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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-11-25 compared with 2023-11-29 · 53 added, 114 removed, 355 unchanged (32% of the section changed)

5 unchanged sentences

Enertopia Corp.

Opinion on the Financial Statements

Opinion on the Consolidated 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.

(the “Company”), as of August 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the years ended August 31, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position Enertopia Corp.

as of August 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended August 31, 2024 and 2023 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 accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company 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.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated 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.

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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.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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.

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 Company’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.

Our audits included performing procedures to assess the risks of material misstatements 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 consolidated 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 consolidated 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:

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.

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.

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(Expressed in U.S.

Cash and cash equivalents (Note 3)

Cash and cash equivalents

Marketable securities (Note 4)

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Non-controlling interest

Total Stockholders' Equity

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

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ENERTOPIA CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S.

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STOCKHOLDERS'

EQUITY(DEFICIT)

Balance, August 31, 2022

Warrants exercised

Stock options granted

Shares issued for hydrogen technology

Shares issued for investment in batter management technology

Shares issued for services

Stock options exercised

Comprehensive income

Warrants issued for cash

Non controlling interest

Comprehensive loss

Balance, August 31, 2023

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Foreign exchange gain (loss)

Realized loss on marketable securities

Realized foreign exchange loss on marketable securities

Realized gain (loss) on marketable securities

Realized foreign exchange gain (loss) on marketable securities

Unrealized gain (loss) on marketable securities

Unrealized foreign exchange loss on marketable securities

Gain from mineral property sale (Note 5)

Net income (loss) and comprehensive income (loss) for the year

Net income (loss) and comprehensive income (loss) attributable to:

Unrealized foreign exchange gain (loss) on marketable securities

Net income (loss) for the period

Net income (loss) attributable to:

Common shareholders

Non controlling interest

Basic and diluted income (loss) per share

Basic and diluted loss per share

Basic and diluted

Weighted average number of common shares outstanding

Basic and diluted

The accompanying notes are an integral part of these consolidated financial statements

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Changes to reconcile net loss to net cash used in operating activities

Shares issued for consulting

Shares issued for battery management system

Shares issued for hydrogen technology

Stock based compensation

Income from mineral property sale

Unrealized (gain) loss on marketable securities

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Net cash used in operating activities

Cash flows from investing activities

Cash flows used in investing activities

Proceeds from sale of marketable securities

Proceeds from sale of royalty grant

Staking of mineral property

Net cash used in investing activities

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Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental information of cash flows:

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As of August 31, 2024, and 2023, cash and cash equivalents consisted of the following:

Money market funds

Cash equivalents

Mineral Properties

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The 3,000,000 shares were initially restricted for trade, as of August 31, 2024 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.

Marketable securities as at August 31, 2024 consist of the Company's investment in 3,000,000 shares of Century of which a total of 2,649,700 were sold by August 31, 2024 leaving 350,300 shares.

As at August 31, 2024, the movement in the Company's marketable securities is as follows:

Balance, August 31, 2022

Unrealized loss

Unrealized foreign exchange loss

Mark to market

Unrealized foreign exchange gain (loss)

Proceeds from disposal

Loss on disposal

Realized loss on disposal

Realized Foreign exchange loss on disposal

Balance, August 31, 2023

Unrealized gain (loss)

Mark to market

Unrealized foreign exchange gain (loss)

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Balance, August 31, 2024

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.

MINERAL PROPERTY

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Total Exploration

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.

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").

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• Incurred $ 95,000 (2023 - $ 114,000 ) 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:

On December 6, 2021 the Company issued 250,000 stock options valued at $ 12,205 to the President of the Company (Note 9).

As at August 31, 2024, the accounts payable to the President of the Company was $ 0 , (2023:

• Incurred $ 30,000 (2023 - $ 20,000 ) 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:

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 $ 776 (2023 - $ 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.

• The Company incurred $ 9,297 in director fees to directors of the Company.

At the Annual General Meeting held in May of 2024, the Company was granted Shareholder approval to perform a share consolidation of between 5-1 to 20-1 shares outstanding while keeping the authorized share capital at 500 million shares.

As of November 22, 2024, no share consolidation has been approved by the board of directors.

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, 2024 the Company had 155,166,088 shares issued and outstanding (2023 - 155,166,088 ).

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.

As at August 31, 2024 the Company had 7,000,000 (2024 - 7,000,000 ) shares held in escrow by our transfer agent in connection with the purchase of Clean energy pending patent approvals.

STOCK OPTIONS AND WARRANTS

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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:

Expected dividend yield

Expected stock volatility

Risk-free interest rate

Expected life of options (years)

Expected forfeiture rate

Grant date fair value per option

During the year ended August 31, 2023, the Company recorded $ 0 (August 31, 2022 $ 163,130 ) as stock-based compensation expense.

During the years ended August 31, 2024, and 2023, the Company did not issue any options.

During the year ended August 31, 2024 and 2023, the Company recorded $ 0 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

Weighted Average

Exercise Price $

Weighted Average

Remaining Life

Intrinsic Value $

Balance, August 31, 2022

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Remaining Life

December 14, 2020

December 14, 2025

January 28, 2021

January 28, 2026

February 4, 2021

February 4, 2026

February 5, 2021

February 5, 2026

April 27, 2021

April 27, 2026

September 1, 2021

September 1, 2026

December 6, 2021

December 6, 2026

August 18, 2022

August 18, 2027

Balance outstanding and exercisable

2 unchanged sentences

There were no warrants issued during the years ended August 31, 2024 and 2023.

During the year ended August 31, 2023, 50,000 warrants were exercised for $ 2,000 , and 4,923,369 warrants expired unexercised.

During the year ended August 31, 2024 and 2023, 0 and 50,000 warrants were exercised, respectively and for $ 0 and $ 2,000 , respectively.

A summary of warrants as at August 31, 2024 and August 31, 2023 is as follows:

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Balance, August 31, 2023

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 consulting agreement with the CFO of the Company for corporate administration and consulting services for $ 7,500 per quarter plus goods and services tax ("GST") on a continuing basis.

The Company has a rental agreement for a corporate office for CAD$ 853 per month plus GST.

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Prepaid Expenses & Deposits

Clean Technology Expense

Exploration costs

Fees and Dues

Office Expenses

Research & Development

Total Prepaid Expenses& Deposits

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Balance August 31, 2023

Natural Resources

Consolidated Total

August 31, 2023

Other income (Note 4)

Segment Income (Loss)

Total Assets (Note 4, 5)

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Based on our evaluation the are no material events have occurred that require disclosure.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Changes in and Disagreements With Accountants on Accounting and Financial Disclosur e

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk