Tower Resources Ltd. — Interim / Quarterly Report 2023

Jun 29, 2023

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CONDENSED INTERIM FINANCIAL STATEMENTS

For the Six Months Ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

TOWER RESOURCES LTD. INDEX TO CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

PAGE(S)

CONTENTS
NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS	3
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION	4
CONDENSED INTERIM STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)	5
CONDENSED INTERIM STATEMENTS OF CASH FLOWS	6
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	7
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS	8 - 19

Page 2

NOTICE OF NO AUDITOR REVIEW OF 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 condensed interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

The Company’s independent auditor has not performed a review of these condensed interim 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.

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

Page 3

TOWER RESOURCES LTD. CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars - Unaudited)

ASSETS Current Cash Receivables (Note 4) Marketable securities (Note 5) Prepaid expenses and deposits Equipment(Note 6) Exploration and evaluation assets(Note 7) Reclamation bonds(Note 8) LIABILITIES Current Accounts payable and accrued liabilities (Notes 9 and 11) SHAREHOLDERS’ EQUITY Share capital (Note 10) Reserves (Note 10) Deficit	April 30, 2023 $ 770,301 59,718 22,375 15,445 867,839 1,087 7,444,955 80,000 8,393,881	October 31, 2022
		$ 1,369,904 24,470 5,938 19,340
		1,419,652 1,208 6,614,323 80,000
		8,115,183
	185,019 185,019 21,807,179 1,072,363 (14,670,680) 8,208,862 **8,393,881 **	434,625
		434,625
		21,339,369 926,166 (14,584,977)
		7,680,558
		8,115,183

NATURE OF OPERATIONS AND GOING CONCERN (Note 1) SUBSEQUENT EVENTS (Notes 10 and 16)

Approved and authorized on behalf of the Board:

s/“Joe Dhami” Joe Dhami, Director	/s/“Gerald Shields” Gerald Shields, Director

The accompanying notes are an integral part of these condensed interim financial statements

Page 4

TOWER RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS ) (Expressed in Canadian Dollars - Unaudited)

Expenses Accounting and audit fees (Note 11) Depreciation (Note 6) Investor relations Legal fees Management fees (Note 11) Office and miscellaneous Share-based compensation (Notes 10 and 11) Transfer agent and filing fees Travel Transfer agent and filing fees Interest income Recognition of flow-through premium (Note 10) Recovery on exploration and evaluation assets previously written off (Note 7) Unrealized loss on marketable securities (Note 5) Income (loss) and comprehensive income (loss) for the period	For the three months ended April 30,	For the three months ended April 30,	For the six months ended April 30,
	2023	2022	2023 2022
	$ 11,187 61 - - 30,000 33,274 87,422 5,162 1,436 1,862	$ 9,317 75 - 2,177 22,500 21,804 21,531 9,416 - -	$ $ 18,687 16,417 121 151 13,000 - - 2,177 57,500 45,000 57,277 43,684 177,790 43,788 9,051 13,132 1,436 - 1,862 -
	(170,404) 636 233,118 - (16,782)	(86,820) 59 152,695 - (5,250)	(336,724) (164,349) 1,251 121 233,333 253,466 35,000 - (18,563) (15,750)
	46,568	60,684	(85,703) 73,488
Basic and diluted income (loss) per share	0.00	0.00	(0.00) 0.00
Weighted average number of common shares outstanding– basic and diluted	142,128,266	131,652,663	140,992,032 130,844,522

The accompanying notes are an integral part of these condensed interim financial statements

Page 5

TOWER RESOURCES LTD. CONDENSED INTERIM STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars - Unaudited)

Cash flows used in operating activities Income (loss) for the period Items not affecting cash Depreciation Share-based compensation Recognition of flow-through premium Recovery on exploration and evaluation assets previously written off Unrealized loss on marketable securities Changes in non-cash working capital items Receivables Prepaid expenses and deposits Accounts payable and accrued liabilities Cash flows used in investing activity Acquisition of exploration and evaluation assets Cash flows provided by financing activities Proceeds from shares issued Proceeds from warrants exercised Proceeds from options exercised Share issuance costs Net change in cash Cash, beginning of period Cash, end of period	For the six months ended April 30,	For the six months ended April 30,
	2023	2022
	$ (85,703) 121 177,790 (233,333) (35,000) 18,563 (35,248) 3,895 (17,330) (206,245) (1,062,908) (1,062,908) 700,000 - 16,500 (46,950) 669,550 (599,603) 1,369,904 770,301	$ 73,488 151 43,788 (253,466) - 15,750 (30,133) 1,139 (20,865)
		(170,148)
		(475,496)
		(475,496)
		- 339,166 - -
		339,166
		(306,478) 1,714,714
		1,408,236

SUPPLEMENTAL CASH FLOW INFORMATION (Note 13)

The accompanying notes are an integral part of these condensed interim financial statements

Page 6

TOWER RESOURCES LTD. CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Expressed in Canadian Dollars - Unaudited)

Balance at October 31, 2021 Shares issued for warrants exercised Shares issued for exploration and evaluation assets Share-based compensation Stock options expired Warrants expired Net income for the period Balance at April 30, 2022 Shares issued for options exercised Shares issued for warrants exercised Share-based compensation Stock options expired Loss for the period Balance at October 31, 2022 Shares issued for cash Shares issued for options exercised Share issuance costs Flow-through premium Share-based compensation Warrants expired Loss for the period Balance at April 30, 2023	Number of Shares Issued 129,867,081 2,550,756 200,000 - - - -	Capital Stock $ 20,154,705 352,160 29,000 - - 159,506 -	Reserves $ 715,755 (12,994) - 43,788 (15,227) (159,506) -	Deficit $ (14,254,815) - - - 15,227 - 73,488	Total Shareholders' Equity
					$ 6,615,645 339,166 29,000 43,788 - - 73,488
	132,617,837 441,667 5,106,746 - - -	20,695,371 85,822 558,176 - - -	571,816 (41,197) (26,811) 429,702 (7,344) -	(14,166,100) - - - 7,344 (426,221)	7,101,087 44,625 531,365 429,702 - (426,221)
	138,166,250 3,888,889 91,666 - - - - -	21,339,369 700,000 30,683 (62,263) (233,333) - 32,723 -	926,166 - (14,183) 15,313 - 177,790 (32,723) -	(14,584,977) - - - - - - (85,703)	7,680,558 700,000 16,500 (46,950) (233,333) 177,790 - (85,703)
	142,146,805	21,807,179	1,072,363	(14,670,680)	8,208,862

The accompanying notes are an integral part of these condensed interim financial statements

Page 7

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

1. NATURE OF OPERATIONS AND GOING CONCERN

Nature of operations

Tower Resources Ltd. (the “Company”) is incorporated under the laws of British Columbia, Canada. The Company’s common shares are listed for trading on the TSX Venture Exchange ("TSX-V") under the symbol TWR. The Company’s head office and principal address and registered and records office is located at 40440 Thunderbird Ridge B1831, Garibaldi Highlands, BC, V0N 1T0.

Going concern

The Company’s principal business activity is the acquisition and exploration of mineral exploration and evaluation assets domiciled in Canada. The Company has not yet determined whether any of these exploration and evaluation assets contain ore reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and future profitable production. To date, the Company has not earned any revenues and is considered to be in the exploration stage.

