot be less than the discounted market price of the Company's common shares.
The Stock Option Plan provides that the number of common shares that may be reserved for the issuance to any one individual upon exercise of all stock options held by such an individual may not exceed 5% of the issued common shares, if the individual is a director or officer, or 2% of the issued common shares, if the individual is a consultant or engaged in providing investor relations services, on a yearly basis or 1% of the issued common shares, if the individual or entity is an eligible charitable organization. The term of the stock options will expire not later than 12 months after the optionee ceases to be a director, officer, or technical consultant of the Company, subject to any earlier expiry date of such stock option. All common shares acquired on exercise of stock options granted to directors and officers prior to the completion of a QT must be deposited in escrow until the final exchange bulletin relating to a QT is issued.
| Number | Weighted Average Exercise Price | |
|---|---|---|
| Outstanding, March 31, 2023 | 602,600 | $ 0.08 |
| Outstanding, March 31, 2024 and December 31, 2024 | 602,600 | $ 0.08 |
The following stock options were outstanding as at December 31, 2024:
| Number of options outstanding | Exercise Price | Expiry Date | Remaining contractual life (years) | |
|---|---|---|---|---|
| Director's Stock Options | 260,000 | $0.05 | June 13, 2032 | 7.45 |
| Agents' Stock Options | 342,600 | $0.10 | March 10, 2028 | 3.19 |
- BASIC AND DILUTED LOSS PER SHARE
The calculation of basic and diluted loss per share for the nine months ended December 31, 2024 was based on the loss attributable to common shareholders of $43,547 (2023 – $57,936) and the weighted average number of common shares outstanding of 3,426,000 (2023 – 3,426,000).
11
TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
The calculation of basic and diluted loss per share for the three months ended December 31, 2024 was based on the loss attributable to common shareholders of $10,405 (2023 – $21,552) and the weighted average number of common shares outstanding of 3,426,000 (2023 – 3,426,000).
9. PROFESSIONAL FEES
During the nine months ended December 31, 2024, the Company incurred $22,516 (2023 - $20,408) in professional fees, which consists of accounting, audit fees and legal fees.
10. MANAGEMENT OF CAPITAL
Capital is comprised of the Company's shareholders' equity and any debt that it may issue. The Company's objectives when managing capital are to maintain financial strength and to protect its ability to meet its ongoing liabilities, to continue as a going concern, to maintain creditworthiness and to maximize returns for shareholders over the long term. Protecting the ability to pay current and future liabilities includes maintaining capital above minimum regulatory levels, current financial strength rating requirements and internally determined capital guidelines and calculated risk management levels.
The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to $3,000 per month may be used for reasonable general and administrative expenses of the Company. These restrictions apply until completion of a QT by the Company as defined under the policies of the Exchange.
11. FINANCIAL INSTRUMENTS
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Market Risk
Market risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate because of changes in market prices or prevailing conditions. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk and are disclosed as follows:
(i) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company holds no financial instruments that are denominated in a currency other than Canadian dollars. As at December 31, 2024, the Company is not exposed to currency risk.
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TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in market risk. The Company's sensitivity to interest rates relative to its cash balances is currently immaterial. The Company also has no long-term debt with variable interest rates, so it has no negative exposure to changes in the market interest rate.
(iii) Price rate risk
The Company has no exposure to price risk with respect to equity prices as the Company is not listed. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market.
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets including cash and cash equivalents. The Company limits the exposure to credit risk by only investing its cash and cash equivalents with high-credit quality financial institutions. Management believes that the credit risk related to its cash and cash equivalents is negligible.
Liquidity Risk
All of the Company's financial liabilities are classified as current and are anticipated to mature within the next fiscal year. The Company intends to settle these with funds from its positive working capital position. The Company manages its liquidity risk by forecasting cash flow requirements for its planned exploration and corporate activities and anticipating investing and financing activities. The risk to the going concern assumption is outlined in Note 1.
Fair Value Measurements
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
- Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities
- Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, and
- Level 3 – Inputs that are not based on observable market date.
As at December 31, 2024, the Company's financial instruments consist of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued liabilities which are
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TOTEC RESOURCES LTD.
Notes to the Interim Financial Statements
For the nine months ended December 31, 2024
(Expressed in Canadian dollars)
(Unaudited)
classified at amortized cost. The fair value approximates at the carrying value because of the short-term nature of the instruments.