37 CAPITAL INC 6-K, filed Nov 29, 2024
37 CAPITAL INC (HHHEF)
About this 6-K
37 CAPITAL INC filed this 6-K on November 29, 2024.
FORM
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report Of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November 2024
Commission
File No.
(Translation of registrant's name into English)
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
| 1 |
SUBMITTED HEREWITH
| Exhibit | 99.1 Interim Financial Statements September 30, 2024 |
| Exhibit | 99.2 Material Change Report dated November 7, 2024 |
| Exhibit | 99.3 Notice of 2024 Annual General Meeting/Information Cicular |
| Exhibit | 99.4 News Release dated November 20, 2024 |
| Exhibit | 99.5 News Release dated November 4, 2024 |
| Exhibit | 99.6 Interim MD&A September 30, 2024 |
| Exhibit | 99.7 CEO Certification for September 30, 2024 |
| Exhibit | 99.8 CFO Certification for September 30, 2024 |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
37
Capital Inc.
“Jake H. Kalpakian”
____________________
Jake H. Kalpakian
President
November 29, 2024.
| 3 |
Condensed Interim Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| Index | Page |
| Notice of No Auditor Review | 1 |
| Condensed Financial Statements | |
| Condensed Balance Sheets | 2 |
| Condensed Statements of Comprehensive Loss | 3 |
| Condensed Statements of Changes in Stockholders’ Deficiency | 4 |
| Condensed Statements of Cash Flows | 5 |
| Notes to Condensed Financial Statements | 6 - 19 |
| F-1 |
Notice of No Auditor Review of Condensed Interim Financial Statements
In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed these unaudited condensed interim financial statements as at September 30, 2024 and for the nine months ended September 30, 2024 and 2023.
| F-2 |
37 CAPITAL INC.
Balance Sheets
(Expressed in Canadian Dollars)
| December 31, | ||||||||
| September 30, | 2023 | |||||||
| 2024 | (Audited) | |||||||
| Assets | ||||||||
| Current | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| GST receivable | ||||||||
| Assets Current | ||||||||
| Mineral Property Interests (note 5) | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficiency | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities (notes 6 and 13) | $ | $ | ||||||
| Due to related parties (note 7) | ||||||||
| Loan payable (note 8) | ||||||||
| Convertible debentures (note 9) | ||||||||
| Total Liabilities | $ | $ | ||||||
| Stockholders’ Deficiency | ||||||||
| Capital stock (note 10) | ||||||||
| Equity portion of convertible debentures (note 9) | ||||||||
| Reserves | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficiency | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | $ | ||||||
On behalf of the Board:
”Jake H. Kalpakian” (signed)
Jake H. Kalpakian, Director
“Gregory T. McFarlane” (signed)
Gregory T. McFarlane, Director
The accompanying notes form an integral part of these financial statements.
| F-3 |
37 CAPITAL INC.
Condensed Interim Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Expenses | ||||||||||||||||
| Finance and interest (notes 7 and 10) | $ | $ | $ | $ | ||||||||||||
| Legal, accounting and audit | ||||||||||||||||
| Office, rent and miscellaneous (note 7) | ||||||||||||||||
| Employee benefits | ||||||||||||||||
| Regulatory and transfer fees | ||||||||||||||||
| Gain on debt settlement | ( | ) | ||||||||||||||
| Total Expenses | ||||||||||||||||
| Net and Comprehensive Loss for the Period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and Diluted Loss per Common Share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||||||
The accompanying notes form an integral part of these financial statements.
| F-4 |
37 CAPITAL INC.
Statements of Changes in Stockholders’ Deficiency
(Expressed in Canadian Dollars)
| Reserves | ||||||||||||||||||||||||||||||||
| Common Shares | Amount | Equity
Portion of Convertible Debentures Reserve | Warrants | Options | Share Subscription | Deficit | Total
Stockholders' Equity (Deficiency | ) | ||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Private placement, net of issuance of costs | ||||||||||||||||||||||||||||||||
| Net income for the period | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Net Loss for the period | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Net loss for the period | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Private placement, net of issuance costs | ||||||||||||||||||||||||||||||||
| Share-based payment | – | |||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
The accompanying notes form an integral part of these condensed interim financial statements.
| F-5 |
37 CAPITAL INC.
Condensed Interim Statements of Cash Flows
(Expressed in Canadian Dollars)
Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | |||||||
| Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Items not involving cash: | ||||||||
| Gain on debt settlement | ( | ) | ||||||
| Interest expense on loan and convertible debentures | ||||||||
| Share-based payment | ||||||||
| Total items not involving cash | ( | ) | ( | ) | ||||
| Changes in non-cash working capital | ||||||||
| Receivable | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Due to related parties | ||||||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Purchase of mineral property interests | ( | ) | ( | ) | ||||
| Cash used in investing activity | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Private placement, net of share issue costs | ||||||||
Fund from related party loan | ||||||||
| Repayment of related party loan | ( | ) | ( | ) | ||||
| Cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
The accompanying notes form an integral part of these condensed interim financial statements.
| F-6 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 1. | NATURE OF BUSINESS |
37 Capital Inc. (“37 Capital” or the “Company”) was incorporated on August 24, 1984 in British Columbia, Canada. The principal business of the Company is the acquisition, exploration, and if warranted, the development of natural resource prospects.
The common shares of the Company trade on the Canadian Securities Exchange (the “Exchange”) under the symbol “JJJ”, and trade on the OTC Pink tier of the OTC markets in the United States of America under the symbol “HHHEF”. The Company’s office is located at 575 – 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8, and its registered office is located at 3200 - 650 West Georgia Street, Vancouver BC V6B 4P7.
| 2. | GOING CONCERN |
These condensed interim financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
Several adverse conditions cast substantial
doubt on the validity of this assumption. The Company has incurred significant income/losses over the past nine months (September 30,
2024 - Loss $
The application of the going concern concept is dependent upon the Company’s ability to raise sufficient funding to pay creditors and to satisfy its liabilities as they become due. Management is actively engaged in the review and due diligence on opportunities of merit and is seeking to raise the necessary capital to meet its funding requirements. There can be no assurance whatsoever that management’s plan will be successful.
