Enertopia Corp. 10-K/A

Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company", we are not required to provide the information required by this Item. 28 Item 8. Consolidated Financial Statements and Supplementary Data 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Directors of Enertopia Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Enertopia Corp. (the "Company") as of August 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity (deficiency), and cash flows for the years ended August 31, 2023 and 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended August 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the entity has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate Except for the matter described in the Going Concern section, we have determined that there are no other critical audit matters to communicate in our auditor's report. We have served as the Company's auditor since 2017. /s/ DAVIDSON & COMPANY LLP Vancouver, Canada Chartered Professional Accountants November 29, 2023 731 30 ENERTOPIA CORP. CONSOLIDATED BALANCE SHEETS (Expressed in U.S. Dollars) August 31, August 31, 2023 2022 ASSETS Current Cash and cash equivalents (Note 3) $ 259,581 $ 615,207 Marketable securities (Note 4) 989,307 2,443,750 Accounts receivable 9,482 4,877 Prepaid expenses and deposit (Note 11) 89,338 139,307 Total Current Assets 1,347,708 3,203,141 Non-current assets, net Mineral property (Note 5) 10,500 10,500 TOTAL ASSETS $ 1,358,208 $ 3,213,641 LIABILITIES Current Accounts payable and accrued liabilities $ 315,404 $ 293,446 Due to related party (Note 7) 17,196 64,409 Total Liabilities 332,600 357,855 STOCKHOLDERS' EQUITY Share Capital (Note 8) Authorized: 500,000,000 common voting shares with a par value of $ 0.001 per share Issued and outstanding: 155,166,088 common shares at August 31, 2023 and 155,116,088 at August 31, 2022 155,167 155,117 Additional paid-in capital (Note 9) 15,397,607 15,395,657 Deficit ( 14,526,485 ) ( 12,694,988 ) Equity attributable to shareholders of the Company 1,026,289 2,855,786 Non-controlling interest ( 681 ) - TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,358,208 $ 3,213,641 The accompanying notes are an integral part of these consolidated financial statements 31 ENERTOPIA CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (Expressed in U.S. Dollars) COMMON STOCK SHARES AMOUNT ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT NON- CONTROLLING INTEREST TOTAL STOCKHOLDERS' EQUITY(DEFICIT) Balance, August 31, 2021 139,211,700 $ 139,213 $ 14,524,341 $ ( 14,669,395 ) $ - $ ( 5,841 ) Warrants exercised 2,791,000 2,791 128,599 - - 131,390 Stock options granted - - 163,130 - - 163,130 Shares issued for hydrogen technology 2,000,000 2,000 98,400 - - 100,400 Shares issued for investment in batter management technology 10,000,000 10,000 440,000 - - 450,000 Shares issued for services 1,000,000 1,000 41,300 - - 42,300 Stock options exercised 113,388 113 ( 113 ) - - - Comprehensive income - - - 1,974,407 - 1,974,407 Balance, August 31, 2022 155,116,088 $ 155,117 $ 15,395,657 $ ( 12,694,988 ) $ - $ 2,855,786 Warrants issued for cash 50,000 50 1,950 - - 2,000 Non controlling interest - - - - ( 681 ) ( 681 ) Comprehensive loss - - - ( 1,831,497 ) - ( 1,831,497 ) Balance, August 31, 2023 155,166,088 $ 155,167 $ 15,397,607 $ ( 14,526,485 ) $ ( 681 ) $ 1,025,608 The accompanying notes are an integral part of these consolidated financial statements 32 ENERTOPIA CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Expressed in U.S. Dollars) YEARS ENDED August 31, August 31, 2023 2022 Expenses Accounting and audit $ 60,057 $ 43,770 Consulting (Note 7) 181,258 262,880 Fees and dues 89,733 57,332 Investor relations 63,293 47,917 Legal and professional 98,229 67,257 Office and miscellaneous 110,789 65,931 Mineral exploration costs (Note 5) 464,665 212,348 Research and development (Note 6) 156,561 808,800 Total expenses 1,224,585 1,566,235 Loss for the period before other items ( 1, 224,585 ) ( 1,566,235 ) Other income (expense) Foreign exchange gain (loss) ( 7,749 ) 1,822 Realized loss on marketable securities ( 564,346 ) ( 7,641 ) Realized foreign exchange loss on marketable securities ( 41,735 ) - Unrealized gain (loss) on marketable securities 136,681 ( 923,533 ) Unrealized foreign exchange loss on marketable securities ( 130,444 ) ( 62,388 ) Gain from mineral property sale (Note 5) - 4,532,382 Net income (loss) and comprehensive income (loss) for the year ( 1,832,178 ) 1,974,407 Net income (loss) and comprehensive income (loss) attributable to: Common shareholders ( 1,831,497 ) 1,974,407 Non controlling interest ( 681 ) - Basic and diluted income (loss) per share Basic $ ( 0.01 ) $ 