Geomega Resources : Earnings Document

Geomega Resources Inc.

Unaudited Condensed Interim Consolidated Financial Statements

For the Nine months ended February 29, 2024

The accompanying financial statements have been prepared by the management

of Geomega Resources Inc. and have not been reviewed by the auditors

Geomega Resources Inc.

Consolidated Statements of Financial Position

(unaudited, in Canadian Dollars)

		As at	As at
		February 29,	May 31,
	Note	2024	2023
		$	$
Assets
Current assets
Cash and cash equivalents	4	2,900,637	3,799,111
Accounts receivable	8	532,703	594,963
Tax credits and government grants receivable	9	605,014	453,376
Investments	5	22,000	522,000
Investment in a listed company	6	180,757	67,574
Prepaid expenses and others	10	355,675	56 051
Inventories		20,555	18 561
Current assets		4,617,341	5,511,636
Non-current assets
Investment in an associate	7	337,143	842,857
Deposits on acquisition of property and equipment, net of
government grants		307,817	283,559
Property and equipment, net of government grants	11	680,720	427,893
Right-of-use assets	12	2,044,903	2,298,752
Non-current assets		3,370,583	3,853,061
Total assets		7,987,924	9,364,697
Liabilities
Current liabilities
Trade and other payables		422,895	626,007
Deferred grants	13	904,624	680,650
Deferred revenues		280,163	338,668
Current portion of the lease liabilities	14	14,023	74,646
Current portion of the long-term debt	15	-	76,809
Current liabilities		1,621,705	1,796,780
Non-current liabilities
Lease liabilities	14	2,223,413	2,289,819
Non-current liabilities		2,223,413	2,289,819
Total liabilities		3,845,118	4,086,599
Equity
Share capital		38,778,372	38,515,697
Reserves	18	1,067,265	1,152,537
Contributed surplus		4,587,730	4,524,149
Deficit		(40,290,561)	(38,914,285)
Total equity		4,142,806	5,278,098
Total liabilities and equity		7,987,924	9,364,697

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

		Three months ended	Nine months ended
		February 29,	February 28,	February 29,	February 28,
	Note	2024	2023	2024	2023
		$	$	$	$
Research fees		57,479	184,078	401,323	381,314
Revenues		57,479	184,078	401,323	381,314
Operating expenses
Salaries, employee benefits and
share-based compensation		151,534	75,782	364,416	200,538
Exploration and evaluation
expenses, net of tax credits	19	755,000	383,143	1,856,890	977,587
Professional fees		2,389	2,843	126,033	50,485
Travel, conference and investor
relations		19,172	38,910	91,614	198,295
Administration		26,294	25,345	61,557	53,203
Filing fees		9,075	13,071	57,199	47,570
Rent		9,117	25,492	62,826	72,963
Depreciation of right-of-use assets		35,530	20,073	142,835	60,219
Insurance, taxes and permits		22,772	6,150	47,919	17,588
Government grants on operating
expenses		(580,169)	(114,696)	(1,284,106)	(480,395)
Operating loss		(375,001)	(292,035)	(1,125,860)	(816,739)
Other income (expenses)
Investment income		25,381	36,658	92,476	73,874
Gain (loss) on foreign exchange		(3,518)	(910)	(12,636)	17,204
Finance costs		(70,515)	(12,471)	(223,865)	(38,249)
Gain on disposal of exploration
and evaluation assets		195,826	136,833	239,687	136,833
Net gain on settlement of a lease
agreement		-	-	171,242	-
Unrealized gain (loss) in fair value
of investments in a listed
company		49,738	26,179	(12,027)	26,179
Share of loss of associate		(49,232)	(77,627)	(41,222)	(171,348)
Net loss on dilution of investment
in an associate		-	(19,203)	-	(19,041)
Reversal of (impairment) of an
investment in an associate		133,547	349,688	(464,493)	(170,229)
		281,198	439,147	(250,416)	(144,777)
Net and comprehensive (loss)
profit		(93,803)	147,112	(1,376,276)	(961,516)
Basic income (loss) per share		(0.001)	0.001	(0.009)	(0.007)
Diluted income (loss) per share		(0.001)	0.001	(0.009)	(0.007)
Weighted average number of basic
shares outstanding		143,048,224	141,769,521	142,372,050	141,585,638
Weighted average number of diluted
shares outstanding		143,048,224	147,657,021	142,372,050	141,585,638

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Geomega Resources Inc.

