Rise Gold Corp. 10-K

Item 8. Financial Statements and Supplementary Data. - 51 - CONSOLIDATED FINANCIAL STATEMENTS (Expressed in United States Dollars) FOR THE YEAR ENDED JULY 31, 2023 - 52 - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Directors of Rise Gold Corp. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Rise Gold Corp. (the “Company”) as of July 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended , and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Rise Gold Corp. as of July 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended July 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company incurred a loss of $3,660,382 for the year ended July 31, 2023 and as of that date, had an accumulated deficit of $26,668,986. These events and conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion 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. 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 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. 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 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. - 53 - Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of impairment indicators of mineral property interests As described in Note 5 to the consolidated financial statements, the carrying amount of the Company’s mineral property interests was $4,149,053 as at July 31, 2023. As more fully described in Note 3, management applies judgment to evaluate its mineral property interests for indicators of impairment whenever events or changes in circumstance indicate that the carrying amount of the asset may not be recoverable. The principal considerations for our determination that the assessment of impairment indicators of the mineral property interests is a critical audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the mineral property interests. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the mineral property interests. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures include, among others: evaluating management’s assessment of indicators of impairment; evaluation of future commodity pricing; assessing good standing of mineral property rights; and evaluating the Company’s current, past, and planned exploration expenditures and ability to carry out future exploration activity. We have served as the Company's auditor since 2013. /s/ DAVIDSON & COMPANY LLP Vancouver, Canada Chartered Professional Accountants October 25, 2023 - 54 - RISE GOLD CORP. (An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS ((Expressed in United States Dollars) AS AT July 31, 2023 July 31, 2022 ASSETS Current Cash and cash equivalents $ 758,272 $ 471,918 Receivables 82,529 85,357 Prepaid expenses (Note 4) 140,042 429,302 Total current assets 980,843 986,577 Non-current Mineral property interests (Note 5) 4,149,053 4,149,053 Equipment (Note 6) 528,465 551,436 Total assets $ 5,658,361 $ 5,687,066 LIABILITIES AND STOCKHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 457,412 $ 321,942 Payable to related parties (Note 8) 51,159 28,018 Total current liabilities 508,571 349,960 Non-current Loan payable (Note 9) 1,437,914 1,364,530 Derivative liability (Note 10) 140,015 373,910 Total liabilities 2,086,500 2,088,400 Stockholders' equity Capital stock, $ 0.001 par value, 400,000,000 shares authorized; 40,362,800 (July 31, 2022 - 32,787,798 ) shares issued and outstanding (Note 11) 40,363 32,788 Additional paid-in capital (Note 11) 30,304,568 26,678,566 Cumulative translation adjustment ( 104,084 ) ( 104,084 ) Deficit ( 26,668,986 ) ( 23,008,604 ) Total stockholders' equity 3,571,861 3,598,666 Total liabilities and stockholders' equity $ 5,658,361 $ 5,687,066 Nature and continuance of operations (Note 1) Contingency (Note 7) Subsequent event (Note 15) Approved and authorized by the Board on October 25, 2023. "Benjamin Mossman" Director "Murray Flanigan" Director Benjamin Mossman Murray Flanigan The accompanying notes are an integral part of these consolidated financial statements. - 55 - RISE GOLD CORP. (An Exploration Stage Company) CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in United States Dollars) FOR THE YEAR ENDED JULY 31, 2023 2022 EXPENSES Accretion expense (Note 9) $ 149,505 $ 114,907 Consulting 565,885 527,320 Directors' fees 81,209 80,000 Filing and regulatory 57,751 32,374 Foreign exchange loss 45,134 45,754 General and administrative 363,287 333,888 Geological, mineral, and prospect costs (Note 5) 772,636 788,684 Interest expense (Note 9) 328,097 273,036 Professional fees 757,769 738,119 Promotion and shareholder communication 183,340 165,987 Salaries 135,000 135,000 Share-based payments (Note 11) 466,527 406,790 Loss before other items ( 3,906,140 ) ( 3,641,859 ) Gain on fair