0.01 Diluted $ ( 0.01 ) $ 0.01 Weighted average number of common shares outstanding Basic 155,142,937 150,994,325 Diluted 164,242,937 151,955,536 The accompanying notes are an integral part of these consolidated financial statements 33 ENERTOPIA CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. Dollars) YEARS ENDED August 31, August 31, 2023 2022 Cash flows used in operating activities Net Income (Loss) $ ( 1,832,178 ) $ 1,974,407 Changes to reconcile net loss to net cash used in operating activities Shares issued for consulting - 42,300 Shares issued for battery management system - 450,000 Shares issued for hydrogen technology - 100,400 Stock based compensation - 163,130 Income from mineral property sale - ( 4,532,382 ) Unrealized (gain) loss on marketable securities ( 136,681 ) 985,921 Unrealized foreign exchange loss on marketable securities 130,444 - Loss on disposal of marketable securities 564,346 7,641 Foreign exchange loss on disposal of marketable securities 41,735 - Change in non-cash working capital items: Accounts receivable ( 4,605 ) ( 325 ) Prepaid expenses and deposits 49,969 ( 98,044 ) Accounts payable and accrued liabilities 21,958 ( 15,831 ) Due to related parties ( 47,213 ) ( 47,250 ) Net cash used in operating activities $ ( 1,212,225 ) $ ( 970,033 ) Cash flows from investing activities Proceeds from sale of marketable securities 854,599 10,064 Proceeds from sale of royalty grant - 1,100,000 Staking of mineral property - ( 10,500 ) Net cash used in investing activities $ 854,599 $ 1,099,564 Cash flows from financing activities Net proceeds from warrants exercised 2,000 131,390 Net cash from financing Activities $ 2,000 $ 131,390 Decrease in cash and cash equivalents ( 355,626 ) 260,921 Cash and cash equivalents at beginning of the year 615,207 354,286 Cash and cash equivalents at end of the year $ 259,581 $ 615,207 Supplemental information of cash flows: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - The accompanying notes are an integral part of these consolidated financial statements 34 ENERTOPIA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2023 (Expressed in U.S. Dollars) 1. ORGANIZATION The Company was formed on November 24, 2004 under the laws of the State of Nevada and commenced operations on November 24, 2004. The Company is an independent natural resource company engaged in the exploration, development, and acquisition of natural resources in the United States. The Company is exploring the West Tonopah Lithium Project ("West Tonopah") in the Big Smokey Valley, Nevada. The Company is also developing various renewable energy technologies. The Company's office is located in Kelowna, B.C., Canada. 2. GOING CONCERN UNCERTAINTY The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business for the foreseeable future. The Company had a working capital of $ 1,015,108 as at August 31, 2023 (2022 - $ 2,845,286 ). As at August 31, 2023 the Company has incurred cumulative losses of $ 14,526,485 that raises substantial doubt about its ability to continue as a going concern. Management has been able, thus far, to finance the operations through equity financing and cash on hand. There is no assurance that the Company will be able to continue to finance the Company on this basis. In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, to receive the continued support of the Company's shareholders, and ultimately to obtain successful operations. There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations. There is significant uncertainty as to whether we can obtain additional financing. These consolidated 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 business and at amounts different from those reflected in the accompanying consolidated financial statements. 3. SIGNIFICANT ACCOUNTING POLICIES a. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. b. Basis of Consolidation The financial statements have been prepared on a consolidated basis with those of the Company's 51 % owned subsidiary, CapNTrack Inc. All intercompany transactions and balances have been eliminated. c. Cash and Cash Equivalents Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of August 31, 2023 and 2022, cash and cash equivalents consisted of the following: August 31, August 31, 2023 2022 Cash $ 218,081 $ 615,207 Money market funds 41,500 - $ 259,581 $ 615,207 35 d. Mineral Properties Acquisition costs of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time proven or probable reserves are established for that project. Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of mineral properties. Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to development activities for that particular project are capitalized as incurred. Where proven and probable reserves have been established, the project's capitalized expenditures are depleted over proven and probable reserves using the units-of production method upon commencement of production. Where proven and probable reserves have not been established, the project's capitalized expenditures are depleted over the estimated extraction life using the straight-line method upon commencement of extraction. The Company has not established proven or probable reserves for any of its projects. The carrying values of the mineral rights are assessed for impairment by management on a quarterly basis and as required whenever indicators of impairment exist. An impairment loss is recognized if it is determined that the carrying value is not recoverable and exceeds fair value. e. Stock-Based Compensation The Company followed Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. f. Accounting Estimates The preparation of consolidated financial statements in conformity with U.S GAAP requires us to make certain estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Some of the Company's accounting policies require us to make subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. These accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. Although we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used. Changes in the accounting estimates used by the Company are reasonably likely to occur from time to time, which may have a material effect on the presentation of financial condition and results of operations. The Company reviews these estimates, judgments and assumptions periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, actual results could differ from these estimates. Significant accounting estimates and assumptions are used for, but not limited to: a) The Valuation of Deferred Tax Assets Judgement is required in determining whether deferred tax assets are recognized on the balance sheet. The recognition of deferred tax assets requires management to assess the likelihood that the Company will generate taxable income in future periods to utilize the deferred tax assets. Due to the Company's history of losses, deferred tax assets have not been recognized by the Company. b) Value of Stock Options The Company provides compensation benefits to its employees, directors, officers, and consultants, through a stock option plan. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility assumption used in the model is based on the historical volatility of the Company's share price. The Company uses historical data to estimate the period of option exercises for use in the valuation model. The risk-free interest rate for the expected term of the option is based on the yields of government bonds. Changes in these assumptions, especially the share price volatility and the expected life determination could have a material impact on the Company's profit and loss for the periods presented. All estimates used in the model are based on historical data which may not be representative of future results. 36 c) Fair value of shares issued in non cash transactions The Company at times grants common shares in lieu of cash to certain vendors for their services to the Company. The Company recognizes the associated cost in the same period and manner as if the Company paid cash for the services provided by calculating the fair value of the share offering at the cost of the service provided. g. Earnings Per Share Loss per share is computed using the weighted average number of shares outstanding during the period. The Company has adopted ASC 220 "Earnings Per Share". Basic earnings per share ("EPS") is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and warrants. h. Foreign Currency Translations The Company's operations are located in the United States of America and has its office in Canada. The Company and its subsidiary CapNTrack maintain their accounting records in U.S. Dollars, as follows: At the transaction date, each asset, liability, revenue and expense that was acquired or incurred in a foreign currency is translated into U.S. dollars by the using of the exchange rate in effect at that date. At the year end, monetary assets and liabilities are translated at the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. i. Financial Instruments ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. The Company's financial instruments consist primarily of cash, marketable securities, accounts receivable, accounts payable and due to related parties. The carrying amounts of these financial instruments approximate their fair values due to their short maturities. Cash and marketable securities are in Level 1 within the fair value hierarchy. The Company's operations are in United States of America and Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. j. Income Taxes The Company has adopted ASC 740, "Income Taxes", which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. 