Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
The
Company’s financial instruments consist of cash and cash equivalents, investments, warrant liability, short term loans, trade payable,
and accrued expenses and other payables. Unless otherwise noted, it is management’s opinion that the Company is not exposed to
significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximates
their carrying values, unless otherwise noted.
Management
understands that the Company is exposed to financial risk arising from fluctuations in foreign exchange rates and the degree of volatility
of these rates as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs relating to being a public company
in Canada), and the Company’s functional and presentation currency is the US dollar. The Company does not use derivative instruments
to reduce its exposure to foreign currency risk.
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 process. The overall objectives of the Board are to set policies that seek to reduce risk as far as possible without
unduly affecting the Company’s competitiveness and flexibility.
The
type of risk exposure and the way in which such exposure is managed is as follows:
Credit
Risk
The
Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration
with respect to financial instruments is remote.
Liquidity
Risk
The
Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they come
due. As of April 30, 2025, the Company has total assets of $17,001,798 (July 31, 2024 - $5,872,261) and a positive working capital balance
of $10,454,565 (July 31, 2024 - negative working capital balance of $3,807,303).
Market
Risk
Interest
rate risk
Interest
Rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. Loans
payable include both fixed and variable interest rates; however, the Company does not believe it is exposed to material interest rate
risk.
Price
risk
As
the Company has no revenues, price risk is remote.
Exchange
risk
The
Company is exposed to foreign exchange risk as a portion of the Company’s transactions occur in Canadian Dollars (mainly costs
relating to being a public company in Canada) and, therefore, the Company is exposed to foreign currency risk at the end of the reporting
period through its Canadian denominated accounts payable and cash. As of April 30, 2025, a 5% depreciation or appreciation of the Canadian
dollar against the US dollar would not have a material effect on the in total loss and comprehensive loss.
Fair
Values
The
carrying values of cash and cash equivalents, trade payable, warrant liability, short term loans, and accrued expenses and other payables
approximate their fair values due to their short terms to maturity.
30
Cash
and cash equivalents are valued using quoted market prices in active markets. The fair value of the warrant liability is determined based
on the nature of the warrant. For publicly traded warrants we use the quoted market price and for all other warrants we use the Black-Scholes
pricing model.
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