Consolidated Statements of Change in Equity

(Unaudited, in Canadian dollars)

		Number of
		shares					Contributed
	Note	outstanding	Share Capital	Reserves	Surplus	Deficit		Total Equity
			$		$		$	$		$
Balance at May 31, 2023		141,826,521	38,515,697	1,152,537	4,524,149	(38,914,285)	5,278,098
Net and comprehensive loss		-		-		-	-	(1,376,276)	(1,376,276)
Exercised stock options		1,575,000	262,675	(99,301)	-		-	163,374
Expired options		-		-	(63,581)	63,581		-	-
Share-based compensation		-		-	77,610	-		-	77,610
Balance at February 29, 2024		143,401,521	38,778,372	1,067,265	4,587,730	(40,290,561)	4,142,806
	Number of
	shares		Broker			Contributed
Note	outstanding	Share Capital	warrants	Reserves	Surplus	Deficit	Total Equity
		$	$		$		$	$		$
Balance at May 31, 2022	141,369,521	38,435,625	27,477	1,069,608		4,424,649	(37,513,413)		6,443,946
Net and comprehensive loss	-	-	-		-		-	(961,516)		(961,516)
Exercised stock options	400,000	66,177	-		(25,301)		-	-		40,876
Expired options	-	-	-		(72,023)		72,023	-		-
Expired broker options	-	-	(27,477)		-		27,477	-		-
Share-based compensation	-	-	-		152,764		-	-		152,764
Balance at February 28, 2023	141,769,521	38,501,802	-	1,125,048		4,524,149	(38,474,929)		5,676,070

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Geomega Resources Inc.

Consolidated Statements of Cash Flow

(Unaudited, in Canadian dollars)

		Nine months ended
		February 29,	February 28,
	Note	2024	2023
		$	$
Operating activities
Net and comprehensive loss		(1,376,276)	(961,516)
Adjustments for:
Share-based compensation		77,610	152,764
Unrealized loss on foreign exchange rate		1,230	844
Depreciation of property and equipment		87,264	23,699
Depreciation of right-of-use assets		142,835	60,219
Finance costs for the accretion of long-term debt		3,191	3,850
Share of loss of an associate		41,221	171,348
Net loss on dilution of investment in an associate		-	19,041
Impairment of an investment in an associate	7	464,493	170,229
Unrealized loss (gain) on variation of value of an investment in a
listed company		12,027	(26,179)
Gain on disposal of exploration and evaluation assets -
non-cash portion		(126,440)	(69,567)
Net gain on settlement of a lease agreement		(171,242)	-
Changes in non-cash working capital items	20	(325,643)	46,865
Cash flows from operating activities		(1,169,730)	(408,403)
Investing activities
Variation of deposits on property and equipment		(6,052)	(647,826)
Disposal of investments		500,000	(522,000)
Additions of property and equipment		(102,142)	(3,644)
Settlement of a lease agreement		175,000	-
Variation of deferred grants for the purchase of property and
equipment	13	(359,151)	107,715
Cash flows from investing activities		207,655	(1,065,755)
Financing activities
Exercise of stock options		163,374	40,876
Repayments of lease liability		(19,773)	(49,341)
Repayment of long-term debt		(80,000)	-
Cash flows from financing activities		63,601	(8,465)
Net change in cash		(898,474)	(960,623)
Cash and cash equivalents - beginning		3,799,111	5,084,902
Cash and cash equivalents - ending		2,900,637	4,124,279