If the going concern assumption were not appropriate for these condensed interim financial statements then adjustments may be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments could be material.
| 3. | BASIS OF PRESENTATION |
| (a) | Statement of compliance |
These condensed interim financial statements are prepared in accordance with the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”).
| (b) | Basis of presentation |
These condensed interim financial statements were prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements.
These condensed interim financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value.
| F-7 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 3. | BASIS OF PRESENTATION (Continued) |
| (b) | Basis of presentation (Continued) |
In addition, these condensed interim financial statements have been prepared on the accrual basis, except for cash flow information. These condensed interim condensed interim financial statements are presented in Canadian dollars, which is the Company’s functional currency.
| (c) | Approval of the condensed interim financial statements |
These condensed interim financial statements were approved and authorized for issue by the Board of Directors on November 27, 2024.
| (d) | Use of estimates and judgments |
The preparation of condensed interim 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. Actual results may differ from these estimates.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The key area of judgment applied in the preparation of the condensed interim financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities is as follows:
| • | assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that give rise to significant uncertainty; |
| • | the classification/allocation of expenses as exploration and evaluation expenditures or operating expenses; and |
| • | the determination whether there have been any events or changes in circumstances that indicate the impairment of its exploration and evaluations assets. |
The key estimates applied in the preparation of the condensed interim financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:
| • | The recoverability of the carrying value of exploration and evaluation assets; |
| • | The provision for income taxes and recognition of deferred income tax assets and liabilities; and |
| • | The inputs in determining the liability and equity components of the convertible debentures. |
| F-8 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 4. | MATERIAL ACCOUNTING POLICY INFORMATION |
Effective January 1, 2023, the Company adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2), which require entities to disclose material accounting policies instead of significant accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies that provide useful, entity-specific accounting policy information that users need to understand other information in the condensed interim financial statements. While the amendments did not result in any changes to the Company’s accounting policies themselves, they impacted the accounting policy information disclosed in the Company’s condensed interim financial statements.
The material accounting policies of the Company include the following:
| (a) | Financial instruments |
| (i) | Recognition and classification |
The Company classifies its financial instruments in the following categories:
| • | At fair value through profit and loss (“FVTPL”): cash |
| • | Amortized cost: accounts payable and accrued liabilities, due to related parties, loan payable and convertible debentures |
The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.
| (ii) | Measurement |
Financial assets and liabilities at amortized cost
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.
Financial assets and liabilities at FVTPL
Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of comprehensive loss in the period in which they arise.
| (iii) | Impairment of financial assets at amortized cost |
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
| F-9 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 4. | MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| (iv) | Derecognition |
Financial assets
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.
Financial liabilities
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
Gains and losses on derecognition are generally recognized in profit or loss.
| (b) | Mineral property interests |
Costs directly related to the acquisition, exploration and evaluation of resource properties are capitalized once the legal rights to explore the resource properties are acquired.
The mineral property interests are tested for impairment if facts or circumstances indicate that impairment exists:
| • | the period for which the Company has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed; |
| • | substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; |
| • | exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and |
| • | sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. |
If it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable, or the property is abandoned or management has determined there is an impairment in value, the property is written down to its recoverable amount. From time to time, the Company acquires or disposes properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee, and accordingly, are recorded as mineral property costs or recoveries when the payments are made or received. After costs are recovered, the balance of the payments received is recorded as a gain on option or disposition of mineral property interest.
| F-10 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 4. | MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| (b) | Mineral property interests (Continued) |
Once the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable, mineral property interests attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property and equipment.
To date, the Company’s mineral property interest has not demonstrated technical feasibility and commercial viability. The recoverability of the carrying amount of any mineral property interests is dependent on successful development and commercial exploitation or, alternatively, sale of the respective areas of interest.
| (c) | Impairment |
At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
| (d) | Decommissioning liabilities |
An obligation to incur decommissioning and site rehabilitation costs occurs when environmental disturbance is caused by exploration, evaluation, development or ongoing production.
Decommissioning and site rehabilitation costs arising from the installation of plant and other site preparation work, discounted to their net present value, are provided when the obligation to incur such costs arises and are capitalized into the cost of the related asset. These costs are charged against operations through depreciation of the asset and unwinding of the discount on the provision.
Depreciation is included in operating costs while the unwinding of the discount is included as a financing cost. Changes in the measurement of a liability relating to the decommissioning or site rehabilitation of plant and other site preparation work are added to, or deducted from, the cost of the related asset. The costs for the restoration of site damage, which arises during production, are provided at their net present values and charged against operations as extraction progresses.
Changes in the measurement of a liability, which arise during production, are charged against operating profit. The discount rate used to measure the net present value of the obligations is the pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. To date the Company does not have any decommissioning liabilities.
| F-11 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 4. | MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| (e) | Income taxes |
Income tax expense consisting of current and deferred tax expense is recognized to profit or loss. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period-end, adjusted for amendments to tax payable with regard to previous years.
Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
| (f) | Share-based payments |
The Company grants stock options to directors, officers, employees and consultants of the Company. The fair value of share-based payments to employees is measured at grant date, using the Black-Scholes Option Pricing Model, and is recognized over the vesting period using the graded method. Fair value of share-based payments for non-employees is recognized and measured at the date the goods or services are received based on the fair value of the goods or services received. If it is determined that the fair value of goods and services received cannot be reliably measured, the share-based payment is measured at the fair value of the equity instruments issued using the Black-Scholes Option Pricing Model.
For both employees and non-employees, the fair value of share-based payments is recognized as either an expense or as mineral property interests with a corresponding increase in option reserves. The amount to be recognized as expense is adjusted to reflect the number of share options expected to vest. Consideration received on the exercise of stock options is recorded in capital stock and the related share-based payment is transferred from the stock option reserve to capital stock. For unexercised options that expire, the recorded value is transferred to deficit.
| (g) | Convertible debentures |
The liability component of convertible debentures is recognized initially at the fair value of a similar liability that does not have a conversion option. The equity component is recognized initially, as the difference between the fair value of the convertible debenture as a whole and the fair value of the liability component. Transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of the convertible debenture is measured at amortized cost using the effective interest method. The equity component is not re-measured subsequent to initial recognition.
| F-12 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 4. | MATERIAL ACCOUNTING POLICY INFORMATION (Continued) |
| (h) | Loss per share |
Loss per share is calculated by dividing net loss attributable to common shares of the Company by the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this method, the dilutive effect on earnings per share is calculated on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to purchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.
| (i) | Capital stock |
Proceeds from the exercise of stock options and warrants are recorded as capital stock. The proceeds from the issuance of units of the Company are allocated between common shares and warrants based on the residual value method. Under this method, the proceeds are allocated first to capital stock based on the fair value of the common shares at the time the units are issued, and any residual value is allocated to the warrants. When the warrants are exercised, the related value is transferred from the warrant reserve to capital stock. For unexercised warrants that expire, the recorded value is transferred from the warrant reserves to deficit.