value adjustment on derivative liability (Note 10) 233,895 67,856 Write-off on payable - 30,739 Other income 11,863 79,137 Net loss and comprehensive loss for the year ( 3,660,382 ) ( 3,464,127 ) Basic and diluted loss per common share $ ( 0.10 ) $ ( 0.12 ) Weighted average number of common shares outstanding (basic and diluted) 36,393,029 29,803,778 The accompanying notes are an integral part of these consolidated financial statements. - 56 - RISE GOLD CORP. (An Exploration Stage Company) CONSOLIDATED STATEMENT OF CASH FLOWS (Expressed in United States Dollars) FOR THE YEAR ENDED JULY 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year $ ( 3,660,382 ) $ ( 3,464,127 ) Items not involving cash: Interest expense 328,097 273,036 Depreciation 22,971 24,345 Share-based payment 466,527 406,790 Accretion expense 149,505 114,907 Gain on fair value adjustment on warrant derivatives ( 233,895 ) ( 67,856 ) Non-cash working capital item changes: Receivables 2,828 ( 41,244 ) Prepaid expenses 289,260 ( 90,268 ) Accounts payables and accrued liabilities 135,470 156,050 Payable to related parties 23,141 ( 5,992 ) Net cash used in operating activities ( 2,476,478 ) ( 2,694,359 ) CASH FLOWS FROM FINANCING ACTIVITIES Private placement, net of issuance cost (Note 11) 2,985,423 2,392,998 Loan repayment ( 250,000 ) - Proceeds from exercise of options 27,409 - Net cash provided by financing activities 2,762,832 2,392,998 C hange in cash and cash equivalents for the year 286,354 ( 301,361 ) C ash and cash equivalents, beginning of year 471,918 773,279 C ash and cash equivalents, end of year $ 758,272 $ 471,918 Supplemental disclosure with respect to cash flows (Note 13) The accompanying notes are an integral part of these consolidated financial statements. - 57 - RISE GOLD CORP. (An Exploration Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Expressed in United States Dollars) Capital Stock Cumulative Additional Paid-in Translation Number Amount Capital Adjustment Deficit Total Balance as at July 31, 2021 26,770,298 $ 26,770 $ 23,884,796 $ ( 104,084 ) $ ( 19,544,477 ) $ 4,263,005 Shares issued for cash, net of issuance cost 6,017,500 6,018 2,386,980 - - 2,392,998 Share-based compensation - - 406,790 - - 406,790 Loss for the year - - - - ( 3,464,127 ) ( 3,464,127 ) Balance as at July 31, 2022 32,787,798 $ 32,788 $ 26,678,566 $ ( 104,084 ) $ ( 23,008,604 ) $ $ 3,598,666 Shares issued for cash, net of issuance cost 7,500,002 7,500 2,977,923 - - 2,985,423 Options exercise 75,000 75 27,334 - - 27,409 Warrants issued for loan modification - - 154,218 - - 154,218 Share-based compensation - - 466,527 - - 466,527 Loss for the year - - - - ( 3,660,382 ) ( 3,660,382 ) Balance as at July 31, 2023 40,362,800 $ 40,363 $ 30,304,568 $ ( 104,084 ) $ ( 26,668,986 ) $ 3,571,861 The accompanying notes are an integral part of these consolidated financial statements. - 58 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 1. NATURE AND CONTINUANCE OF OPERATIONS Rise Gold Corp. (the "Company") was originally incorporated as Atlantic Resources Inc. in the State of Nevada on February 9, 2007 and is in the exploration stage. On April 11, 2012, the Company merged its wholly-owned subsidiary, Patriot Minefinders Inc., a Nevada corporation, in and to the Company to effect a name change to Patriot Minefinders Inc. On January 14, 2015, the Company completed a name change to Rise Resources Inc. in the same manner. On March 29, 2017, the Company changed its name to Rise Gold Corp. These mergers were carried out solely for the purpose of effecting these changes of names. On September 18, 2020, the Company increased its authorized capital from 40,000,000 shares to 400,000,000 shares. On January 29, 2016, the Company completed an initial public offering in Canada and began trading on the Canadian Securities Exchange ("CSE") on February 1, 2016. The Company is in the early stages of exploration and as is common with any exploration company, it raises financing for its acquisition activities. The accompanying consolidated financial statements have been prepared on the going concern basis, which presumes that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has incurred a loss of $ 3,660,382 for the year ended July 31, 2023 and has accumulated a deficit of $ 26,668,986 . The ability of the Company to continue as a going concern is dependent on the Company's ability to maintain continued support from its shareholders and creditors and to raise additional capital and implement its business plan. There is no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. These events and conditions cast substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At July 31, 2023, the Company had working capital of $ 472,272 (2022 - working capital of $ 636,617 ). 