These condensed interim financial statements have been prepared assuming the Company will continue on a going concern basis. The Company has incurred losses since inception, and the ability of the Company to continue as a going concern depends upon its ability to raise adequate financing and/or to achieve profitable operations. These condensed interim financial statements do not include adjustments to the carrying value of assets and liabilities, the reported expenses, and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The continuation of the Company’s operations is dependent on obtaining sufficient additional financing in order to realize the recoverability of the Company’s investments in exploration and evaluation assets, which in turn is dependent upon the existence of economically recoverable reserves and market prices for the underlying minerals. Management closely monitors commodity prices of precious metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company if favourable or adverse market conditions occur. The Company raised capital in the current, prior, and subsequent (Note 16) periods through private placements of its common shares and exercise of options and warrants, with the result that the current working capital balance is an amount that management estimates is sufficient to further operations for the upcoming twelve months.

In February 2022, Russia invaded Ukraine. This has created global supply chain issues, market instability and volatility, and increased inflation. It is not possible for the Company to predict the duration or magnitude of the adverse results of the Russian invasion and their effects on the Company’s business or results of operations or its ability to raise funds.

2. BASIS OF PRESENTATION

Statement of compliance

These condensed interim financial statements, including comparatives, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and the interpretations of the International Financial Reporting Interpretations Committee. They do not include all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements, and, therefore, should be read in conjunction with the Company’s audited financial statements for the year ended October 31, 2022, prepared in accordance with IFRS as issued by the IASB.

Page 8

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

2. BASIS OF PRESENTATION (continued)

Statement of compliance (continued)

These condensed interim financial statements were approved by the Audit Committee and Board of Directors of the Company on June 28, 2023.

Basis of presentation

These condensed interim financial statements have been prepared on a historical cost basis, using the accrual basis of accounting, except for cash flow information and certain financial assets that are measured at fair value.

Functional currency

The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company is the Canadian dollar. The reporting currency of the Company is the Canadian dollar.

Significant estimates

The preparation of these condensed interim financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of these condensed interim financial statements and the reported revenues and expenses during the period.

Although management uses historical experience and its best knowledge of the amounts, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

Critical judgment exercised relates primarily to the application of the going concern basis of preparation.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments are as follows:

Economic recoverability and probability of future economic benefits of exploration and evaluation assets

Management has determined that exploration, evaluation, and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessment of economic recoverability and probability of future economic benefits, including geologic and other technical information, a history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.

Valuation of share-based compensation

The Company uses the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.

Significant judgments

Going concern

The Company has exercised judgment in determining that its available funds are sufficient to continue operations for the ensuing twelve months.

Page 9

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES

These condensed interim financial statements were prepared using the same accounting policies and methods of computation as in the Company’s financial statements for the year ended October 31, 2022.

New standards, interpretations and amendments to existing standards not yet effective

A number of new standards and amendments to standards and interpretations have been issued by the IASB and are effective for annual periods beginning after November 1, 2022. These have not been applied in preparing these condensed interim financial statements. There are no IFRSs or IFRS Interpretations Committee interpretations that are not yet effective that would be expected to have a material impact on these condensed interim financial statements.

4. RECEIVABLES

	April 30,	October 31,
	2023	2022
	$	$
GST receivable	58,688	23,909
Interest receivable	1,030	561
	59,718	24,470

5. MARKETABLE SECURITIES

As at April 30, 2023, the Company held 1,118,750 (October 31, 2022 - 118,750) common shares of Volatus Capital Corp. (“Volatus”), with a fair value of $22,375 (October 31, 2022 - $5,938). During the six months ended April 30, 2023, the Company received 1,000,000 (April 30, 2022 - nil) common shares of Volatus, with a fair value of $35,000 (April 30, 2022 - $nil), pursuant to option agreements on the Belle and More Creek properties (Note 7). The change in market value of the shares resulted in the recording of an unrealized loss on marketable securities for the six months ended April 30, 2023 of $18,563 (April 30, 2022 - $15,750).