37 k. Long-Lived Assets Impairment In accordance with ASC 360, "Accounting for Impairment or Disposal of Long Lived Assets", the carrying value of long lived assets are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. L. Asset Retirement Obligations The Company accounts for asset retirement obligations in accordance with the provisions of ASC 410, "Asset Retirement and Environmental Obligations". ASC 410 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company does not believe it has any asset retirement obligation as of August 31, 2023 and 2022. M. Comprehensive Income The Company has adopted ASC 220, "Comprehensive Income", which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Deficiency. Comprehensive income comprises equity except those transactions resulting from investments by owners and distributions to owners. n. Concentration of credit risk The Company places its cash with high credit quality financial institutions. o. Commitments and Contingencies In accordance with ASC 450-20, "Accounting for Contingencies", the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In the event that estimates or assumptions prove to differ from actual results, adjustments are made in subsequent periods to reflect more current information. Historically, the Company has not experienced any material claims. p. Research and Development Research and development costs are expensed as incurred. q. Comparative Information The Company reclassified certain balances related to operations in the comparative period to conform with the current presentation. There has been no impact on net loss, comprehensive loss, or net assets as a result of the changes. 4. MARKETABLE SECURITIES On May 4, 2022 ("Closing Date"), the Company announced the sale of its Clayton Valley unpatented mining claims to Cypress Development Corporation ("Cypress") and as a result of this transaction received 3,000,000 shares of Cypress along with $ 1,100,000 in cash. During January 2023 Cypress underwent a name change to Century Lithium Corp ("Century"). The 3,000,000 shares were initially restricted for trade, as of August 31, 2023 all shares are tradable. Marketable securities as at August 31, 2023 consist of the Company's investment in 3,000,000 shares of Century of which a total of 1,140,200 were sold during the year ended August 31, 2023 (2022 - 0 shares sold) leaving 1,859,800 shares. An additional 6,000 share sales were pending that were settled after the year end. As at August 31, 2023, the movement in the Company's marketable securities is as follows: Balance, August 31, 2021 $ 14,994 Additions 1 3,432,382 Unrealized loss ( 923,533 ) Unrealized foreign exchange loss ( 62,388 ) Proceeds from disposal ( 10,064 ) Loss on disposal ( 7,641 ) Balance, August 31, 2022 $ 2,443,750 Additions - Unrealized gain (loss) 136,681 Unrealized foreign exchange gain (loss) ( 130,444 ) Proceeds from disposal ( 854,599 ) Realized loss on disposal ( 564,346 ) Realized Foreign exchange loss on disposal ( 41,735 ) Balance, August 31, 2023 $ 989,307 1 Company recorded the 3,000,000 shares received from Cypress on May 4, 2022 as an investment and valued the investment using the closing rate of CAD 1.63 per share and a discount rate of 10 % due to restrictions on trading. All trading restrictions ended during the year ended August 31, 2023. 38 5. MINERAL PROPERTY West Tonopah On February 25, 2022, the Company staked 1,760 acres of unpatented mineral claims in Esmeralda County, Nevada for cash consideration of $ 10,500 . During the years ended August 31, 2023 and 2022, the mineral exploration expense consisted of: August 31, August 31, 2023 2022 Drilling $ 325,170 $ 125,154 Geologists 77,379 56,999 Sample Assays 31,441 8,572 Travel & Misc 30,675 21,623 Total Exploration $ 464,665 $ 212,348 Disposed of Property Clayton Valley During the year ended August 31, 2017 the Company staked lode and placer claims on Bureau of Land Management lands in Esmerelda County Nevada covering approximately 160 Acres with a 100 % interest in the lands. In February of 2020 the Company signed a 1 % Royalty agreement in exchange for $ 200,000 . In October of 2020 the Company signed a 1 % Royalty agreement in exchange for $ 250,000 . On May 4, 2022, the Company closed the Clayton Valley property sale and disposed of the unpatented mining claims for consideration consisting of $ 1,100,000 in cash and 3,000,000 shares of Cypress Development Corp (Note 4, 5), renamed