On the issuance of flow-through shares, any premium received in excess of the market price of the Company’s common shares is initially recorded as a liability (“flow-through tax liability”). Provided that the Company has renounced the related expenditures, or that there is a reasonable expectation that it will do so, the flow-through tax liability is reduced on a pro-rata basis as the expenditures are incurred. If such expenditures are capitalized, a deferred tax liability is recognized. To the extent that the Company has suitable unrecognized deductible temporary differences, an offsetting recovery of deferred income taxes would be recorded.
| (j) | Foreign currency translation |
Amounts recorded in foreign currency are translated into Canadian dollars as follows:
| (i) | Monetary assets and liabilities, at the rate of exchange in effect as at the balance sheet date; |
| (ii) | Non-monetary assets and liabilities, at the exchange rates prevailing at the time of the acquisition of the assets or assumption of the liabilities; and |
| (iii) | Revenues and expenses (excluding amortization, which is translated at the same rate as the related asset), at the rate of exchange on the transaction date. |
Exchange differences are recognized in profit or loss in the period which they arise.
| (k) | Accounting standards issued but not yet effective |
At the date of the approval of the condensed interim financial statements, a number of standards and interpretations were issued but not effective. The Company considers that these new standards and interpretations are either not applicable or are not expected to have a significant impact on the Company’s condensed interim financial statements.
| F-13 |
37 CAPITAL INC.
Notes to Condensed interim financial statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 5. | MINERAL PROPERTY INTERESTS |
| Schedule of mineral property interests | ||||
Extra High Property | ||||
| Balance, December 31, 2022 | $ | |||
| Exploration costs | ||||
| Balance December 31, 2023 | ||||
| Exploration costs | ||||
| Balance, September 30, 2024 | $ | |||
Extra High Property
Previously
the Company held a
On
October 31, 2019, as amended on November 4, 2019, the Company entered into an agreement with Colt Resources Inc. (“Colt Resources”)
to purchase the remaining
During
the year ended December 31, 2021, the Company recorded an impairment loss of $
Pursuant
to the Company’s offer letter to Colt Resources dated July 6, 2022, the Company has made a cash payment of $
During
2023 the Company hired the services of Discovery Consultants of Vernon, British Columbia (“Discovery “) to plan, conduct,
and complete the Company’s exploration work program on the Extra High Property (the “Company’s 2023 Exploration Work
Program”). The Company’s 2023 Exploration Work Program consisted of 2 Phases. The Company incurred $
As at December 31, 2023 and September 30, 2024, the Company owns a 100% undivided right, interest, and title in and to the Extra High Property.
| 6. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
| Schedule of accounts payable and accrued liabilities | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Trade payables | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| F-14 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 7. | RELATED PARTY TRANSACTIONS |
The amounts due to related parties are unsecured, payable on demand which consist of the following:
| Schedule of amounts due to related parties | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Advances from directors (interest at prime plus 1%) | $ | $ | ||||||
| Entities controlled by directors (non-interest-bearing) | ||||||||
| Due to related parties | $ | $ | ||||||
The convertible
debentures and accrued interest of $
During the nine-month period ended September 30, the following amounts were charged by related parties.
| Schedule of amounts charged by related parties | ||||||||
| 2024 | 2023 | |||||||
| Interest charged on amounts due to related parties | $ | $ | ||||||
Rent charged by entities with common directors (note 11) | ||||||||
Office expenses charged by, and other expenses paid on behalf of the Company by a company with common directors (note 11) | ||||||||
| Total expenses | $ | $ | ||||||
The Company, together with Jackpot Digital Inc. ("Jackpot"), a related company with certain common directors, have entered into an office lease agreement, and an office support services agreement (note 11).
| 8. | LOAN PAYABLE |
During
the year ended December 31, 2016, the Company entered into an agreement with a party whereby the party paid certain debts owed by
the Company. The loan was non-interest bearing, unsecured and due on demand. On January 25, 2021, the principal amount of $
During
May 2021, a party lent the Company $
| 9. | CONVERTIBLE DEBENTURES FINANCING |
Convertible Debentures Financing 2015
On
January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $
| F-15 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 9. | CONVERTIBLE DEBENTURES FINANCING (Continued) |
On
October 29, 2021, the Company entered into an Addendum to the convertible debentures whereby the maturity date of the principal amount
totaling $
At September 30, 2024, the Company recorded interest expense of $
The following table reconciles the fair value of the debentures to the carrying amount.
| Schedule of reconciles of fair value of debentures to carrying amount | ||||||||||||
| Liability Component | Equity Component | Total | ||||||||||
| Balance, December 31, 2022 | $ | $ | $ | |||||||||
| Interest accrued | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Interest accrued | ||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | |||||||||
| 10. | CAPITAL STOCK |
| (a) | Authorized |
Unlimited number of common and preferred shares without par value.
As of September 30, 2024, there are preferred shares issued.
| (b) | Issued |
As of September 30, 2024, there are common shares issued and outstanding.
During the nine months ended September 30, 2024, the following transaction occurred.
On September 20, 2024, the Company closed a non-brokered private placement financing for gross proceeds of $through the issuance of units of the Company at $per unit. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws. Based on the residual value the warrants were valued at $nil.
During the year ended December 31, 2023, the following transactions occurred:
On July 24, 2023, the Company closed a non-brokered private placement financing, for gross proceeds of $ through the issuance of flow-through units of the Company at $ per unit to related parties. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws. Based on the residual method the warrants were valued at $ nil. The units were issued below the then market price of the Company shares, therefore a flow-through premium was not recorded.
| F-16 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 10. | CAPITAL STOCK (Continued) |
| (b) | Issued (Continued) |
On May 15, 2023, the Company closed a non-brokered private placement financing for gross proceeds of $ through the issuance of units of the Company at $ per unit of which were subscribed to related parties. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws. Based on the residual value the warrants were valued at $ nil.
