AI assistant
Totec Resources Ltd. — Management Reports 2025
Mar 3, 2025
48391_rns_2025-03-03_812dc859-ae0b-4d60-b9cf-0a0dc7bc5a8b.pdf
Management Reports
Open in viewerOpens in your device viewer
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
The effective date of this report is March 3, 2025
Management Discussion & Analysis:
Management’s discussion and analysis (“MD&A”) provides a detailed analysis of the results and financial condition of Totec Resources Ltd. (the “Company” or “Totec”) for the nine months ended December 31, 2024. The following management discussion and analysis, prepared as of March 3, 2025, should be read together with the unaudited interim financial statements for the nine months ended December 31, 2024, with the related notes attached thereto and the audited financial statements for the year ended March 31, 2024, with the related notes attached thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”). The MD&A supplements but does not form part of the financial statements. Management is responsible for the preparation of the financial statements and the MD&A for the nine months ended December 31, 2024. News releases and previous filings may be found on SEDAR+ at www.sedarplus.ca.
Description of Business:
The Company was incorporated as a private company by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act on January 25, 2022. The Company was classified as a Capital Pool Company (“CPC”) as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4 on March 10, 2023. The Company will not carry on any business other than the identification and evaluation of assets or a business with a view to completing a Qualifying Transaction which will be subject to receipt of shareholder approval and acceptance by regulatory authorities.
On March 10, 2023, the Company completed its initial public offering (the “Offering”) and issued 3,426,000 common shares (the “Shares”) for gross proceeds of $342,600 pursuant to the Offering. The Company’s common shares were listed on the TSX-V and immediately halted pending closing of the Offering. The common shares commenced trading on the TSX-V on March 14, 2023, under the trading symbol “TOTC.P”.
Forward Looking Statements:
This Management Discussion and Analysis contains certain forward-looking statements and information relating to Totec that is based on the beliefs of the Company, or management, as well as assumptions made by and information currently available to the Company or management. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “implied”, “intend” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company regarding future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties noted with the inflationary pressures, rising interest rates, the global financial climate and the conflicts in Ukraine and the Middle East affecting current economic conditions and increasing economic uncertainty. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, implied, expected or intended. In each
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
instance, forward-looking information should be considered in the light of the accompanying meaningful cautionary statements herein. Totec cautions that forward-looking statements involve risk and uncertainty.
Overall Performance
The Company does not generate revenues from operations. The Company’s net loss for the nine months ended December 31, 2024 was $43,547 (December 31, 2023: $57,936).
Working capital as at December 31, 2024 was $166,271 (December 31, 2023: $234,988), and comprised cash and cash equivalents of $193,269 (December 31, 2023: $234,578), receivables of $3,421 (December 31, 2023: $8,007), prepaid expenses of $2,625 (December 31, 2023: $2,625) and accounts payable and accrued liabilities of $33,044 (December 31, 2023: $10,222).
The Company’s continuing operations are dependent upon its ability to identify, evaluate and negotiate an agreement to acquire an interest in a material asset or business and obtain the necessary financing to do so, within 24 months of listing on the TSX-V.
Summary of Corporate Activities
There are no significant corporate activities during the nine months end December 31, 2024.
Critical accounting policies and estimates
The preparation of the unaudited interim financial statements in accordance with International Financial Reporting Standards requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Actual results could differ from these estimates. A detailed description of these matters, as well as the significant accounting policies adopted by the Company are disclosed in the notes to the unaudited interim financial statements for the nine months ended December 31, 2024.
Financial Instruments
IFRS 9 establishes three primary measurement categories for financial assets: fair value through profit and loss (“FVTPL”), fair value through other comprehensive income (“FVOCI”) and amortized cost. The basis for classification depends on the entity’s business model and the contractual cash flow characteristics of the instrument.
The Company determines the classification of its financial instruments at initial recognition. Upon initial recognition, a financial asset is classified as measured at: amortized cost, fair value through profit and loss (“FVTPL”), or fair value through other comprehensive income (loss) (“FVOCI”). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial liability is classified and measured at amortized cost or FVTPL.
2
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as FVTPL:
- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
An equity investment that is held for trading is measured at FVTPL. For other equity investments that are not held for trading, the Company may irrevocably elect to designate them as FVOCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has elected to measure them at FVTPL.
The Company classifies its financial instruments as follows:
| Asset or Liability | IFRS 9 Classification |
|---|---|
| Cash and cash equivalents | Amortized cost |
| Receivables | Amortized cost |
| Prepaid expenses | Amortized cost |
| Accounts payable and accrued liabilities | Amortized cost |
RECENT ACCOUNTING PRONOUNCEMENTS
Certain new standards, interpretations, amendments, and improvements to existing standards were issued by the IASB or International Financial Reporting Interpretations Committee.
During the nine months ended December 31, 2024, the Company was not required to, and has not adopted any new standards, interpretations, amendments, and improvements to existing standards
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
which had a material impact on the Company’s unaudited interim financial statements. The Company also does not expect the adoption of any currently announced new standards, interpretations, amendments, and improvements to existing standards to have a material impact on the Company’s unaudited interim financial statements.