2. BASIS OF PREPARATION Generally accepted accounting principles These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America ("US GAAP") for financial information with the instructions to Form 10-K and Regulation S-K. - 59 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 2. BASIS OF PREPARATION (continued) Basis of Consolidation These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Rise Grass Valley Inc. All significant intercompany accounts and transactions have been eliminated on consolidation. Subsidiaries Subsidiaries are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases. The accounts of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Intercompany transactions, balances and unrealized gains or losses on transactions are eliminated upon consolidation. Use of Estimates The preparation of these financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring the use of estimates include the carrying value and recoverability of mineral properties and the recognition of deferred tax assets based on the change in unrecognized deductible temporary tax differences. Actual results could differ from those estimates and would impact future results of operations and cash flows. Functional and reporting currency The Company and its wholly owned subsidiary, Rise Grass Valley Inc. functional and reporting currency is the United States dollar. Transactions in currencies other than the functional currency of the Company are initially translated into the functional currency by applying the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the date of the statement of financial position. Non-monetary assets and liabilities are translated at historical exchange rates, unless the item is carried at fair value, in which case it will be translated at the exchange rate in effect at the date when the fair value was determined. Resulting foreign exchange gains and losses are recognized in income or loss. - 60 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 3. SIGNIFICANT ACCOUNTING POLICIES Derivative liability Derivatives are initially recognized at the fair value on the date the derivative contract is entered into and transaction costs are expensed. The Company's derivatives are subsequently re-measured at their fair value at each balance sheet date with changes in fair value recognized in profit or loss. As the exercise price of the Company's warrants are in Canadian Dollars, and the functional currency of the Company is the United States Dollar, these warrants are considered a derivative as a variable amount of cash in the Company's functional currency will be received upon exercise. Receivables The Company reviews all receivables that exceed terms and establishes an allowance for doubtful accounts based on management's assessment of the collectability of trade and other receivables. Mineral property The costs of acquiring mineral rights are capitalized at the date of acquisition. After acquisition, various factors can affect the recoverability of the capitalized costs. If, after review, management concludes that the carrying amount of a mineral property is impaired, it will be written down to estimated fair value. Exploration costs incurred on mineral properties are expensed as incurred. Development costs incurred on proven and probable reserves will be capitalized. Upon commencement of production, capitalized costs will be amortized using the unit-of-production method over the estimated life of the ore body based on proven and probable reserves (which exclude non-recoverable reserves and anticipated processing losses). When the Company receives an option payment related to a property, the proceeds of the payment are applied to reduce the carrying value of the exploration asset. Long-lived assets Long-lived assets, consisting of equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Equipment Equipment is recorded at cost less accumulated depreciation. Depreciation is provided over the assets' useful lives on a straight-line basis . Equipment purchased by the Company is depreciated over 15 years. Asset retirement obligations The Company records 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 long-lived assets. The Company also records a corresponding asset which is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost). - 61 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Loss per share Basic loss per common share is computed using the weighted average number of common shares outstanding during the year. To calculate diluted loss per share, the Company adjusts net income (loss) attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares such as stock options and warrants. As at July 31, 2023, 3,638,500 outstanding options and 16,661,247 outstanding warrants were excluded from the diluted calculation. In reporting periods when a loss is incurred, potential issuance of shares would be anti-dilutive and, therefore, basic and diluted loss per share are the same. Financial instruments The Company's financial instruments consist of cash, receivables, accounts payable and accrued liabilities, loan payable and payable to related parties. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these financial instruments approximate their carrying values unless otherwise noted. Fair value of financial assets and liabilities The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor's carrying amount or exchange amount. Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest rate method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income. The following indicates the fair value hierarchy of the valuation techniques the Company utilizes to determine the fair value of financial assets that are measured at fair value on a recurring basis. Level 1 - Unadjusted quoted prices in active markets for identical assets and 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. Cash is considered level 1 and classified as cash on hand and held at banks. The derivative liability is recognized at fair value using level 2 inputs as the fair value of derivatives was determined using a Black-Scholes option pricing formula. Financial instruments, including payable to related parties, accounts payable, accrued liabilities and loan payable are classified as other financial liabilities and are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. - 62 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 3. SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of credit risk The financial instrument which potentially subjects the Company to concentration of credit risk is cash. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. Stock-based compensation The Company accounts for share-based compensation under the provisions of ASC 718, "Compensation-Stock Compensation". Under the fair value recognition provisions, stock-based compensation expense is measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measured. Share-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period. The Black-Scholes option valuation model is used to calculate fair value. Income taxes The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss from the current year and any adjustment to income taxes payable related to previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or subsequently enacted by the year-end date. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized. Recently adopted and recently issued accounting standards The Company has determined that other significant newly issued accounting pronouncements are either not applicable to the Company's business or that no material effect is expected on the financial statements as a result of future adoption. 4. PREPAID EXPENSES July 31, 2023 July 31, 2022 Insurance $ 79,758 $ 71,424 Deposits 50,539 342,987 Other 9,745 14,891 $ 140,042 $ 429,302 - 63 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 5. MINERAL PROPERTY INTERESTS The Company's mineral properties balance consists of: Idaho-Maryland, California Ending balance, July 31, 2023 and 2022 $ 4,149,053 Title to mineral properties Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain mineral titles as well as the potential for problems arising from the frequently ambiguous conveying history characteristic of many mineral properties. As at July 31, 2023, the Company holds title to the Idaho-Maryland Gold Mine Property. As of July 31, 2023, based on management's review of the carrying value of mineral rights, management determined that there is no evidence that the cost of these acquired mineral rights will not be fully recovered and accordingly, the Company determined that no adjustment to the carrying value of mineral rights was required. As of the date of these consolidated financial statements, the Company has not established any proven or probable reserves on its mineral properties and has incurred only acquisition and exploration costs. Idaho-Maryland Gold Mine Property, California On August 30, 2016, the Company entered into an option agreement with three parties to purchase a 100 % interest in and to the Idaho-Maryland Gold Mine property located near Grass Valley, California, United States. Pursuant to the option agreement, in order to exercise the option, the Company was required to pay $ 2,000,000 by November 30, 2016. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $ 25,000 , which would be credited against the purchase price of $ 2,000,000 upon exercise of the option. On November 30, 2016, the Company negotiated an extension on the closing date of the option agreement to December 26, 2016, in return for a cash payment of $ 25,000 , which would be credited against the purchase price of $ 2,000,000 upon exercise of the option. On December 28, 2016, the Company negotiated a further no-cost extension of the closing date of the option agreement to April 30, 2017. On January 25, 2017, the Company exercised the option by paying $ 1,950,000 and acquired a 100 % interest in the Idaho-Maryland Gold Mine property. In connection with the option agreement, the Company agreed to pay a cash commission of $ 140,000 equal to 7 % of the purchase price of $ 2,000,000 . The commission was settled on January 25, 2017 through the issuance of 92,000 units valued at $ 1.16 (C$ 2.00 ) per unit. Each unit consisted of one share of common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of $ 3.04 (C$ 4.00 ) for a period of two years from the date of issuance. The Company also incurred additional transaction costs of $ 109,053 , which have been included in the carrying value of the Idaho-Maryland Gold Mine. - 64 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 5. MINERAL PROPERTY INTERESTS (cont'd...) On January 6, 2017, the Company entered into an option agreement with Sierra Pacific Industries Inc. ("Sierra") to purchase a 100 % interest in and to certain surface rights located near Grass Valley, California, United States, contiguous to the Idaho-Maryland Gold Mine property acquired by the Company on January 25, 2017. Pursuant to the option agreement, in order to exercise the option, the Company was required to pay $ 1,900,000 by March 31, 2017. Upon execution of the option agreement, the Company paid the vendors a non-refundable cash deposit in the amount of $ 100,000 , which was credited against the purchase price of $ 1,900,000 upon exercise of the option. On April 3, 2017, the Company negotiated an extension of the closing date of the option agreement to June 30, 2017, in return for a cash payment of $ 200,000 , at which time a payment of $ 1,600,000 was due in order to exercise the option. On June 7, 2017, the Company negotiated an extension of the closing date of the option agreement to September 30, 2017, in return for a cash payment of $ 300,000 , at which time a payment of $ 1,300,000 was due in order to exercise the option. On May 14, 2018, the Company completed the purchase of the surface rights by making final payments totalling $ 1,300,000 . As at July 31, 2023, the Company has incurred cumulative exploration expenditures of $ 8,730,982 on the Idaho-Maryland Gold Mine property as follows: Year ended July 31, 2023 Year ended July 31, 2022 Idaho-Maryland Gold Mine expenditures: Opening balance $ 7,958,346 $ 7,169,662 Consulting 629,183 549,468 Depreciation 22,971 24,345 Engineering 20,370 91,635 Exploration ( 28,183 ) ( 15,856 ) Logistics 21,815 3,037 Rent 97,332 88,517 Supplies 9,148 23,433 Sampling - 24,105 Total expenditures for the year 772,636 788,684 Closing balance $ 8,730,982 $ 7,958,346 - 65 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 6. EQUIPMENT Cost Drilling equipment At July 31, 2021 $ 644,847 At July 31, 2022 $ 644,847 At July 31, 2023 $ 644,847 Accumulated depreciation At July 31, 2021 $ 69,066 Depreciation 24,345 At July 31, 2022 $ 93,411 Depreciation 22,971 At July 31, 2023 $ 116,382 Total carrying value, July 31, 2022 $ 551,436 Total carrying value, July 31, 2023 $ 528,465 Depreciation of equipment is included in geological, mineral, and prospect costs (Note 5). 7. CONTINGENCY During the year ended July 31, 2014, the Company entered into a binding letter of intent ("LOI") with Wundr Software Inc. ("Wundr"). Under the terms of the LOI, the Company would acquire 100% of the issued and outstanding common shares of Wundr. Due to unforeseen circumstances, the Company did not complete the transactions contemplated in the LOI, which the Company announced had expired on January 10, 2014. On September 17, 2014, the Company learned that it was the subject, along with a number of additional defendants, of a notice of civil claim (the "Claim") filed in the Supreme Court of British Columbia by Wundr, under which Wundr is seeking general damages from the Company as well as damages for conspiracy to cause economic harm. None of the allegations contained in the Claim have been proven in court. Management has determined that the probability of the Claim resulting in an unfavourable outcome and financial loss to the Company is unlikely. 