During the year ended December 21, 2021, the following share transaction occurred:
On January 15, 2021, the Company issued flow-through units for proceeds of $. Each flow-through unit consists of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.50 for a period of two years. During the year-ended December 31, 2022, the Company made a formal application to Canada Revenue Agency and cancelled the Company’s flow-through share application which was submitted during the year ended December 31, 2020. As at December 31, 2023 and September 30, 2024, the Company has included a provision for indemnification of the flow through shareholder for an amount of $ in accounts payable.
| (c) | Warrants |
Warrants activity is as follows:
| Schedule of warrant activity | |||||||||
| Number of Warrants | Weighted Average Exercise Price | ||||||||
| Balance, December 31, 2022 | $ | ||||||||
| Expired | ( | ) | $ | ||||||
| Issued | $ | ||||||||
Balance, December 31, 2023
| $ | ||||||||
| Issued | $ | ||||||||
| Balance, September 30, 2024 | $ | ||||||||
As of September 30, 2024, the following warrants were outstanding:
| Schedule of warrants outstanding | ||||||||
| Expiry Date | Exercise Price | Number of Warrants Outstanding | ||||||
| August 31, 2027 | $ | |||||||
| October 7, 2027 | $ | |||||||
| October 31, 2027 | $ | |||||||
| May 15, 2028 | $ | |||||||
| July 24, 2028 | $ | |||||||
September 20, 2027 | $ | |||||||
The weighted average remaining contractual life for warrants outstanding at September 30, 2024 is years (September 30, 2023 - years).
| F-17 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 10. | CAPITAL STOCK (Continued) |
| (d) | Stock options |
The Company’s 2015 Stock Option Plan provides that the Board of Directors of the Company may grant to directors, officers, employees and consultants of the Company options to acquire up to 20% of the issued and outstanding common shares of the Company calculated from time to time on a rolling basis. The terms of the options are determined at the date of grant.
During January 2024, a total of stock options were granted to directors, officers and consultants exercisable at the price of $ per share for three years. As at September 30, 2024, there are stock options outstanding (September 30, 2023 – Nil).
The weighted average remaining contractual life for options outstanding at September 30, 2024 is years.
The Company applies the fair value method using the Black-Scholes option pricing model in accounting for its stock options granted. Accordingly, share-based payments of $ (September 30, 2023 - $ nil) were recognized as employee benefits and $ nil (September 30, 2023 - $ nil was recognized as consulting fees for options granted to consultants.
| 11. | COMMITMENTS |
| a) | The Company has an office lease agreement with Jackpot. Under the agreement,
the Company is entitled to have office space from Jackpot at a monthly rate of $ |
| b) | The Company has an office support services agreement
with Jackpot which has been extended until September 30, 2024. Under the agreement, the Company is entitled to receive office support
services from Jackpot at a monthly rate of $ |
| c) | In
relation to the flow-through private placement completed during January 2021, the Company
was committed to incur and renounce $ |
| d) | In
relation to the flow-through private placement completed during July 2023, the Company is
committed to incur and renounce $ |
| F-18 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 12. | CAPITAL MANAGEMENT |
The Company considers its capital to be comprised of stockholders’ deficiency and convertible debenture.
The Company’s objective when managing capital is to maintain adequate levels of funding to support the acquisition, exploration and, if warranted, the development of mineral properties, to invest in non-mining related projects and to maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity and debt financing. Future financings are dependent on market conditions and there can be no assurance that the Company will be able to raise funds in the future. There were no changes to the Company’s approach to capital management during the nine months ended September 30, 2024. The Company is not subject to externally imposed capital requirements.
| 13. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
| (a) | Risk management overview |
The Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital. The Company employs risk management strategies and policies to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the responsibility to administer and monitor these risks.
| (b) | Fair value of financial instruments |
The fair values of cash, accounts payable and accrued liabilities, due to related parties, loan payable and convertible debentures approximate their carrying values due to the short-term maturity of these instruments.
IFRS establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
| (c) | Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.
| (d) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.
| F-19 |
37 CAPITAL INC.
Notes to Financial Statements
Nine Months Ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
| 13. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued) |
| (d) | Liquidity risk (Continued) |
At September 30, 2024, the Company
had cash of $
| (e) | Market risk |
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net earnings or the value of financial instruments. As at September 30, 2024, the Company is not exposed to significant interest rate risk, currency risk or other price risk on its financial assets and liabilities due to the short-term maturity of its financial liabilities and the fixed interest rate on the outstanding convertible debentures.
| 14. | EVENT AFTER REPORTING PERIOD |
The Company closed the first tranche of the
private placement which was announced on October 1, 2024 for gross proceeds of $ and issued units of the Company. Each unit consists of one common share in the capital of the Company and one share
purchase warrant to purchase an additional common share in the capital of the Company at the price of $ per common share for a period of three () years. The Company paid a finder’s fee of $
| F-20 |
51-102F3
Material Change Report
| Item 1. | Name and Address of Company |
37
Capital Inc. (the “Company”)
Suite 575 – 510 Burrard Street
Vancouver, BC V6C 3A8
| Item 2. | Date of Material Change |
October 31, 2024
| Item 3. | News Release |
The news release of the Company dated November 4, 2024 was disseminated through Stockwatch and Bay Street News (Market News Publishing) and was filed on www.sedarplus.ca.
| Item 4. | Summary of Material Changes |
In connection with the non-brokered private placement which the Company announced on October 1, 2024, the Company has closed the first tranche for gross proceeds of $65,000 and issued 650,000 units of the Company. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.15 per common share for a period of 3 years. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws.
| Item 5. | Full Description of Material Change |
Please see the News Release of the Company dated November 4, 2024, attached hereto as Schedule “A”.
| Item 6. | Reliance on subsection 7.1(2) or (3) of National Instrument 51-102 |
Not Applicable
| Item 7. | Omitted Information |
None
| Item 8. | Executive Officer |
Mr. Jake H. Kalpakian, President, (604) 681-0204 ext. 6105
| Item 9. | Date of Report |
November 7, 2024
| 1 |
NEWS RELEASE
Symbols: JJJ - CSE
HHHEF – OTC Pink
37 Capital announces First Tranche Closing of Non-Brokered Private Placement
VANCOUVER, BRITISH COLUMBIA. November 4, 2024. 37 Capital Inc. (the “Company” or “37 Capital”) announces that further to its news releases dated October 1, 2024, the Company has closed the first tranche of the private placement for gross proceeds of $65,000 and issued 650,000 units of the Company. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.15 per common share for a period of three (3) years. All securities issued in connection with the private placement include a hold period in accordance with applicable securities laws. The proceeds of this proposed financing shall be utilized for general working capital purposes.