Page 10

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

6. EQUIPMENT

	Computer software	Equipment and furniture Total
Cost October 31, 2021, October 31, 2022, and April 30, 2023	$ 76,929	$ $ 11,451 88,380
Depreciation October 31, 2021 Charge for the year	76,929 -	9,941 86,870 302 302
October 31, 2022 Charge for the period	76,929 -	10,243 87,172 121 121
April 30, 2023	76,929	10,364 87,293
Net book value October 31, 2022	-	1,208 1,208
April 30, 2023	-	1,087 1,087

Page 11

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

7. EXPLORATION AND EVALUATION ASSETS

	Belle Rabbit North Nechako Gold More Creek Total
Balance, October 31, 2021 Acquisition costs Deferred costs Drilling Equipment rental Field travel, meals and accommodation Geology Laboratory and analytical Project supplies and fuel Additions for the year B.C. mineral exploration tax credit recovery Balance, October 31, 2022 Acquisition costs Deferred costs Consulting Drilling Equipment rental Field travel, meals, and accommodations Geology Laboratory and analytical Project supplies and fuel Additions for the period Balance, April 30, 2023	$ $ $ $ $
	1 2,760,354 2,484,315 - 5,244,670 - 79,000 - - 79,000 - 761,031 - - 761,031 - 1,953 - - 1,953 - 80,929 - - 80,929 - 312,764 6,370 - 319,134 - 110,664 691 - 111,355 - 23,688 - - 23,688
	- 1,370,029 7,061 - 1,377,090 - - (7,437) - (7,437)
	1 4,130,383 2,483,939 - 6,614,323 - - - - - - 4,500 - - 4,500 - 533,111 - - 533,111 - 630 - - 630 - 28,486 - - 28,486 - 107,392 - - 107,392 - 132,155 185 - 132,340 - 24,173 - - 24,173
	- 830,447 185 - 830,632
	1 4,960,830 2,484,124 - 7,444,955

Page 12

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

7. EXPLORATION AND EVALUATION ASSETS (continued)

BELLE PROPERTY

The Company owns a 100% interest in the Belle property located in the Omineca mining division of British Columbia. The property is subject to a 2% net smelter return royalty (“NSR”), of which 1% can be purchased by the Company for $2,000,000.

On August 5, 2020, the Company entered into an option agreement with Volatus, pursuant to which the Company granted to Volatus the option to acquire its 100% interests in and to the Belle property (the “Belle Option”). To exercise the Belle Option and earn a 100% interest, Volatus is required to make a total of $100,000 in cash payments ($75,000 received as at April 30, 2023) and issue 125,000 common shares over a 36 month period (93,750 received as at April 30, 2023, valued at $63,125).

RABBIT NORTH PROPERTY

The Company owns a 100% interest in the Rabbit North property, comprised of certain mineral claims, located in the Kamloops mining division of British Columbia. The Company acquired the property by making cash payments of $170,000, issuing 1,300,000 common shares, and funding aggregate exploration expenditures of $2,150,000.

The property is subject to a 3% NSR in favour of the optionors, of which 1% of the 3% may be purchased by the Company for $2,000,000 and the second 1% of the 3% may be purchased by the Company for $1,500,000. In March 2017, the Company entered into a royalty buyback assignment agreement with Sandstorm Gold Ltd. (“Sandstorm”) pursuant to which it assigned to Sandstorm the Company’s right to purchase the second 1% of the Company’s 2% buyback rights with respect to the optionors’ NSR. If the Company makes a decision to develop the Rabbit North property and put it into production, the Company has agreed to exercise its right to buy back 1% of the NSR, contingent upon Sandstorm exercising its right to buy back the second 1% (as assigned to it), whereupon the Company will grant directly to Sandstorm a 1% NSR. As at April 30, 2023, the Company had paid a total of $150,000 in advance annual royalty payments.

The Company acquired additional claims contiguous to the Rabbit North property by staking, known collectively as the Rabbit North Extension property. In March 2017, the Company entered into an agreement with Sandstorm and granted Sandstorm a 2% NSR on the Rabbit North Extension property. The Company has the option to buy back 1% of the NSR from Sandstorm for cash consideration of $500,000.

