FINANCIAL STATEMENTS
For the Years Ended November 30, 2023 and 2022
(Expressed in Canadian dollars)
Independent Auditor's Report
To the Shareholders of:
ZIMTU CAPITAL CORP.
Opinion
We have audited the financial statements of Zimtu Capital Corp. ("the Company"), which comprise the statements of financial position as at November 30, 2023 and 2022, and the statements of changes in shareholders' equity, operations and comprehensive loss, and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended November 30, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
Investments in private companies
The Company derives the fair values of investment in private companies using a variety of valuation techniques. The inputs of these are derived from observable market data where possible, but where observable market data is not available, the Company is required to establish fair value. The Company discloses the investments in Note 6 which notes the changes in cost and fair value as well as the valuation model.
Audit Response
We responded to this matter by performing procedures evaluating management's key assumptions, management's valuation techniques and methodologies applied in determining the fair value of the investments in private companies as at November 30, 2023. Our audit work in relation to this included, but was not restricted to, the following:
We assessed the appropriateness and reliability of the valuation techniques and methodologies to value investments in private companies.
We assessed whether there is indication of impairment. This involves evaluating changes in market conditions, financial performance of the investee companies and other relevant factors.
Other Information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis. Our opinion on the financial statements does not cover the other information and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Mike Kao.
WDM
Chartered Professional Accountants
Vancouver, B.C.
March 26, 2024
ZIMTU CAPITAL CORP. | |||
Statements of Financial Position | |||
As at November 30, 2023 and 2022 | |||
Expressed in Canadian Dollars | |||
Note | 2023 | 2022 | |
$ | $ | ||
ASSETS | |||
CURRENT | |||
Cash | 47,734 | 1,287,584 | |
Investments | 6 | 7,730,018 | 9,195,764 |
Advances and amounts receivable | 8 | 1,335,981 | 698,552 |
GST/HST receivable | 14,853 | - | |
Prepaid and deposits | 9 | 81,749 | 77,116 |
Right-of-use asset | 18 | 371,978 | 109,507 |
Due from equity investees | 10 | 487,182 | 205,609 |
Due from related parties | 10 | 116,102 | 122,603 |
10,185,597 | 11,696,735 | ||
Investments in associates | 7 | 336,924 | 1,715,794 |
Mineral property interests | 11 | 1,314,074 | 47,273 |
11,836,595 | 13,459,802 | ||
LIABILITIES | |||
CURRENT | |||
Accounts payable and accrued liabilities | 115,070 | 1,154,161 | |
GST/HST payable | - | 3,937 | |
Lease liabilities | 18 | 119,427 | 111,562 |
Loan payable | 17 | 40,000 | - |
Promissory notes payable - current portion | 13 | 63,750 | - |
Unearned revenue | 12 | 294,657 | 238,458 |
632,904 | 1,508,118 | ||
Promissory notes payable | 13 | 95,625 | 177,500 |
Loan payable | 17 | - | 39,472 |
Lease liabilities | 18 | 259,070 | - |
987,599 | 1,725,090 | ||
SHAREHOLDERS' EQUITY | |||
Share capital | 14 | 14,137,407 | 11,521,114 |
Share-based payment reserves | 14 | 5,397,757 | 5,239,523 |
Deficit | (8,686,168) | (5,025,925) | |
10,848,996 | 11,734,712 | ||
11,836,595 | 13,459,802 | ||
NATURE OF OPERATIONS (Note 1) | |||
SUBSEQUENT EVENTS (Note 21) | |||
Approved on behalf of the Board on March 26, 2024: | |||
"Sean Charland" | "Kevin Bottomley" | ||
Sean Charland - Director | |||
The accompanying notes are an integral part of these financial statements. | |||
4 |
Kevin Bottomley - Director
Statements of Changes in Shareholders' Equity
Number of | Share-Based | Retained | Total | |||
Common | Share | Payment | Earnings | Shareholders' | ||
Note | Shares | Capital | Reserves | (Deficit) | Equity | |
$ | $ | $ | $ | |||
Balance, November 30, 2021 | 16,106,483 | 9,521,822 | 5,165,236 | 5,448,694 | 20,135,752 | |
Shares issued for property | 14 | 200,000 | 48,000 | - | - | 48,000 |
Shares issued for cash | 14 | 9,892,500 | 1,978,500 | - | - | 1,978,500 |
Share issuance costs | - | (27,208) | 1,753 | - | (25,455) | |
Share-based payments | 14 | - | - | 72,534 | - | 72,534 |
Net (loss) for the year | - | - | - | (10,474,619) | (10,474,619) | |
Balance, November 30, 2022 | 26,198,983 | 11,521,114 | 5,239,523 | (5,025,925) | 11,734,712 | |
Shares issued for cash | 14 | 28,214,320 | 2,112,593 | 23,125 | - | 2,135,718 |
Shares issued for property | 11,14 | 9,000,000 | 540,000 | - | - | 540,000 |
Share issuance costs | - | (36,300) | - | - | (36,300) | |
Share-based payments | 14 | - | - | 135,109 | - | 135,109 |
Net (loss) for the year | - | - | - | (3,660,243) | (3,660,243) | |
Balance, November 30, 2023 | 63,413,303 | 14,137,407 | 5,397,757 | (8,686,168) | 10,848,996 | |
5 |
The accompanying notes are an integral part of these financial statements.