8. RELATED PARTY TRANSACTIONS Key management personnel consist of the Chief Executive Officer, Chief Financial Officer, and the directors of the Company. The remuneration of the key management personnel is as follows: a) Salaries of $ 135,000 (2022 - $ 135,000 ) were paid or accrued to the CEO of the Company. b) Directors' fees of $ 81,209 (2022 - $ 80,000 ) to directors of the Company. c) During the year ended July 31, 2023, the Company paid $ 134,140 (2022 - $ 141,822 ) in professional fees to a company controlled by a director of the Company. d) Share-based compensation of $ 421,883 (2022 - $ 394,158 ) for options granted during the year ended July 31, 2023. e) As at July 31, 2023, $ 51,159 (2022 - $ 28,018 ) was owed to related parties. - 66 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 9. LOAN PAYABLE On September 3, 2019, the Company completed a debt financing with Eridanus Capital LLC (the "Lender") for $ 1,000,000 (the "Loan"). The Loan has a term of 4 years and an annual interest rate of 10 % for the first two years increasing to 20 % in year 3 and to 25 % in year 4. Interest will accrue and be paid along with the principal upon the maturity date. The Lender received 1,150,000 bonus share purchase warrants as additional consideration for advancing the Loan. The fair value of these warrants was calculated to be $ 444,942 which was netted against the loan payable balance along with $ 15,000 paid to the lender for a total of $ 459,942 in issuance costs. Each warrant entitles the holder to acquire one share of common stock at an exercise price of $ 0.80 (C$ 1.00 ) for a period of three years from the date of issuance. The Loan may be repaid prior to the maturity date, in whole or in part, provided that all accrued interest is paid. In addition, if total interest payments are less than $200,000, the difference will be paid to the Lender as prepayment compensation. The Loan is secured against the assets of the Company and its subsidiary and will be used for permitting, engineering, and working capital at the Company's Idaho Maryland Gold Project. Loan Payable Balance, July 31, 2021 $ 976,587 Interest expense 273,036 Accretion expense 114,907 Balance, July 31, 2022 $ 1,364,530 Interest expense 328,097 Accretion expense 149,505 Issuance costs ( 154,218 ) Repayment ( 250,000 ) Balance, July 31, 2023 $ 1,437,914 In February 2023, the Company renegotiated its debt agreement with the Lender whereby the Company agreed to pay $ 250,000 applied against unpaid and accrued interest and issue 575,000 share purchase warrants to the Lender. The maturity date of the loan has been extended by one year to September 4, 2024 and the interest rate has been reduced to 15 % compounding monthly for a period of 12 months after which it reverts to 25 % per annum, compounding monthly. The renegotiation of the debt was accounted for as a non - substantial debt modification. Accordingly, no gain or loss was recorded and a new effective interest rate of 32.67 % was established based on the carrying value of the debt and the revised cash flow. Each warrant entitles the holder to acquire one share at an exercise price of $ 0.60 for a period of two years from the date of issuance. The fair value of these warrants was calculated to be $ 154,218 which was netted against the loan payable balance. The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants: February 17, 2023 Risk-free interest rate 4.15 % Expected life of warrants 2 years Expected annualized volatility 99.02 % Share price at grant date $ 0.53 Exercise price $ 0.60 Fair value $ 0.27 Dividend Nil Forfeiture rate 0 % - 67 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 10. DERIVATIVE LIABILITY The exercise price of the Company's share purchase warrants is fixed in Canadian dollars and the functional currency of the Company is the US dollar. These warrants are considered to be a derivative as a variable amount of cash in the Company's functional currency that will be received on exercise of the warrants. Accordingly, the share purchase warrants issued as part of past financings, are classified, and accounted for as warrant derivative. Share purchase warrants with a compensatory nature are not included in this calculation. The following table shows a continuity of the Company's fair value of warrant derivative: Warrant derivative Number of warrants accounted for as derivative liability Balance, July 31, 2021 $ 441,766 5,480,083 Expiry - ( 488,438 ) Fair value adjustment ( 67,856 ) - Balance, July 31, 2022 $ 373,910 4,991,645 Fair value adjustment ( 233,895 ) - Balance, July 31, 2023 $ 140,015 4,991,645 During the year ended July 31, 2023, the Company recorded a gain on fair value adjustment on derivative liability of $ 233,895 (July 31, 2022 - gain of $ 67,856 ). The following weighted average assumptions were used for the Black-Scholes pricing model valuation of warrants derivative as at July 31, 2023 and July 31, 2022: July 31, 2023 July 31, 2022 Risk-free interest rate 4.67 % 1.52 % Expected life of warrants 0.93 