The Company paid a finder’s fee of $1,500 in cash and issued 15,000 share purchase warrants exercisable for two (2) years at the price of $0.15 per share.
For more information on the Company, you may contact us at (604) 681-0204, or visit the Company's website at www.37capitalinc.com, or the CSE's website by using the following direct link: http://thecse.com/en/listings/mining/37-capital-inc.
On Behalf of the Board of 37 Capital Inc.,
“Jake H. Kalpakian”
____________________
Jake H. Kalpakian,
President and CEO
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Trading in the securities of the Company should be considered speculative.
Certain statements contained herein are “forward-looking”. Forward-looking statements may include, among others, statements regarding future plans, projected or proposed financings, costs, objectives, economic or technical performance, or the assumptions underlying any of the foregoing. In this News Release, words such as “may”, “would”, “could”, “will”, “likely”, “enable”, “feel”, “seek”, “project”, “predict”, “potential”, “should”, “might”, “objective”, “believe”, “expect”, “propose”, “anticipate”, “intend”, “plan”, “plans” “estimate”, and similar words are used to identify forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, projections and estimations, there can be no assurance that these assumptions, projections or estimations are accurate. Readers, shareholders and investors are therefore cautioned not to place reliance on any forward-looking statements as the plans, assumptions, intentions or expectations upon which they are based might not occur.
| 2 |
37 CAPITAL INC.
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting (the "Meeting") of the Shareholders of 37 CAPITAL INC. (hereinafter called the "Company") will be held on Tuesday, December 10, 2024, at Suite 575, 510 Burrard Street, Vancouver, British Columbia at the hour of 11:00 a.m. (Vancouver time) for the following purposes:
| 1. | To receive and consider the audited financial statements of the Company for the fiscal year ended December 31, 2023 and the Auditor's Report thereon; |
| 2. | To fix the number of Directors for the ensuing year at four (4); |
| 3. | To elect four (4) Directors for the ensuing year; |
| 4. | To re-appoint Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, as the Company’s Auditor for the ensuing year and to authorize the Directors to fix the remuneration to be paid to the Auditor; |
| 5. | To re-approve the Company's Stock Option Plan; and |
| 6. | To transact such other business as may properly come before the Meeting. |
Accompanying this Notice is an Information Circular and Proxy with notes to Proxy.
Shareholders unable to attend the Meeting in person should read the notes accompanying the enclosed Proxy and complete and return the Proxy to the Company's Registrar and Transfer Agent within the time and to the location set out in the said notes to the Proxy.
The enclosed Proxy is solicited by Management and you may amend it, if you so desire, by striking out the names listed therein and inserting in the space provided the name of the person you wish to represent you at the Meeting.
DATED at Vancouver, British Columbia, this 5th day of November, 2024.
BY ORDER OF THE BOARD,
“Jake
H. Kalpakian”
________________________
Jake H. Kalpakian
President, CEO & Director
| 1 |
37 CAPITAL INC.
Suite 575, 510 Burrard Street
Vancouver, BC V6C 3P1
Telephone: (604) 681-0204
INFORMATION CIRCULAR
(Containing Information as at November 5, 2024, unless otherwise stated)
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of proxies by the Management of 37 Capital Inc. (the “Company”), for use at the Annual General Meeting (the “Meeting”) of the Shareholders of the Company, to be held on Tuesday, the 10th day of December, 2024, at the time and place and for the purposes set forth in the accompanying Notice of Meeting and at any adjournment thereof. The solicitation will be primarily by mail, however, proxies may be solicited personally or by telephone by the regular officers and employees of the Company. The cost of solicitation will be borne by the Company.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the accompanying form of Proxy are Directors and/or officers of the Company. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A SHAREHOLDER) TO ATTEND AND ACT FOR HIM OR HER ON HIS OR HER BEHALF AT THE MEETING OTHER THAN THE PERSONS NAMED IN THE ENCLOSED INSTRUMENT OF PROXY. TO EXERCISE THIS RIGHT, A SHAREHOLDER SHALL STRIKE OUT THE NAMES OF THE PERSONS NAMED IN THE INSTRUMENT OF PROXY AND INSERT THE NAME OF HIS/HER NOMINEE IN THE BLANK SPACE PROVIDED, OR COMPLETE ANOTHER INSTRUMENT OF PROXY. A PROXY WILL NOT BE VALID UNLESS IT IS DEPOSITED WITH THE COMPANY’S REGISTRAR AND TRANSFER AGENT, COMPUTERSHARE TRUST COMPANY OF CANADA, AT 100 UNIVERSITY AVENUE, 9TH FLOOR, TORONTO, ONTARIO, M5J 2Y1, NOT LESS THAN 48 HOURS (EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) BEFORE THE TIME OF THE MEETING OR ANY ADJOURNMENT THEREOF.
The Instrument of Proxy must be signed by the Shareholder or by his attorney in writing, or, if the Shareholder is a corporation, it must either be under its common seal or signed by a duly authorized officer.
A Shareholder who has given a proxy may revoke it at any time before it is exercised. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing executed by the Shareholder or by his attorney authorized in writing, or, if the Shareholder is a corporation, it must either be under its common seal, or signed by a duly authorized officer and deposited at the Company’s Registrar and Transfer Agent, Computershare Trust Company of Canada, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, at any time up to and including the last business day preceding the day of the Meeting, or any adjournment of it, at which the proxy is to be used, or to the Chairperson of the Meeting on the day of the Meeting or any adjournment of it. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.
VOTING OF SHARES AND EXERCISE OF DISCRETION OF PROXIES
On any poll, the persons named in the enclosed Instrument of Proxy will vote the shares in respect of which they are appointed. Where directions are given by the Shareholder in respect of voting for or against any resolution, the proxy holder will do so in accordance with such direction.