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN
   Geomega Resources Inc. (the "Corporation") is incorporated under the Canada Business Corporations Act and is engaged in the acquisition, exploration and evaluation of mining properties in Canada. Through its private and wholly owned subsidiary Innord, the Corporation is developing innovative technologies for extraction and separation of rare earth elements and other critical and strategic metals from its mining properties and other mining and industrial waste, in an environmentally sustainable way. The Corporation's shares are listed on the TSX Venture Exchange (the "Exchange") under symbol GMA. The address of the Corporation's registered office and principal place of business is 75, de Mortagne Boulevard, Boucherville, Quebec, Canada, J4B 6Y4. These unaudited condensed consolidated financial statements (the "Financial Statements") were approved by the Corporation's
   Board of Directors on April 24, 2024.
   The Financial Statements have been prepared in accordance with valid accounting principles in a context of going concern which provides that the Company will be able to realize its assets and pay its debts in the normal course of its activities. In assessing the validity of the going concern principle, management considers all available data regarding the future, which represents at least, but is not limited to, the twelve months following the end of the reporting period. For the nine months ended February 29, 2024, the Corporation recorded a net loss of $1,376,276 and accumulated a deficit of $40,290,561 as of that date. As of February 29, 2024, the Company had a working capital of $2,995,636.
   Any funding shortfall may be met in the future in a number of ways including but not limited to, the issuance of new equity or debt financing. While management has been successful in securing financing in the past, there can be no assurance that it will be able to do so in the future or that these sources of funding or initiatives will be available to the Corporation or that they will be available on terms which are acceptable to the Corporation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Declaration of conformity
   The Financial Statements have been prepared in accordance with International Financial Reporting
   Standards ("International Financial Reporting Standards" or "IFRS") as published by the International Accounting Standards ("IAS") and which are applicable for the preparation of interim consolidated financial statements, in particular International Accounting Standard 34 ("International Accounting Standard 34" or "IAS 34") - Interim financial information. The Financial Statements therefore do not include all the information and notes required under IFRS for the purposes of annual financial statements.
2. Basis of Presentation
   The Financial Statements should be read in conjunction with the audited annual financial statements for the year ended May 31, 2023, which have been prepared in accordance with IFRS. The accounting conventions and the calculation and presentation methods used in the preparation of the Financial Statements comply with the conventions and methods used for the previous financial year ended May 31, 2023, except as follows:
   Equity-settledshare-based compensation
   The Corporation offers an equity settled share-based compensation plan for its eligible directors, officers, employees and consultants. Each award is considered a separate award with its own vesting periods and fair value. Fair value is measured at the date of grant using the Black-Scholes option pricing model or the share market price where applicable.
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Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

All equity settled share-based compensation (except broker warrants) are ultimately recognized as an expense in the statement of (loss) income with a corresponding credit to reserves (within shareholders' equity on the consolidated statement of financial position). Equity settled share-based compensation to broker, in respect of an equity financing are recognized as issuance cost of the equity instruments with a corresponding credit to broker warrants in equity.

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting year, based on the best available estimate of the number of equity instruments expected to vest. Non-market vesting conditions are included in assumptions about the instruments that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of instruments expected to vest differs from previous estimates. Any cumulative restatement prior to vesting is recognized in the current period.

Any consideration paid on exercise of share options is credited to share capital. The accumulated expenses resulting from stock options are transferred to share capital when the options are exercised.

Expenses recognized for forfeited awards are reversed. Where the terms of an equity settled award are modified, as a minimum, an expense is recognized as if the terms had not been modified over the original vesting period. In addition, an expense is recognized for any modification which increases the total fair value of the share-based payment arrangement as measured at the date of the modification, over the remainder of the vesting period.

3. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ERRORS

The preparation of financial statements in accordance with IFRS requires the Company to make estimates and assumptions that affect the amounts reported as assets and liabilities, the presentation of assets and at the date of the Financial Statements as well as the amounts presented as income and expenses during the reporting period. The Company also makes estimates and assumptions for the future. The determination of estimates requires the exercise of judgment based on various assumptions as well as other factors such as historical experience and current and expected economic conditions. Actual results could differ from these estimates.

Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations about future events, which are believed to be reasonable under the circumstances.

In preparing the Financial Statements, the main judgments made by management in applying the Company's accounting policies and the main sources of estimation uncertainty were the same as those that applied to the annual financial statements for the fiscal year ended May 31, 2023.

4. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include available cash, bank balances and short-term liquid investments with an original maturity of up to 3 months or redeemable at any time without penalty.

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Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

1. CASH AND CASH EQUIVALENTS (CONT'D)
   The short-term investments held as of February 29, 2024 and classified as cash equivalents include the following investments:
2. • Guaranteed investments certificates totaling $2,440,610 with rates from 4.50% to 5.15% and maturity dates ranging from May 6, 2024 to February 13, 2025. The short-term investments classified as cash equivalents are either cashable at anytime without penalty or invested for a period of 3 months or less.
   • Investment of US $163,642 (CAD $222,305) in a high interest exchange trading fund. Investment is cashable at any time without penalty.
3. INVESTMENTS

The investments as at February 29, 2024 consist of guaranteed investment certificates totalling $22,000 that are non-cashable prior to maturity. The certificates bear interest at 3.00% and expires on October 3, 2024.