Statements of Operations and Comprehensive Loss
Note | 2023 | 2022 | |
$ | $ | ||
REVENUE | |||
Administrative fees | 961,000 | 806,472 | |
Corporate development and marketing | 1,238,859 | 886,452 | |
Income (loss) from property sales | 11 | 345,680 | (13,400) |
2,545,539 | 1,679,524 | ||
EXPENSES | |||
General and administrative expenses | 15 | 1,727,767 | 3,388,499 |
INCOME (LOSS) BEFORE OTHER ITEMS | 817,772 | (1,708,975) | |
OTHER ITEMS | |||
Equity loss from investment in associates | 7 | (292,669) | (134,464) |
Fair market loss on investments in public companies | 6 | (2,225,560) | (9,428,834) |
Fair market loss on investment in private companies | 6 | - | (62,374) |
Fair market loss on promissory notes receivable | (75,250) | (188,125) | |
Impairment loss on investment in associates | 7 | (1,088,296) | - |
(Loss) gain on sale of investments | 6,7 | (660,334) | 932,183 |
Impairment of mineral properties | 11 | (68,656) | (3,712) |
Interest income | 1,494 | 1,249 | |
Gain on sale of debt | - | 29,140 | |
Write off marketable securities | 6 | (55,026) | - |
Write off promissory notes receivable | 8 | (47,500) | - |
Other income | 33,782 | 34,166 | |
(4,478,015) | (8,820,771) | ||
LOSS BEFORE INCOME TAX | (3,660,243) | (10,529,746) | |
Deferred tax recovery | 20 | - | 55,127 |
NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR | (3,660,243) | (10,474,619) | |
Basic loss per share | (0.08) | (0.43) | |
Diluted loss per share | (0.08) | (0.43) | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | |||
Basic | 47,967,139 | 24,104,949 | |
Diluted | 47,967,139 | 24,104,949 | |
The accompanying notes are an integral part of these financial statements. | |||
6 |
Statements of Cash Flows
Note | 2023 | 2022 | |
$ | $ | ||
CASH FLOWS PROVIDED BY (USED FOR): | |||
OPERATING ACTIVITIES | |||
Net loss for the year | (3,660,243) | (10,474,619) | |
Adjustment for: | |||
Accretion | 528 | 5,799 | |
Bad debt expense (recovery) | 13,237 | (15,754) | |
Depreciation of ROU asset | 143,323 | 146,009 | |
Deferred tax recovery | - | (55,127) | |
Equity loss from investment in associates | 292,669 | 134,464 | |
Fair market value loss of investments in public companies | 2,225,560 | 9,428,834 | |
Fair market value loss on investment in private companies | - | 62,374 | |
Fair market value loss promissory notes receivable | 75,250 | 188,125 | |
Loss (Gain) on sale of investment | 660,334 | (932,183) | |
Shares received for property | (289,934) | - | |
Impairment of mineral property | 68,656 | 3,712 | |
Impairment of investment in associates | 1,088,296 | - | |
Write off marketable securities | 55,026 | - | |
Write off promissory notes receivable | 47,500 | - | |
Other income | - | (12,716) | |
Lease interest | 12,632 | 5,336 | |
Shares received for debt | (41,250) | 19,140 | |
Non-cash from property sale | (72,895) | 13,400 | |
Share-based payments | 135,109 | 72,534 | |
753,798 | (1,410,672) | ||
Changes in other working capital items: | 19(a) | (2,085,426) | 704,117 |
CASH USED FOR OPERATING ACTIVITIES | (1,331,628) | (706,555) | |
INVESTING ACTIVITIES | |||
Acquisition of investments | (3,465,232) | (3,437,388) | |
Proceeds on disposition of investments | 2,337,647 | 3,433,392 | |
Mineral property acquisitions | (841,062) | (58,189) | |
Proceeds on disposition of mineral properties | 112,500 | - | |
CASH USED FOR INVESTING ACTIVITIES | (1,856,147) | (62,185) | |
FINANCING ACTIVITIES | |||
Shares issued for cash | 2,135,718 | 1,978,500 | |
Shares issue costs | (36,300) | (25,455) | |
Principal payments of lease liabilities | (151,493) | (150,240) | |
CASH PROVIDED BY FINANCING ACTIVITIES | 1,947,925 | 1,802,805 | |
(DECREASE) INCREASE IN CASH DURING THE YEAR | (1,239,850) | 1,034,065 | |
CASH, BEGINNING OF YEAR | 1,287,584 | 253,519 | |
CASH, END OF YEAR | 47,734 | 1,287,584 | |
Supplemental cash flow information - see Note 19(b) | |||
The accompanying notes are an integral part of these financial statements. |
7
NOTE 1 - NATURE OF OPERATIONS
Zimtu Capital Corp. (the "Company") was incorporated in the Province of British Columbia on July 4, 2006, under the Business Corporations Act of British Columbia. The Company's principal business activities are investments in junior resource companies, mineral resource property acquisitions and dispositions, and the provision of management services. The Company is traded on the TSX Venture Exchange ("TSX-V") under the symbol 'ZC'. The Company also trades on the Frankfurt Stock Exchange under the symbol 'ZCT1'. The head office and principal address are located at Suite 1450, 789 West Pender Street, Vancouver, BC, Canada V6C 1H2 and the registered and records office of the Company is located at Suite 800, 885 West Georgia Street, Vancouver, BC, Canada V6C 3H1.