Century Lithium Corp. The royalty liabilities from the project were fully transferred to Century Lithium Corp. 6. RESEARCH AND DEVELOPMENT Clean Technologies On December 6, 2021, The Company entered into a Definitive Purchase and Sale Agreement to acquire 100 % ownership and rights to the hydrogen technology ("Hydrogen Technology"). By acquiring this Hydrogen Technology, the Company is currently researching the opportunity to create process gas that can be used in commercial, industrial and mining applications by splitting the hydrogen from water via electrolysis. The technology is still in the research and development phase and is not commercially feasible as at the year ended August 31, 2023. Energy Management System ("EMS") On December 17, 2021, The Company entered into a Definitive Purchase and Sale Agreement to acquire 100 % ownership and rights to their Provisional Patent Pending EMS. The Company created a Joint Venture ("JV") with 51 % controlling interest in CapNTrack to run the commercial and industrial operations related to the EMS. As at the period ended date of August 31, 2023, there have been no operations in the JV and only insurance costs have been incurred. The EMS is still in the research and development phase and it has not obtained commercial or operational feasibility as at the year end date of August 31, 2023. 39 The research and development expenses for the years ending August 31, 2023 and 2022 consisted of the following: August 31, August 31, 2023 2022 Clean Technologies $ 152,913 $ 319,133 Energy Management Systems 3,648 489,667 Total Research and Development $ 156,561 $ 808,800 7. RELATED PARTY TRANSACTIONS For the year ended August 31, 2023, the Company was party to the following related party transactions with key management personnel, which consists of the President and Chief Financial Officer of the Company and its Directors: Incurred $ 114,000 (2022 - $ 38,000 ) to the President of the Company in consulting fees. As at August 31, 2023, the accounts payable to the President of the Company was $ 17,196 , of which $ 17,159 were accrued wages (2022: $ 64,409 ). On December 6, 2021 the Company issued 250,000 stock options valued at $ 12,205 to the President of the Company (Note 9). Incurred $ 20,000 (2022 - $ 769 ) to the Chief Financial Officer of the Company in consulting fees. As at August 31, 2023, the accounts payable to the Chief Financial Officer of the Company was $ 0 (2022: $ 0 ). On August 18, 2022, the Company issued 1,000,000 stock options valued at $ 40,543 to the Chief Financial Officer of the Company (Note 9). The Company incurred $ 13,500 to a director of the Company in geological consulting services. On August 18, 2022 the Company issued a total of 1,000,000 stock options valued at $ 40,543 to two Directors of the Company. 8. COMMON STOCK At the Annual General Meeting held in March of 2023, the authorized share capital was increased from 200 million shares to 500 million shares. During the year ended August 31, 2022 the Company issued 113,388 common shares as a result of the exercise of stock options and 2,791,000 common shares as a result of the exercise of warrants (Note 9). On December 6, 2021 the Company issued 1,000,000 common shares and an additional 1,000,000 common shares in escrow in connection with the purchase of Hydrogen Technology (Note 6). On December 17, 2021 the Company issued 5,000,000 common shares and an additional 5,000,000 common shares in escrow in connection with the purchase of JV (Note 6). On February 25, 2022, the Company issued 1,000,000 shares to one consultant of the Company. On February 22, 2023 the Company issued 50,000 shares on the exercise of 50,000 warrants at $ 0.04 per warrant (Note 9). As at August 31, 2023 the Company had 155,166,088 shares issued and outstanding (2022 - 155,116,088 ). As at August 31, 2023 the Company had 7,000,000 (2022 - 7,000,000 ) shares held in escrow in connection with the purchase of Clean energy pending patent approvals. 9. STOCK OPTIONS AND WARRANTS Stock Options On July 15, 2014, the shareholders approved and adopted at the Annual General Meeting the Company's 2014 Stock Option Plan. The purpose of these Plans is to advance the interests of the Corporation, through the grant of Options, by providing an incentive mechanism to foster the interest of eligible persons in the success of the Corporation and its affiliates; encouraging eligible persons to remain with the Corporation or its affiliates; and attracting new Directors, Officers, Employees and Consultants. The aggregate number of Common Shares that may be reserved, allotted and issued pursuant to Options shall not exceed 17,400,000 shares of common stock, less the aggregate number of shares of common stock then reserved for issuance pursuant to any other share compensation arrangement. For greater certainty, if an Option is surrendered, terminated or expires without being exercised, the Common Shares reserved for issuance pursuant to such Option shall be available for new Options granted under this Plan. The options are deemed as vested and exercisable on issuance and the maximum life of the options granted under this Plan may not exceed 5 years. 