In fiscal 2022, the Company entered into a property purchase agreement and acquired a 100% interest in the West Afton Property, comprised of certain mineral claims contiguous to the Rabbit North property, by making cash payments totaling $20,000 and issuing 200,000 common shares, valued at $29,000.

NECHAKO GOLD PROPERTY

In July 2016, the Company entered into two property option agreements (Porphyry and Chutanli) under which it was granted the right to acquire mineral tenures in the Nechako Plateau region of central British Columbia. The Company fully exercised the options and now owns a 100% interest in these property properties. Details are as follows:

Porphyry Property Option Agreement

In fiscal 2018, the Company fulfilled its obligations under the Porphyry Property option agreement and earned the right to acquire a 100% interest in the Porphyry Property by making cash payments totaling $40,000 and issuing 400,000 common shares, in addition to funding aggregate exploration expenditures of $250,000.

The agreement is subject to a 1.5% NSR, which can be purchased by the Company for $1,000,000.

Page 13

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

7. EXPLORATION AND EVALUATION ASSETS (continued)

NECHAKO GOLD PROPERTY (continued)

Chutanli Property Option Agreement

In fiscal 2019, the Company fulfilled its obligations under the Chutanli Property option agreement and earned the right to acquire a 100% interest in the Chutanli Property by making cash payments totaling $60,000 and issuing 600,000 common shares, in addition to funding aggregate exploration expenditures of $225,000.

The agreement is subject to a 1.5% NSR, which can be purchased by the Company for $1,000,000.

In March 2017, the Company entered into certain NSR agreements with Sandstorm and granted Sandstorm a 2% NSR on the Nechako Gold property. The Company has the option to buy back 1% of the NSR from Sandstorm for cash consideration of $500,000.

MORE CREEK PROPERTY

This property is located in the Golden Triangle district of northwest British Columbia and was acquired by staking.

In March 2017, the Company entered into an NSR agreement with Sandstorm and granted Sandstorm a 2% NSR on the Company’s More Creek property. The Company has the option to buy back 1% of the NSR from Sandstorm for cash consideration of $500,000.

On August 21, 2020, the Company entered into an option agreement with Volatus, pursuant to which the Company granted to Volatus the right to acquire its 100% interest in and to the More Creek property (the “More Option”). To exercise the More Option and earn a 100% interest, Volatus is required to make a total of $150,000 in payments (of which Volatus must pay $50,000 in cash and, at its option, pay up to $100,000 in cash or shares of Volatus) ($50,000 cash received and 1,000,000 shares received in lieu of $50,000 cash as at April 30, 2023), issue 25,000 common shares (received, valued at $39,000), and complete $600,000 in exploration expenditures over a 40‐month period. The Company will retain a 1% NSR of which 0.5% can be repurchased by Volatus for $500,000. During the six months ended April 30, 2023, the Company recorded an amount for the More Option of $35,000 (2022 - $nil), in recovery on exploration and evaluation assets previously written off.

8. RECLAMATION BONDS

In relation to the Rabbit North and Nechako properties, the Company has posted reclamation bonds totaling $45,000 and $35,000 as at April 30, 2023 (October 31, 2022 - $45,000 and $35,000), respectively.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	April 30,	October 31,
	2023	2022
	$	$
Accounts payable	172,857	406,625
Accrued liabilities	12,162	28,000
	185,019	434,625

Page 14

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

10. SHARE CAPITAL AND RESERVES

Authorized share capital

Unlimited number of common shares without par value.