IN THE ABSENCE OF ANY INSTRUCTION IN THE PROXY, IT IS INTENDED THAT SUCH SHARES WILL BE VOTED IN FAVOUR OF THE MOTIONS PROPOSED TO BE MADE AT THE MEETING AS STATED UNDER THE HEADINGS IN THIS INFORMATION CIRCULAR. The Instrument of Proxy enclosed, when properly signed, confers discretionary authority with respect to amendments or variations to the matters which may properly be brought before the Meeting. At the time of printing this Information Circular, the Management of the Company is not aware that any such amendments, variations or other matters are to be presented for action at the Meeting. However, if any other matters which are not now known to the Management should properly come before the Meeting, the Proxies hereby solicited will be exercised on such matters in accordance with the best judgment of the nominee.
In order to approve a motion proposed at the Meeting, a majority of greater than 50% of the votes cast will be required (an “Ordinary Resolution”) unless the motion requires a Special Resolution, in which case a majority of not less than two-thirds of the votes cast will be required. In the event a motion proposed at the Meeting requires disinterested Shareholder approval, common shares (“Common Shares”) held by Shareholders of the Company who have an interest in the motion and their “associates”, as such term is defined under applicable securities laws, will be excluded from the count of votes cast on such motion.
| 2 |
ADVICE TO BENEFICIAL SHAREHOLDERS
The information set forth in this section is of significant importance to many Shareholders as a substantial number of Shareholders do not hold their shares in their own name. Shareholders who do not hold their shares in their own name (referred to as “Beneficial Shareholders”) should note that only proxies deposited by Shareholders whose names appear on the records of the Company as the registered holders of shares can be recognized and acted upon at the Meeting.
If Common Shares are listed in an account statement provided to a Shareholder by a broker, then, in almost all cases, those Common Shares will not be registered in the Shareholder’s name on the records of the Company. Such shares will more likely be registered under the name of the Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such Common Shares are registered under the name CDS & Co., the registration name for The Canadian Depositary for Securities, which acts as nominee for many Canadian brokerage firms. The Common Shares held by brokers or their agents or nominees can only be voted for or against resolutions upon the instructions of the Beneficial Shareholder. Without specific instructions, a broker and its agents or nominees are prohibited from voting shares for the broker’s clients. Beneficial Shareholders should carefully ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person.
Applicable regulatory rules require intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their shares are voted at the Meeting. The purpose of the form of proxy or voting instruction form provided to a Beneficial Shareholder by its broker, agent or nominee is limited to instructing the registered holder of the shares on how to vote such shares on behalf of the Beneficial Shareholder.
The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communications (“Broadridge”). Broadridge typically supplies a voting instruction form, mails those forms to Beneficial Shareholders and asks those Beneficial Shareholders to return the forms to Broadridge or follow specific telephone or other voting procedures. Broadridge then tabulates the results of all instructions received by it and provides appropriate instructions respecting the voting of the shares to be represented at the Meeting. A Beneficial Shareholder receiving a voting instruction form from Broadridge cannot use that form to vote Common Shares directly at the Meeting. Instead, the voting instruction form must be returned to Broadridge or the alternate voting procedures must be completed well in advance of the Meeting in order to ensure such Common Shares are voted.
Although Beneficial Shareholders may not be recognized directly at the Meeting for the purpose of voting Common Shares registered in the name of their broker, agent or nominee, a Beneficial Shareholder may attend the Meeting as a proxyholder for a Shareholder and vote shares in that capacity. Beneficial Shareholders who wish to attend the Meeting and indirectly vote their shares as proxyholder for the registered Shareholder should contact their broker, agent or nominee well in advance of the Meeting to determine the steps necessary to permit them to indirectly vote their shares as a proxyholder.
This Information Circular and accompanying form of proxy are being sent to both registered and non-registered owners of the shares of the Company. If you are a non-registered owner and the Company has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. In this event, by choosing to send this Information Circular to you directly, the Company (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering this Information Circular to you; and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.
The Company will not pay for an intermediary to deliver proxy related materials and voting instruction forms to objecting beneficial owners (called OBOs for Objecting Beneficial Owners). OBOs have objected to their intermediary disclosing ownership information about themselves to the Company. Accordingly, OBOs will not receive the materials unless their intermediary assumes the costs of delivery.
The Company is not relying on the “notice-and-access” delivery procedures outlined in National Instrument 54-101 to distribute copies of the proxy related materials in connection with the Meeting.
All references to Shareholders in this Information Circular and the accompanying form of proxy are to registered Shareholders unless specifically stated otherwise.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company’s authorized capital consists of an unlimited number of Common Shares without par value and an unlimited number of preferred shares (“Preferred Shares”) without par value. As at November 5, 2024 (the “Record Date”), the Company has 14,685,947 Common Shares issued and outstanding, each share carrying the right to one vote. There are no Preferred Shares outstanding.
| 3 |
Any Shareholder of record at the close of business on the Record Date who either personally attends the Meeting or who has completed and delivered a Proxy in the manner and subject to the provisions described above, shall be entitled to vote or to have such Shareholder’s shares voted at the Meeting.
To the best of the knowledge of the Directors and senior officers of the Company, the only persons who beneficially own, or control or direct, directly or indirectly, more than 10% of the issued and outstanding Common Shares of the Company, are as follows:
| Name | Number of Voting Securities | Percentage |
| Jake H. Kalpakian, Vancouver, British Columbia |
3,580,039(1) | 24.4% |
|
Roberto Fia, Toronto, Ontario |
4,130,000 | 28.1% |
| (1) | Of these shares, 1,756,288 Common Shares are held by Jake H. Kalpakian directly, 1,520,920 Common Shares are held by private companies which are controlled by and in which Jake H. Kalpakian is the principal shareholder and 302,831 Common Shares are held by a family member of Jake H. Kalpakian. |
EXECUTIVE COMPENSATION
In accordance with the provisions of applicable securities legislation, the Company had two “Named Executive Officers” during the financial year ended December 31, 2023, namely Mr. Jake H. Kalpakian, President and CEO and Mr. Neil Spellman, CFO.