to 1.05 years 1.93 to 2.05 years Expected annualized volatility 151.04 % to 154.60 % 89.49 % to 90.89 % Dividend Nil Nil Forfeiture rate 0 % 0 % - 68 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 11. CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL Private Placements On February 17, 2023, the Company completed a non-brokered private placement over two tranches for gross proceeds totaling $ 3,000,000 through the issuance of 7,500,000 units in total at a price of $ 0.40 per unit, where each unit consisted of one share of common stock and one-half of one share purchase warrant. Each whole warrant entitles the holder to acquire one additional share of common stock at an exercise price of $ 0.60 until January 31, 2025 and February 17, 2025 . Certain directors of the Company purchased an aggregate of 2,394,299 units of the private placement for gross proceeds of $ 957,720 . The Company paid fees of $ 4,014 and issued 10,440 finder's warrants relating to the first tranche, where each finder's warrant entitles the holder to acquire one share of common stock at a price of $ 0.60 until January 31, 2025 and February 17, 2025 . The Company paid legal fees of $ 10,563 in connection with this financing. On January 31, 2022, the Company completed a non-brokered private placement for gross proceeds totalling $ 2,407,000 through the issuance of 6,017,500 units at a price of $ 0.40 per unit, where each unit consisted of one share of common stock and one share purchase warrant. Each warrant entitles the holder to acquire one additional share of common stock at an exercise price of $ 0.60 until January 28, 2024 . Certain directors of the Company purchased an aggregate of 2,075,000 units of this private placement for gross proceeds of $ 830,000 . The Company has paid associated legal fees of $ 14,002 in connection with this financing. Stock Options On February 21, 2023, the Company granted a total of 1,045,000 stock options with a fair value of $ 466,527 to employees, officers, directors and consultants of the Company, exercisable at a weighted average price of $ 0.53 (C$ 0.72 ) per share until February 21, 2028. On February 7, 2022, the Company granted a total of 805,000 stock options with a fair value of $ 406,790 to employees, officers, directors, and consultants of the Company, exercisable at a weighted average price of $ 0.65 (C$ 0.82 ) per share for a period of five years. The following incentive stock options were outstanding and exercisable as at July 31, 2023: Number of Options Weighted Average Exercise Price (C$) Expiry Date 170,000 1.00 November 30, 2023 280,000 0.70 August 21, 2024 1,338,500 1.20 September 22, 2025 805,000 0.82 February 7, 2027 1,045,000 0.72 February 21, 2028 3,638,500 0.93 - 69 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 11. CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL (continued) As at July 31, 2023, the aggregate intrinsic value of the Company's stock options is $ Nil (2022 - $ Nil ). Stock option transactions are summarized as follows: Number of Options Weighted Average Exercise Price ($C) Balance outstanding and exercisable, July 31, 2021 2,233,500 1.09 Options granted 805,000 0.82 Balance outstanding and exercisable, July 31, 2022 3,038,500 1.02 Options granted 1,045,000 0.72 Options cancelled - 60,000 1.08 Options expired - 310,000 1.20 Options exercised - 75,000 0.50 Balance outstanding and exercisable, July 31, 2023 3,638,500 $ 0.93 The following weighted average assumptions were used for the Black-Scholes pricing model valuation of stock options issued during the year ended July 31: 2023 2022 Risk-free interest rate 3.58 % 1.38 % Expected life of stock options 5 years 5 years Expected annualized volatility 122.01 % 114.02 % Dividend Nil Nil Forfeiture rate 0 % 0 % Share-Based Payments The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10 % of the issued and outstanding common stock of the Company. Under the plan the exercise price of each option equals the market price of the Company's stock, less any applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 5 years with vesting determined by the board of directors. Warrants On June 14, 2022, the Company amended the term of 6,308,310 common share purchase warrants by extending their expiry dates by two years and adding an accelerated expiry provision. Between July 3, 2019 and September 21, 2020 the Company issued a total of 6,308,310 warrants to purchase shares of common stock of the Company in connection with various private placement financings and debt financings. 