Issued share capital

During the six months ended April 30, 2023, the Company issued:

• a. 3,888,889 units at a price of $0.18 per unit for gross proceeds of $700,000. Each unit was comprised of one flow-through common share and one share purchase warrant, with each warrant entitling the holder to acquire one additional common share of the Company at an exercise price of $0.36 per share for a period of 24 months. The Company paid a total of $46,950 in cash for fees and issued 233,333 finder’s warrants. Each finder’s warrant entitles the to acquire one additional common share of the Company at an exercise price of $0.18 per share for a period of 24 months. The finder’s warrants were valued at $15,313, calculated using the Black-Scholes option pricing model assuming a life expectancy of two years, a risk-free interest rate of 3.93%, a dividend rate of nil%, a forfeiture rate of nil% and volatility of 122%. The flow-through shares were issued at a premium of $233,333; and

• b. 91,666 common shares for proceeds of $16,500 pursuant to the exercise of options.

During the six months ended April 30, 2022, the Company issued:

• a. issued 2,550,756 common shares for proceeds of $339,166 pursuant to the exercise of warrants; and

• b. issued 200,000 common shares, valued at $29,000, pursuant to the acquisition of the West Afton Property (Note 7).

Flow-through share premium

	Total
	$
October 31, 2021	394,106
Recognition of flow-through premium	(394,106)
October 31, 2022	-
Flow-through premium additions	233,333
Recognition of flow-through premium	(233,333)
April30, 2023	-

Stock options

On November 19, 2010, the Company adopted an incentive stock option plan (the “Plan”). The Plan provides that the aggregate number of shares of the Company’s capital stock issuable pursuant to options granted under the Plan may not exceed ten percent of the issued and outstanding common shares of the Company at the time an option is granted. Options granted under the Plan will have a maximum term of 10 years. The exercise price of options granted under the Plan shall be set by the Board of Directors on the effective date of the options and will not be less than the Discounted Market Price as defined under the policies of the TSX-V. Vesting of the options shall be at the discretion of the Board of Directors.

During the six months ended April 30, 2023, the Company expensed $177,790 (2022 - $43,788) as share-based compensation as share-based compensation for the fair value of vesting stock options.

Page 15

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

10. SHARE CAPITAL AND RESERVES (continued)

Stock options (continued)

During the six months ended April 30, 2023, 91,666 (2022 - nil) incentive stock options were exercised; accordingly, fair value associated with the options of $14,183 (2022 - $nil) was reclassified from reserves to share capital.

During the six months ended April 30, 2023, nil (2022 - 100,000) incentive stock options expired unexercised; accordingly, $nil (2022 - $15,227), was reversed from reserves to deficit.

The following is a summary of stock options activities:

Outstanding at October 31, 2021 Granted Exercised Expired Outstanding at October 31, 2022 Exercised Outstanding at April 30, 2023	Number of options 7,750,000 2,818,000 (441,667) (150,000) 9,976,333 (91,666) 9,884,667	Weighted average exerciseprice
		$ 0.08 0.28 0.10 0.16 0.13 0.18 0.13

The Company has outstanding options entitling the holders to purchase common shares at April 30, 2023 as follows:

Number outstanding 500,000 2,700,000 1,850,000 2,066,667 2,768,000 9,884,667	Number exercisable Exercise price $ 500,000 0.125 2,700,000 0.055 1,850,000 0.115 1,350,000 0.060 889,333 0.280 7,289,333	Weighted average remaining life(years) 0.01 1.25 2.23 3.49 4.01	Expiry date
			May 2, 2023(1) July 29, 2024 July 22, 2025 October 26, 2026 May 4, 2027

(1) subsequent to period end, 200,000 options were exercised and 300,000 options expired, unexercised (Note 16)

The weighted average exercise price of exercisable options is $0.10.

Page 16

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

10. SHARE CAPITAL AND RESERVES (continued)

Warrants

During the six months ended April 30, 2023, 250,000 (2022 - 25,985,440) share purchase warrants expired unexercised accordingly, $32,723 (2022 - $159,506) was reversed from reserves to share capital.