NOTE 2 - STATEMENT OF COMPLIANCE AND BASIS OF PRESENTATION
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").
These audited financial statements were approved and authorized for issue by the Audit Committee and Board of Directors on March 26, 2024.
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and related disclosure. Judgment is used mainly in determining how a balance or transaction should be recognized in the financial statements. Estimates and assumptions are used mainly in determining the measurement of recognized transactions and balances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
Significant areas where management's judgment has been applied include the following:
Classifying categories of financial assets and financial liabilities in accordance with IFRS 9, Financial instruments: recognition and measurement;
The valuation of investment in private companies;
The recoverability of the carrying value of the mineral property interests is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest; and
Management's assumption that there are currently no decommissioning liabilities is based on the facts and circumstances that have existed during the year.
Significant areas requiring the use of management estimates and assumptions include the following:
Income Taxes
Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases ("temporary differences") and losses carried forward. The determination of the ability of the Company to utilize tax loss carry-forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is "probable" that the Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions and other factors could result in revisions to the estimates of the benefits to be realized or the timing of utilization of the losses.
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
Fair value of investment in warrants
Management uses the Black-Scholes option pricing model in measuring the fair value of investment in warrants where active market quotes are not available. In applying the valuation technique, management is required to determine and make assumptions about the most appropriate inputs to the valuation model including the expected term to exercise, volatility, dividend yield and forfeiture rate. Such assumptions are inherently uncertain and changes in these assumptions affect the fair value estimates.
Fair value of share-based compensation
Management measures the fair value of equity-settled share-based transactions with employees and directors by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The Company uses the Black-Scholes option pricing model. This estimate also requires determining and making assumptions about the most appropriate inputs to the valuation model including the expected life, volatility, dividend yield and forfeiture rate. Such assumptions are inherently uncertain and changes in these assumptions affect the fair value estimates.
Expected credit loss of accounts receivable
The Company reviews the accounts receivable balances on a regular basis and estimates the likelihood of collection and records allowance for estimated losses. Management bases its estimates on historical experience and other relevant factors.
Fair value of promissory notes receivable
Management uses valuation techniques in measuring the fair value of promissory notes receivable, where active market quotes are not available. Details of the assumptions used are given in Note 8 to these financial statements. In applying the valuation technique, management makes use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. These estimates may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
Fair value of investment in private companies
Management uses valuation techniques in measuring the fair value of private company investments, where active market quotes are not available. In applying the valuation technique, management makes use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. These estimates may vary from the actual prices that would be achieved in an arm's length transaction from recent transactions.
Inputs used in IFRS 16 Leases
Key areas where management has made judgments, estimates, and assumptions related to the application of IFRS 16 include the following:
Incremental borrowing rate: The Incremental borrowing rates are based on judgments including economic environment, term, currency, and the underlying risk inherent to the asset. The carrying balance of the right-of-use assets, lease obligations, and the resulting interest and depreciation expense, may differ due to changes in the market conditions and lease term.
Mineral property interests
The carrying amount of the Company's mineral property interests does not necessarily represent present or future values, and the Company's mineral property interests have been accounted for under the assumption that the carrying amount will be recoverable. Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production or proceeds from the disposition of the mineral properties themselves. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could impact management's assessment as to the overall viability of its properties or to the ability to generate future cash flows necessary to cover or exceed the carrying value of the Company's mineral properties.
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Zimtu Capital Corp. published this content on 27 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2024 16:24:43 UTC.