3,959,727 of these warrants were granted with an exercise price of CAD$ 1.00 per share ("CAD Priced Warrants") or optional currency settlement choice with amended expiry dates ranging from July 3, 2024 to September 9, 2024, and 2,348,583 of these warrants were granted with an exercise price of US$ 1.00 per share ("USD Priced Warrants") with amended expiry dates ranging from July 31, 2024 to September 21, 2024. All other terms and conditions of the warrants remain unchanged. - 70 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 11. CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL (continued) The following warrants were outstanding as at July 31, 2023: Number of Warrants Exercise Price (C$) Expiry Date 518,406 1.00 July 3, 2024 2,291,321 1.00 August 19, 2024 1,150,000 1.00 September 9, 2024 2,181,917 1.36 July 31, 2024 166,666 1.36 September 21, 2024 6,017,500 0.76 January 28, 2024 2,231,429 0.80 January 31, 2025 1,529,008 0.80 February 17, 2025 575,000 0.80 February 17, 2025 16,661,247 0.91 Warrant transactions are summarized as follows: Number of Warrants Weighted Average Exercise Price (C$) Balance, July 31, 2021 6,851,379 1.14 Warrants issued 6,017,500 0.76 Warrants expired ( 531,873 ) ( 1.21 ) Balance, July 31, 2022 12,337,006 0.95 Warrants issued 4,335,437 0.80 Warrants expired ( 11,196 ) ( 1.00 ) Balance, July 31, 2023 16,661,247 $ 0.91 - 71 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 12. INCOME TAXES A reconciliation of income taxes (recovery) at statutory rates with the reported taxes is as follows: 2023 2022 Loss before income taxes $ ( 3,660,382 ) $ ( 3,464,127 ) Expected income tax (recovery) at statutory tax rates $ ( 978,000 ) $ ( 887,000 ) Change in statutory, foreign tax, foreign exchange rates and other 703,000 1,068,000 Permanent differences 125,000 101,000 Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses ( 1,391,000 ) - Change in unrecognized deductible temporary difference 1,541,000 ( 282,000 ) Income tax recovery $ - $ - Significant components of deferred tax assets (liabilities) that have not been included on the Company's consolidated balance sheet are as follows: 2023 2022 Deferred tax assets (liabilities): Exploration and evaluation assets $ 310,000 $ 49,000 Mineral property interest ( 87,000 ) ( 21,000 ) Non-capital losses available for future period 4,125,000 1,630,000 4,348,000 1,658,000 Unrecognized deferred tax assets ( 4,348,000 ) ( 1,658,000 ) Net deferred tax assets $ - $ - The Company has approximately $ 11,502,000 (2022 - $ 6,100,000 ) in net operating losses which may be carried forward and applied against taxable income in future years. The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows: 2023 Expiry Date Range 2022 Expiry Date Range Temporary Differences Exploration and evaluation assets $ 1,161,000 No expiry date $ 181,000 No expiry date Equipment ( 326,000 ) No expiry date 81,000 No expiry date Non-capital losses available for future period 11,502,000 2027 to Indefinite 6,100,000 2027 to Indefinite USA $ 12,337,000 2027 to Indefinite $ 6,362,000 2027 to Indefinite Tax attributes are subject to review and potential adjustments by tax authorities. - 72 - RISE GOLD CORP. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 31, 2023 (Expressed in United States Dollars) 13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS During the years ended July 31, 2023 and 2022, the Company had the following non-cash financing and investing activities: For the year ended July 31, 2023: a) The Company accrued $ 328,097 of interest expense as part of the outstanding balance of loan payable. b) The Company issued a total of 575,000 share purchase warrants for loan modification entitling the holder to acquire one share an exercise price of $ 0.60 until May 17, 2025 with a total fair value of $ 154,218 . For the year ended July 31, 2022: a) The Company accrued $ 273,036 of interest expense as part of the outstanding balance of loan payable. During the years ended July 31, 2023, the Company had the following cash financing and investing activities: The Company paid $ 250,000 and applied it against unpaid and accrued interest on its loan payable. 14. SEGMENTED INFORMATION A reporting segment is defined as a component of the Company that: - Engages in business activities from which it may earn revenues and incur expenses; - Operating results are reviewed regularly by the entity's chief operating decision maker; and - Discrete financial information is available The Company has determined that it operates its business in one geographical segment located in California, United States, where all of its equipment and mineral property interests are located. 15. SUBSEQUENT EVENT Subsequent to July 31, 2023, the Company granted a total of 397,780 stock options to officers and directors of the Company. The stock options are exercisable at a price of $ 0.26 per share until September 22, 2028. - 73 - Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.