FINANCIAL REVIEW

Fiscal Year ended December 31, 2023

(An Exploration Stage Company)

FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

(Expressed in Canadian Dollars)

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF RACKLA METALS INC.

Opinion

We have audited the financial statements of Rackla Metals Inc. (the "Company"), which comprise:

  • the statements of financial position as at December 31, 2023 and 2022;
  • the statements comprehensive loss for the years then ended;
  • the statements of changes in shareholders' equity for the years then ended;
  • the statements of cash flows for the years then ended; and
  • the notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 2 in the financial statements, which indicates that the Company has an accumulated deficit of $14,944,630. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditors' report.

SMYTHE LLP | smythecpa.com

VANCOUVER

1700-475 Howe St Vancouver, BC V6C 2B3

  1. 604 687 1231
  1. 604 688 4675

LANGLEY

600-19933 88 Ave Langley, BC V2Y 4K5

  1. 604 282 3600
  1. 604 357 1376

1

NANAIMO

201-1825 Bowen Rd

Nanaimo, BC V9S 1H1

  1. 250 755 2111
  1. 250 984 0886

Other Information

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

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

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

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

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

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

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

SMYTHE LLP | smythecpa.com

VANCOUVER

1700-475 Howe St Vancouver, BC V6C 2B3

  1. 604 687 1231
  1. 604 688 4675

LANGLEY

600-19933 88 Ave Langley, BC V2Y 4K5

  1. 604 282 3600
  1. 604 357 1376

2

NANAIMO

201-1825 Bowen Rd

Nanaimo, BC V9S 1H1

  1. 250 755 2111
  1. 250 984 0886
  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

SMYTHE LLP | smythecpa.com

VANCOUVER

1700-475 Howe St Vancouver, BC V6C 2B3

  1. 604 687 1231
  1. 604 688 4675

LANGLEY

600-19933 88 Ave Langley, BC V2Y 4K5

  1. 604 282 3600
  1. 604 357 1376

3

NANAIMO

201-1825 Bowen Rd

Nanaimo, BC V9S 1H1

  1. 250 755 2111
  1. 250 984 0886

The engagement partner on the audit resulting in this independent auditors' report is Michelle Chi Wai So.

Chartered Professional Accountants

Vancouver, British Columbia

April 22, 2024

SMYTHE LLP | smythecpa.com

VANCOUVER

1700-475 Howe St Vancouver, BC V6C 2B3

  1. 604 687 1231
  1. 604 688 4675

LANGLEY

600-19933 88 Ave Langley, BC V2Y 4K5

  1. 604 282 3600
  1. 604 357 1376

4

NANAIMO

201-1825 Bowen Rd

Nanaimo, BC V9S 1H1

  1. 250 755 2111
  1. 250 984 0886

RACKLA METALS INC.

(An Exploration Stage Company)

STATEMENTS OF FINANCIAL POSITION

As at December 31, 2023 and 2022

(Expressed in Canadian Dollars)

2023

2022

ASSETS

Current assets

Cash (Note 5)

$

1,181,671

$

4,427,903

Equity investments (Note 6)

1,501

3,001

Taxes receivable

189,094

8,329

Prepaid expenses and deposits (Notes 11 and 15)

257,666

3,300

1,629,932

4,442,533

Non-current assets

Deposits (Notes 8 and 15)

101,000

61,000

Equipment (Note 7)

30,515

-

Exploration and evaluation assets (Notes 8 and 15)

962,972

158,598

1,094,487

219,598

TOTAL ASSETS

$

2,724,419

$

4,662,131

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued liabilities

$

356,375

$

127,390

Due to related parties (Note 15)

47,863

159,842

Current portion of lease liability (Note 10)

17,958

-

Other liability (Note 11)

71,649

966,025

493,845

1,253,257

Non-current liability

Lease liability (Note 10)

6,416

-

Total liabilities

500,261

1,253,257

Shareholders' equity

Share capital (Note 12)

16,237,918

13,578,009

Other equity reserves (Note 12)

989,119

46,025

Accumulated other comprehensive loss

(58,249)

(56,749)

Deficit

(14,944,630)

(10,158,411)

Total shareholders' equity

2,224,158

3,408,874

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,724,419

$

4,662,131

APPROVED BY THE BOARD OF DIRECTORS AND AUTHORIZED FOR ISSUE ON APRIL 22, 2024:

"Simon Ridgway"

"William Katzin"

Simon Ridgway, Director

William Katzin, Director

The accompanying notes are an integral part of these financial statements

5

RACKLA METALS INC.

(An Exploration Stage Company)

STATEMENTS OF COMPREHENSIVE LOSS

For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

2023

2022

EXPLORATION EXPENDITURES (Notes 9 and 15)

$ 4,197,695

$

94,622

GENERAL AND ADMINISTRATIVE EXPENSES

Amortization (Note 7)

14,463

-

Consulting fees

50,000

-

Directors' fees (Note 15)

30,000

-

Interest expense on lease liability (Note 10)

2,145

-

Legal and audit fees

48,077

28,634

Management fees (Note 15)

44,700

59,400

Office and administrative (Note 15)

102,153

42,032

Salaries and benefits (Note 15)

191,358

89,846

Share-based payments (Notes 13 and 15)

806,319

-

Shareholder communications (Note 15)

277,706

28,431

Transfer agent and regulatory fees (Note 15)

16,656

18,137

Travel and accommodation (Note 15)

47,830

34,685

1,631,407

301,165

(5,829,102)

(395,787)

Interest income

89,891

9,285

Part XII.6 tax (Note 11)

(59,867)

-

Write-off of deferred acquisition costs (Note 8)

-

(1,271,884)

Write-off of exploration and evaluation asset (Note 8)

(88,556)

(20,001)

Loss before income taxes

(5,887,634)

(1,678,387)

Recovery on flow-through share liability (Notes 11)

1,038,601

-

Net loss for the year

(4,849,033)

(1,678,387)

Other comprehensive loss

Item that will not be reclassed to profit or loss

Fair value loss on equity investments (Note 6)

(1,500)

(2,625)

Total comprehensive loss

$ (4,850,533)

$ (1,681,012)

Basic and diluted loss per share

$(0.08)

$(0.04)

Weighted average number of common shares outstanding

61,809,862

45,049,902

The accompanying notes are an integral part of these financial statements

6

RACKLA METALS INC.

(An Exploration Stage Company)

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

Other equity reserves

Accumulated

Number of

Share

other

common

Share

Share-based

purchase

Compensation

comprehensive

shares

capital

payments

warrants

options

income (loss)

Deficit

Total

Balance, December 31, 2021

34,881,308

$ 9,512,893

$

119,706

$

-

$

-

$

(54,124)

$

(8,553,705)

$

1,024,770

Net loss for the year

-

-

-

-

-

-

(1,678,387)

(1,678,387)

Shares issued on private

placements

12,615,000

2,523,000

-

-

-

-

-

2,523,000

Shares issued for property

acquisition

120,000

37,200

-

-

-

-

-

37,200

Warrants exercised

10,580,000

1,587,000

-

-

-

-

-

1,587,000

Share issuance costs

-

(82,084)

-

-

-

-

-

(82,084)

Fair value loss on equity

investments

-

-

-

-

-

(2,625)

-

(2,625)

Fair value of expired options

-

-

(73,681)

-

-

-

73,681

-

Balance, December 31, 2022

58,196,308

13,578,009

46,025

-

-

(56,749)

(10,158,411)

3,408,874

Net loss for the year

-

-

-

-

-

-

(4,849,033)

(4,849,033)

Shares issued on private

placements

10,569,000

2,536,560

-

105,690

-

-

-

2,642,250

Shares issued for property

acquisition

2,610,378

584,500

-

-

-

-

-

584,500

Options exercised

5,000

500

-

-

-

-

-

500

Share issuance costs

-

(462,173)

-

-

94,421

-

-

(367,752)

Transfer of other equity

reserve on exercise of

options

-

522

(522)

-

-

-

-

-

Fair value of forfeited

options

-

-

(62,814)

-

-

-

62,814

-

Fair value loss on equity

investments

-

-

-

-

-

(1,500)

-

(1,500)

Share-based payments

-

-

806,319

-

-

-

-

806,319

Balance, December 31, 2023

71,380,686

$ 16,237,918

$

789,008

$

105,690

$

94,421

$

(58,249)

$

(14,944,630)

$

2,224,158

The accompanying notes are an integral part of these financial statements

7

RACKLA METALS INC.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

For the years ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)

2023

2022

Cash provided by (used in):

OPERATING ACTIVITIES

Net loss for the year

$

(4,849,033)

$

(1,678,387)

Items not involving cash:

Amortization

14,463

-

Write-off of deferred acquisition costs

-

1,271,884

Write-off of exploration and evaluation asset

88,556

20,001

Recovery on flow-through share liability

(1,038,601)

-

Share-based payments

806,319

-

Changes in non-cash working capital items:

(4,978,296)

(386,502)

Taxes receivable

(180,765)

(5,884)

Prepaid expenses

(254,366)

(2,130)

Accounts payable and accrued liabilities

228,985

(23,887)

Due to related parties

(111,979)

(65,436)

(5,296,421)

(483,839)

FINANCING ACTIVITIES

Proceeds from issuance of capital stock

2,786,975

5,076,025

Share issuance costs

(367,752)

(200)

Repayment of lease obligation (net)

(10,970)

-

2,408,253

5,075,825

INVESTING ACTIVITIES

Purchase and lease of equipment

(9,634)

-

Reclamation deposit

(40,000)

-

Acquisition of exploration and evaluation assets

(308,430)

(121,398)

Advance royalty payments

-

(10,000)

Deferred acquisition costs

-

(58,480)

(358,064)

(189,878)

(Decrease) increase in cash

(3,246,232)

4,402,108

Cash, beginning of year

4,427,903

25,795

Cash, end of year

$

1,181,671

$

4,427,903

Supplemental Cash Flow Information (Note 18)

The accompanying notes are an integral part of these financial statements

8

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Rackla Metals Inc. published this content on 29 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2024 11:26:33 UTC.