40 At the Annual General Meeting held March 22, 2023, a new 2023 Stock Option Plan was approved. Under the 2023 Stock Option Plan (the "2023 Plan") the Company may grant options to purchase shares of common stock, $ 0.001 par value per share, of the Company. The stock subject to options granted under the 2023 Plan shall be shares of authorized but unissued or reacquired common stock. The maximum number of shares of common stock of the Company which may be issued and sold under the 2023 Plan shall be 31,000,000 , subject to adjustment for stock splits or consolidations with a maximum life of 5 years and vesting at the discretion of the Board of Directors. Management plans to issue all new option grants under the 2023 Plan and to cancel the 2014 Plan once all currently issued options are either exercised or expire. On September 9, 2021, the Company issued 500,000 stock options to one of the consultants of the Company with an exercise price of $ 0.08 vested immediately, expiring September 9, 2026 . On December 6, 2021, the Company issued 250,000 stock options to the president of the Company with an exercise price of $ 0.07 vested immediately, expiring December 6, 2026 . On December 6, 2021, the Company issued 500,000 stock options to one of the consultants of the Company with an exercise price of $ 0.07 vested immediately, expiring December 6, 2026 . On December 6, 2021, the Company issued 250,000 stock options to one of the consultants of the Company with an exercise price of $ 0.07 vested immediately, expiring December 6, 2026 . On August 18, 2022, the Company issued 2,000,000 stock options with an exercise price of $ 0.06 vesting immediately, expiring August 18, 2027 . 1,000,000 to the Chief Financial Officer and 500,000 each to two Directors of the Company (Note 7). During the year ended August 31, 2023, the Company did not issue any options. The fair value of the options granted during the year ended August 31, 2022 was estimated on the date of the grant using the Black-Scholes options pricing model, with the following weighted average assumptions: 2022 Expected dividend yield 0.00 % Expected stock volatility 202 % Risk-free interest rate 2.26 % Expected life of options (years) 5.00 Expected forfeiture rate 0.00 % Grant date fair value per option 0.05 During the year ended August 31, 2023, the Company recorded $ 0 (August 31, 2022 $ 163,130 ) as stock-based compensation expense. During the year ended August 31, 2023 no options were exercised and 1,750,000 options expired unexercised. During the year ended August 31, 2022, 113,388 common shares were issued as a result of the exercise of 226,776 cashless stock options and a total of 3,450,000 stock options expired without being exercised. A summary of the changes in stock options is presented below: Options Outstanding Number of Options Weighted Average Exercise Price $ Weighted Average Remaining Life (Years) Balance, August 31, 2021 10,076,776 0.08 Issued 3,500,000 0.07 Expired ( 3,450,000 ) 0.07 Exercised ( 226,776 ) 0.04 Balance, August 31, 2022 9,900,000 0.08 Expired ( 1,750,000 ) 0.06 Balance, August 31, 2023 (Outstanding & Exercisable) 8,150,000 0.09 2.91 41 The Company has the following options outstanding and exercisable as at August 31, 2023: Issue Date Expiry Date Exercise Price Number of Options Remaining Life (Years) December 14, 2020 December 14, 2025 0.05 2,100,000 2.29 January 28, 2021 January 28, 2026 0.14 2,000,000 2.41 February 4, 2021 February 4, 2026 0.18 100,000 2.43 February 5, 2021 February 5, 2026 0.18 300,000 2.44 April 27, 2021 April 27, 2026 0.12 100,000 2.66 May 28, 2021 May 28, 2026 0.12 50,000 2.74 September 1, 2021 September 1, 2026 0.08 500,000 3.01 December 6, 2021 December 6, 2026 0.07 1,000,000 3.27 August 18, 2022 August 18, 2027 0.06 2,000,000 3.97 Balance outstanding and exercisable 8,150,000 2.91 *As at August 31, 2023 the market price of the Company's common shares was $ 0.021 per share. The intrinsic value of the stock options was $ 0 . Warrants There were no warrants issued during the years ended August 31, 2023 and 2022. During the year ended August 31, 2023, 50,000 warrants were exercised for $ 2,000 , and 4,923,369 warrants expired unexercised. A summary of