The following is a summary of share purchase warrant activities:

Outstanding at October 31, 2021 Expired Exercised Outstanding at October 31, 2022 Issued Expired Outstanding at April 30, 2023	Number of warrants 34,205,442 (25,985,440) (7,657,502) 562,500 4,122,222 (250,000) 4,434,722	Weighted average exerciseprice
		$ 0.19 0.22 0.11 0.12 0.35 0.22 0.33

The Company has outstanding warrants entitling the holders to purchase common shares at April 30, 2023 as follows:

Number outstanding 312,500 3,888,889 233,333 4,434,722	Exercise price $ 0.0375 0.36 0.18	Expiry date
		December 31, 2023 December 23, 2024 December 23, 2024

11. RELATED PARTY TRANSACTIONS

The Company entered into transactions with related parties during the six months ended April 30, 2023 and 2022.

Summary of key management personnel compensation (includes officers and directors of the Company):

	For the	six months ended
		April 30,
	2023	2022
	$	$
Accounting fees	15,750	12,000
Management fees	57,500	45,000
Share-based compensation	129,207	37,890
	202,457	94,890

Amounts owing to related parties (including key management personnel) included in accounts payable and accrued liabilities total $15,370 as at April 30, 2023 (October 31, 2022 - $9,975).

Page 17

TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

12. SEGMENTED INFORMATION

The Company has one geographic segment, being Canada, and one operating segment, being the acquisition and exploration of mineral exploration and evaluation assets.

13. SUPPLEMENTAL CASH FLOW INFORMATION

The significant non-cash investing and financing transactions are as follows:

	For the six months	ended
	April 30,
	2023	2022
	$	$
Non-cash transactions not included in investing or financing activities:
Exploration and evaluation assets in accounts payable	130,150	366,191
Shares issued for exploration and evaluation assets	-	29,000
Shares received for exploration and evaluation assets	35,000	-
Options exercised	14,183	-
Options expired / forfeited	-	15,227
Fair value of agent’s warrants	15,313	-
Warrants exercised	-	12,994
Warrants expired	32,723	159,506
Flow-through share premium	233,333	-

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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 data.

The Company’s financial instruments consist of cash, receivables, marketable securities, reclamation bonds, and accounts payable and accrued liabilities. The fair value of these financial instruments approximates their carrying values, except for marketable securities, which are measured at fair value using level 1 inputs.

The Company is exposed to a variety of financial risks by virtue of its activities including credit, liquidity, interest rate, foreign currency and price risk.

Credit risk

The Company is exposed to industry credit risks arising from its cash holdings and receivables. The Company manages credit risk by placing cash with major Canadian financial institutions. The Company’s receivables are primarily due from a government agency. Management believes that credit risk related to these amounts is nominal.

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TOWER RESOURCES LTD. Notes to the condensed interim financial statements For the six months ended April 30, 2023 (Expressed in Canadian Dollars - Unaudited)

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient funds to meet its financial obligations when they are due. To manage liquidity risk, the Company reviews additional sources of capital and financing to continue its operations and discharge its commitments. The Company has sufficient cash as at April 30, 2023 to settle its current liabilities as they come due and management estimates funds are sufficient to further operations for the upcoming twelve months (Note 1).

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As of April 30, 2023, the Company held deposits with a face value of $68,000. A 1% increase or decrease in the interest rates would have a nominal impact in interest income for the six months ended April 30, 2023.

Foreign currency risk

The Company is not significantly exposed to foreign currency risk on fluctuations related to items that are denominated in a foreign currency.

Price risk

The Company has limited exposure to price risk with respect to commodity and equity prices. 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. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities.

15. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it based on the funds available to the Company, in order to support the acquisition and exploration of exploration and evaluation assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company defines capital that it manages as share capital, options and warrants.

The properties in which the Company currently has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital restrictions. There have been no significant changes in the Company’s objectives, policies, and processes for managing its capital during for the six months ended April 30, 2023.

16. SUBSEQUENT EVENT

Subsequent to April 30, 2023, the Company issued 200,000 common shares pursuant to the exercise of options, for proceeds of $25,000.

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