Definitions:
For the purpose of this Information Circular:
“CEO” means an individual who acted as chief executive officer of the company, or acted in a similar capacity, for any part of the most recently completed financial year;
“CFO” means an individual who acted as chief financial officer of the company, or acted in a similar capacity, for any part of the most recently completed financial year;
“closing market price” means the price at which the company’s security was last sold, on the applicable date,
| (a) | in the security’s principal marketplace in Canada, or |
| (b) | if the security is not listed or quoted on a marketplace in Canada, in the security’s principal marketplace; |
“company” includes other types of business organizations such as partnerships, trusts and other unincorporated business entities;
“equity incentive plan” means an incentive plan, or portion of an incentive plan, under which awards are granted and that falls within the scope of IFRS2 Share-Based Payment;
“external management company” includes a subsidiary, affiliate or associate of the external management company;
“grant date” means a date determined for financial statement reporting purposes under IFRS2 Share-Based Payment;
“incentive plan” means any plan providing compensation that depends on achieving certain performance goals or similar conditions within a specified period;
“incentive plan award means compensation awarded, earned, paid, or payable under an incentive plan;
“NEO” or “Named Executive Officer” means each of the following individuals:
| (a) | a CEO; |
| (b) | a CFO; |
| (c) | each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000, as determined in accordance with subsection 1.3(5) of Form 51-102F6V, for that financial year; and |
| (d) | each individual who would be an NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the company, nor acting in a similar capacity, at the end of that financial year; |
| 4 |
“NI 52-107” means National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency;
“non-equity incentive plan” means an incentive plan or portion of an incentive plan that is not an equity incentive plan;
“option-based award” means an award under an equity incentive plan of options, including, for greater certainty, share options, share appreciation rights, and similar instruments that have option-like features;
“plan” includes any plan, contract, authorization, or arrangement, whether or not set out in any formal document, where cash, securities, similar instruments or any other property may be received, whether for one or more persons;
“replacement grant” means an option that a reasonable person would consider to be granted in relation to a prior or potential cancellation of an option;
“repricing” means, in relation to an option, adjusting or amending the exercise or base price of the option, but excludes any adjustment or amendment that equally affects all holders of the class of securities underlying the option and occurs through the operation of a formula or mechanism in, or applicable to, the option;
“share-based award” means an award under an equity incentive plan of equity-based instruments that do not have option-like features, including, for greater certainty, Common Shares, restricted shares, restricted share units, deferred share units, phantom shares, phantom share units, common share equivalent units, and stock.
compensation discussion and analysis
The Company’s executive officers do not currently receive any compensation but may, in the future, receive a base salary in recognition for discharging job responsibilities and that reflects the officer’s performance over time, as well as that individual’s particular experience and qualifications. If paid in the future, an officer’s base salary will be reviewed by the Board of Directors on an annual basis and may be adjusted to take into account performance contributions for the year and to reflect sustained performance contributions over a number of years. Officers are also eligible to receive discretionary bonuses as determined by the Board of Directors based on each officer’s responsibilities, his achievement of corporate objectives and the Company’s financial performance.
In addition, officers are eligible under the Company’s Stock Option Plan (the "Stock Option Plan") to receive grants of stock options. The Stock Option Plan is an important part of the Company’s long-term incentive strategy for its officers, permitting them to participate in any appreciation of the market value of the Common Shares over a stated period of time. The Stock Option Plan is intended to reinforce commitment to long-term growth in profitability and shareholder value. The size of stock option grants to officers is dependent on each officer's level of responsibility, authority and importance to the Company and the degree to which such officer's long-term contribution to the Company will be key to its long-term success.
In setting compensation and bonus levels, the Board has not yet established any formal objectives or criteria as the Company’s current stage of development and financial resources requires flexibility in determining remuneration for its NEO’s. The Board will, as circumstances require, review and consider the general risks associated with the Company's compensation policies and strategies in terms of compensation paid or proposed to be paid to its NEO’s.
The Board of Directors has not conducted a formal evaluation of the implications of the risks associated with the Company’s compensation policies. Risk management is a consideration of the Board of Directors when implementing its compensation policies and the Board of Directors do not believe that the Company’s compensation policies result in unnecessary or inappropriate risk taking including risks that are likely to have a material adverse effect on the Company.
Use of Financial Instruments
The Company does not have a policy that would prohibit a Named Executive Officer or Director from purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the Named Executive Officer or Director. However, management is not aware of any Named Executive or Director purchasing such an instrument.
The following table sets out certain information respecting the compensation paid to Named Executive Officers of the Company for the financial years ended December 31, 2023 and 2022.
| 5 |
Summary Compensation Table
| Name and position | Financial Year | Salary, consulting fee, retainer or commission ($) | Bonus ($) |
Committee or meeting fees ($) |
Value of perquisites ($) | Value of all other compensation ($) | Total compensation ($) |
| Jake Kalpakian President, CEO and Director |
2023 | N/A | N/A | N/A | N/A | N/A | N/A |
2022 |
N/A | N/A | N/A | N/A | N/A | N/A | |
| Neil Spellman CFO and Director |
2023 | N/A | N/A | N/A | N/A | N/A | N/A |
| 2022 | N/A | N/A | N/A | N/A | N/A | N/A |
option based awards
Common Share Purchase Plan
The Company has in effect the Stock Option Plan in order to provide effective incentives to Directors, officers, senior management personnel, employees and consultants of the Company and to enable the Company to attract and retain experienced and qualified individuals in those positions by permitting such individuals to directly participate in an increase in per share value created for the Company’s Shareholders. The Company has no equity compensation plans other than the Stock Option Plan. The Stock Option Plan is an important part of the Company’s long-term incentive strategy for its executive officers, permitting them to participate in any appreciation of the market value of the Common Shares over a stated period of time. The Stock Option Plan is intended to reinforce commitment to long-term growth in profitability and shareholder value. The size of stock option grants to officers is dependent on each officer's level of responsibility, authority and importance to the Company and the degree to which such executive officer’s long term contribution to the Company will be key to its long-term success. Previous grants of stock options are taken into account when considering new grants.
Outstanding Share-Based Awards and Option-Based Awards
There were no outstanding share-based or option-based awards held by the NEO’s as at December 31, 2023.
Incentive Plan Awards – Value Vested Or Earned During The Year
For NEO’s, no option-based awards or share based awards were vested or earned during the year ended December 31, 2023.