warrants as at August 31, 2023 and August 31, 2022 is as follows: Weighted Average Number of warrants Exercise Price Balance, August 31, 2021 9,716,869 $ 0.05 Forfeited ( 1,952,500 ) 0.08 Exercised ( 2,91,000 ) 0.05 Balance, August 31, 2022 4,973,369 $ 0.04 Forfeited ( 4,923,369 ) 0.04 Exercised ( 50,000 ) 0.04 Balance, August 31, 2023 - $ - 10. COMMITMENTS The Company has a consulting agreement with the President of the Company for corporate administration and consulting services for $ 9,500 per month plus goods and services tax ("GST") on a continuing basis. The Company has a consulting agreement with the CFO of the Company for corporate administration and consulting services for $ 5,000 per quarter plus goods and services tax ("GST") on a continuing basis, increasing to $ 7,500 per quarter plus GST beginning September 1, 2023. The Company has a rental agreement for a corporate office for CAD$ 1,155 per month plus GST. The agreement expires December 31, 2023. 11. PREPAID EXPENSES AND DEPOSITS The balance of Prepaid Expenses and Deposits consisted of the following: August 31, August 31, Prepaid Expenses & Deposits 2023 2022 Advertising $ 13,593 $ 20,863 Clean Technology Expense 5,400 71,000 Consultants 8,000 24,540 Exploration costs 28,400 9,077 Filing fees - 8,748 Insurance 33,915 - Office Expenses 30 5,079 Total Prepaid Expenses& Deposits $ 89,338 $ 139,307 42 12. INCOME TAXES The following table reconciles the income tax benefit at the U.S. Federal statutory income tax rates to income tax benefit at the Company's effective tax rates at August 31, 2023 and 2022: August 31, August 31, 2023 2022 Income (loss) before taxes $ ( 1,832,178 ) $ 1,974,407 Statutory tax rate 21 % 21.00 % Expected income tax expense (recovery) ( 384,757 ) 414,625 Non-deductible items 1,428 34,257 Change in enacted rates and other 422,502 ( 26,649 ) Change in valuation allowance ( 39,173 ) ( 422,234 ) Income tax expense (recovery) $ - $ - Deferred taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes. Deferred tax assets (liabilities) at August 31, 2023 and 2022 are comprised of the following: August 31, 2023 August 31, 2022 Net operating loss carry forwards $ 2,734,816 $ 2,154,456 Intangible assets 29,590 - Marketable securities 206,303 207,613 Mineral property 25,465 64,364 Capital loss carry forwards 1,605 4,526 2,997,779 2,430,960 Valuation allowance 2,977,779 2,430,960 Deferred tax assets (liabilities) $ - $ - The Company has net operating loss carry forwards of approximately $ 12,651,469 (2022 - $ 10,259,316 ) a portion of which may be carried forward up to 20 years to apply against future taxable income for US tax purposes, subject to the final determination by the taxation authority, expiring in the following years. Future tax assets have not been recognized because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom. 43 13. SEGMENTED INFORMATION The Company's operations involve the development of natural resources and green technologies. The Company is centrally managed and its chief operating decision maker, being the CEO, uses the consolidated and other financial information to make operational decisions and to assess the performance of the Company. The Company has increased its reportable segments from one to three during the year ended August 31, 2022. The decision for this change was made keeping in mind the Company's strategic direction and the need to better report the results for each of the identified three reportable segments: Natural Resources, Technology and Corporate, none of which are revenue generating as at the year ended date of August 31, 2023. Long term Assets Amount United States of America $ 10,500 Balance August 31, 2023 $ 10,500 Natural Resources Technology Corporate Consolidated Total August 31, 2023 $ $ $ $ Expenses ( 464,665 ) ( 156,561 ) ( 603,359 ) ( 1,224,585 ) Other income (Note 4) - - ( 607,593 ) ( 607,593 ) Segment Loss ( 464,665 ) ( 156,561 ) ( 1,210,952 ) ( 1,832,178 ) Total Assets (Note 4, 5) 10,500 - 1,347,708 1,358,208 Long term Assets Amount United States of America $ 10,500 Balance August 31, 2022 $ 10,500 Natural Resources Technology Corporate Consolidated Total August 31, 2022 $ $ $ $ Expenses ( 212,348 ) ( 808,800 ) ( 545,087 ) ( 1,566,235 ) Other income (Note 4, 5, 6) 4,532,382 - ( 991,740 ) 3,540,642 Segment Income (Loss) 4,320,034 ( 808,800 ) ( 1,536,827 ) 1,974,407 Total Assets (Note 4, 5) 10,500 - 3,203,141 3,213,641 14. SUBSEQUENT EVENTS Management has evaluated subsequent events through the date these consolidated financial statements were issued. Based on our evaluation the are no material events have occurred that require disclosure. 44 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.