6. INVESTMENT IN A LISTED COMPANY

The Corporation holds marketable securities. The shares are listed on the Exchange. The total amount of the investment is as follows:

		As at	As at
		February 29,	May 31,
		204	2023
		$	$
	Classified as current asset
	MTM Critical Metals Ltd. - 2,327,273 common shares (666,667
	as at May 31, 2023) - $0.088 AUD ($0.115 AUD as at May	180,757	67,574
31, 2023)
	Investment in a listed company	180,757	67,574
7. INVESTMENT IN AN ASSOCIATE

Kintavar Exploration Inc. ("Kintavar") is the Corporation's only associate. Kintavar's share capital consists solely of ordinary shares, which are held directly by the Corporation. Kintavar is incorporated in Canada where its exploration and evaluation activities on bearing properties are carried out. The proportion of ownership interest is the same as the proportion of voting rights held. The investment in Kintavar is accounted for under the equity method. Its fair value as at February 29, 2024 is $337,143 (16,857,143 shares at $0.02, closing price on the Exchange). Considering that the fair value of the investment is lower than its carrying value as at February 29, 2024, an impairment loss of $780,856 has been recorded to reduce the investment to its estimated recoverable value, in this case its fair market value. Its fair value was of $842,857 as at May 31, 2023. The Corporation categorized the fair value measurement as Level 1, as it is derived from quoted prices in active markets. No shares were issued in the first nine months of fiscal 2024, thus the Corporation's interest in Kintavar was not diluted and remains at 13.11%.

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Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

7. INVESTMENT IN AN ASSOCIATE (CONT'D)

Determination of significant influence

Management determines its ability to exercise significant influence over an investment in shares of other companies by looking at its percentage interest and other qualitative factors including but not limited to its voting rights, representation on the board of directors, participation in policy-making processes, material transactions between the Corporation and the associate, interchange of managerial personnel, provision of essential technical information and operating involvement. Considering these factors, Geomega is considered to have significant influence over Kintavar.

			Nine months
			ended		Year ended
			February 29, 2024 May 31, 2023
			$		$
	Balance at beginning of period		842,857	1,372,048
	Share of net and comprehensive loss		(41,221)	(193,787)
	Net gain from dilution of the interest			-	(19,041)
	Impairment to fair market value		(464,493)	(316,363)
	Balance at end of period		337,143	842,857
8. ACCOUNTS RECEIVABLE
		As at	As at
	February 29, 2024	May 31, 2023
		$	$
	Trade receivables	52,311	343,010
	Sales taxes receivable	252,313	110,293
	Interest receivables	12,232	43,258
	Other accounts receivables	215,847	98,402
	Accounts receivable	532,703	594,963
9. TAX CREDITS AND GOVERNMENT GRANTS RECEIVABLE
			As at		As at
		February 29, 2024	May 31, 2023
			$		$
	Refundable tax credits		4,193		2,173
	Government grants receivable		600,821		451,203
	Tax credits and government grants
	receivable		605,014		453,376

Refundable tax credits are related to eligible mining exploration expenses incurred in the province of Quebec and the refundable portion of the research and development tax credits.

The government grants are related to expenditures on research and development incurred by the corporation and its subsidiary.

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Geomega Resources Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited, in Canadian Dollars)

10. PREPAID EXPENSES AND OTHERS

				As at	As at
				February 29, 2024	May 31, 2023
				$	$
			Prepaid on operation expenses	168,648	56,051
			Advance payment on inventories	187,027	-
			Prepaid expenses and others	355,675	56,051
11. PROPERTY AND EQUIPMENT
				Office	E&E	Total
				equipment	Equipment
				$	$		$
		Nine months ended February 29, 2024
		Opening net book value	-	427,893		427,893
		Additions	-	794,886		794,886
		Government grants	-	(454,795)	(454,795)
		Depreciation	-	(87,264)	(87,264)
		Closing net book value	-	680,720		680,720
		As at February 29, 2024
		Cost	14,984	1,050,336		1,065,320
		Accumulated depreciation	(14,984)	(369,616)	(384,600)
		Closing net book value	-	680,720		680,720
				Office	E&E	Total
				equipment	Equipment
				$	$		$
		Fiscal 2023
		Opening net book value	-	100,532		100,532
		Additions	-	764,100		764,100
		Government grants	-	(402,628)	(402,628)
		Depreciation	-	(34,111)	(34,111)
		Closing net book value	-	427,893		427,893
		As at May 31, 2023
		Cost	14,984	710,244		725,228
		Accumulated depreciation	(14,984)	(282,351)	(297,335)
		Closing net book value	-	427,893		427,893

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