Summary of Quarterly Results & Results of Operations
The table below provides, for each of the last eight quarterly periods, a summary of corporate losses and is derived from unaudited quarterly financial statements prepared by management. The Company’s condensed unaudited interim financial statements are prepared in accordance with IFRS applicable to unaudited interim financial statements and are expressed in Canadian dollars.
| Loss per quarter | Loss per share | Property costs | |
|---|---|---|---|
| January 1, 2023 – March 31, 2023 | 28,289 | 0.14 | - |
| April 1, 2023 – June 30, 2023 | 19,797 | 0.01 | - |
| July 1, 2023 – September 30, 2023 | 16,589 | 0.00 | - |
| October 1, 2023 – December 31, 2023 | 21,551 | 0.01 | - |
| January 1, 2024 – March 31, 2024 | 25,170 | 0.01 | - |
| April 1, 2024 – June 30, 2024 | 14,527 | 0.00 | - |
| July 1, 2024 – September 30, 2024 | 18,615 | 0.01 | - |
| Oct 1, 2024 – December 31, 2024 | 10,405 | 0.00 | - |
Discussion of Operations for the nine months ended December 31, 2024
Loss and comprehensive loss for the nine months ended December 31, 2024, was $43,547 (2023: $57,936) of which $22,516 (2023: $20,408) was spent on audit, accounting, and legal fees. Regulatory and filing fees of $2,665 (2023: $7,704) were incurred for the nine months ended December 31, 2024.
Discussion of Operations for the three months ended December 31, 2024
Loss and comprehensive loss for the three months ended December 31, 2024, was $10,405 (2023: $21,552) of which $3,628 (2023: $8,745) was spent on audit, accounting, and legal fees. Regulatory and filing fees were $Nil (2023: $864) for the three months ended December 31, 2024.
4
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
Liquidity, Capital Resources and Capital Expenditures
As at December 31, 2024, the Company’s working capital, defined as current assets less current liabilities, was $166,271 (March 31, 2024: $209,818). 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. The successful completion of such financing is not guaranteed, and depends on a number of factors, including the general sentiment in the capital markets, the strength of commodities prices and the strength of the local and global economies.
Other source of funds potentially available to the Company is through the exercise of 260,000 stock options granted to directors and officers at a price of $0.05 per share expiring ten years from the grant date until June 13, 2032.
Capital expenditures are limited to those items that may be used to identify and evaluate assets or businesses for future investment, with the exception that the Company cannot spend more than the $3,000 per month on allowable general and administrative (G&A) expenses until the completion of a Qualifying Transaction for purposes other than to identify and evaluate assets or businesses and obtain shareholder approval for a proposed Qualifying Transaction if necessary. These restrictions apply until completion of a Qualifying Transaction by the Company as defined under the Exchange Policy 2.4.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements.
Financial risk factors
The Company’s risk exposures and the impact on the Company’s financial statements are summarized below.
Credit risk
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and interest receivable. The Company limits its exposure to credit loss by placing its cash and G.I.C.’s with major financial institutions.
Liquidity risk
The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2024, the Company’s cash and receivables exceeded its current liabilities. In order to meet future obligations as they become due, the Company may need to access funding from the issuance of equity securities, the exercise of stock options or through other sources. The Company’s access to financing is uncertain and there is no assurance of continued access to equity funding.
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates and commodity and equity prices.
a) Interest rate risk
The Company is exposed to interest rate risk to the extent that the cash maintained at the financial institutions is subject to a floating rate of interest. The interest rate risks on cash and on the Company’s obligations are not considered significant.
b) Foreign currency risk
The Company is exposed to foreign currency risk on fluctuations related to cash, receivables and accounts payable and accrued liabilities that are denominated in a foreign currency. As at December 31, 2024, the Company did not have any accounts in foreign currencies and considers foreign currency risk insignificant.
c) Price risk
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. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.
The Company’s business and operations could be adversely affected by the outbreak of an epidemic or a pandemic or other health crises, e.g., COVID-19. Global government actions, along with market uncertainty could cause an economic slowdown resulting in a decrease in the demand for metals and have a negative impact on metal prices, as well as possible disruptions to global supply chains. While these effects are expected to be temporary, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time.
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:
| 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 |
6
7
TOTEC RESOURCES LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2024
These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
Outstanding Share Data
Authorized Capital
Unlimited common shares with no par value and unlimited preferred shares with no par value.
Issued and Outstanding Capital
6,126,000 common shares were issued and outstanding at December 31, 2024, and December 31, 2023.
Stock Options & Warrants Outstanding (at December 31, 2024):
| Number | Exercise Price | Expiry Date | |
|---|---|---|---|
| Director’s stock options | 260,000 | $0.05 | June 13, 2032 |
| Agent’s stock options | 342,600 | $0.10 | March 10, 2028 |
Subsequent Events
There are no subsequent events.