Pension Plan Benefits
No pension, retirement or deferred compensation plans, including defined contribution plans, have been instituted by the Company and none are proposed at this time.
Termination and Change of Control Benefits
There are no contracts, agreements, plans or arrangements that provide for payments to NEO’s at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change of control of the Company or a change in a NEO’s responsibilities.
DIRECTOR COMPENSATION
There was no compensation paid to Directors who were not NEO’s for the financial year ended December 31, 2023.
The Company has no standard arrangement pursuant to which Directors who were not NEO’s are compensated by the Company for their services in the capacity as Directors except for the granting from time to time of incentive stock options. See “Option Based Awards – Common Share Purchase Plan”.
During the Company's most recently completed fiscal year, there were no stock options granted by the Company to Directors who were not NEO’s.
| 6 |
Outstanding Share Based & Option Based Awards
There were no outstanding share-based or option-based awards held by Directors of the Company who were not NEO’s as at December 31, 2023.
Incentive Plan Awards – Value Vested or Earned During the Year
There were no option-based awards or share based awards vested or earned during the year ended December 31, 2023 by the Directors who were not NEO's.
Securities Authorized for Issuance under Equity Compensation
The following table sets forth information with respect to all compensation plans under which equity securities are authorized for issuance as of December 31, 2023:
Equity Compensation Plan Information
| Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| Plan Category | (a) | (b) | (c) |
| Equity compensation plans approved by securityholders (1) | NIL | N/A | 2,749,189 |
| Equity compensation plans not approved by securityholders | N/A | N/A | N/A |
| TOTAL | NIL | N/A | 2,749,189 |
| (1) | Represents 20% “rolling” stock option plan (the “Stock Option Plan”). The number of Common Shares remaining available for issuance under the Stock Option Plan as at December 31, 2023 is based on the difference between the number of total number of Common Shares issuable under the Stock Option Plan as at December 31, 2023, being 2,749,189 shares (20% of 13,745,947 then-outstanding shares), less shares reserved for issuance under outstanding options as at December 31, 2023 (NIL). |
For further information on the Company's equity compensation plan, refer to the heading "Particulars of Other Matters To Be Acted” Upon" – "Re-approval of the Stock Option Plan."
INDEBTEDNESS OF DIRECTORS AND Executive OFFICERS
Other than “routine indebtedness” as defined in applicable securities legislation, since the beginning of the last fiscal year of the Company, none of the executive officers or Directors of the Company or any proposed nominee for election as a Director of the Company or any of their respective associates is or has been indebted to the Company or has been indebted to any other entity where that indebtedness was the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company.
| 7 |
Interest Of Certain Persons In Matters To Be Acted Upon
Except as otherwise disclosed herein, none of:
| (b) | the Directors or executive officers of the Company at any time since the beginning of the last financial year of the Company; |
| (c) | the proposed nominees for election as a Director of the Company; or |
| (d) | any associate or affiliate of the foregoing persons, |
has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matters to be acted upon at the Meeting exclusive of the election of Directors or the appointment of auditors.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
For purposes of the following discussion, "Informed Person" means (a) a Director or executive officer of the Company; (b) a Director or executive officer of a person or company that is itself an Informed Person or a subsidiary of the Company; (c) any person or company who beneficially owns, or controls or directs, directly or indirectly, voting securities of the Company or a combination of both carrying more than 10 percent of the voting rights attached to all outstanding voting securities of the Company, other than the voting securities held by the person or company as underwriter in the course of a distribution; and (d) the Company itself if it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities.
Except as disclosed below, elsewhere herein or in the Notes to the Company's financial statements for the financial year ended December 31, 2023, none of:
| (a) | the Informed Persons of the Company; |
| (b) | the proposed nominees for election as a Director of the Company; or |
| (c) | any associate or affiliate of the foregoing persons, |
has any material interest, direct or indirect, in any transaction since the commencement of the last financial year of the Company or in a proposed transaction which has materially affected or would materially affect the Company or any subsidiary of the Company.
FIXING THE NUMBER OF DIRECTOrS AND ELECTION OF DIRECTORS
The persons named in the enclosed Instrument of Proxy intend to vote in favour of fixing the number of Directors at four (4). Although Management is nominating four (4) individuals to stand for election, the names of further nominees for Directors may come from the floor at the Meeting.
Each Director of the Company is elected annually and holds office until the next Annual General Meeting of Shareholders or until his successor is duly elected, if his office is earlier vacated, in accordance with the Articles of the Company.
In the absence of instructions to the contrary, the Common Shares represented by Proxy will be voted for the nominees herein listed. Management does not contemplate that any of the nominees will be unable to serve as a Director.
INFORMATION CONCERNING NOMINEES SUBMITTED BY MANAGEMENT
The following table sets out the names of the persons proposed to be nominated by Management for election as a Director, the province or state and country in which he is ordinarily resident, the positions and offices which each presently holds with the Company, the period of time for which he has been a Director of the Company, the respective principal occupations or employment during the past five years if such nominee is not presently an elected Director and the number of Common Shares of the Company which each beneficially owns, or controls or directs, directly or indirectly, as of the date of this Information Circular. The four nominees are all currently Directors of the Company.
The nominees for the office of Director and information concerning them as furnished by the individual nominees are as follows:
| Name, Province or State and Country of Ordinary Residence and Positions Held with the Company(1) | Principal Occupation (2) | Dates Served as a Director | No. of Shares Beneficially Owned, Directly or Indirectly(3) |
|
Jake H. Kalpakian President, CEO and Director BC, Canada |
President & CEO of the Company; President and CEO of Jackpot Digital Inc. from 1991 to present |
January 2, 1991 to present |
1,756,288 (direct) 1,823,751 (indirect)(4) |
|
Neil Spellman CFO and Director California, USA |
CFO of Jackpot Digital Inc. since July 2019; Sr. Vice-President of DB Financial Management, Inc. from February 2001 until July 2020 |
August 23, 2016 to present |
0 |
|
Gregory Todd McFarlane Director Utah, USA |
Freelance Advertising Copywriter
|
October 1, 1992 to present |
25 (direct) |
|
Mathieu McDonald(5) Director BC, Canada |
V.P. Corporate Development of Jackpot Digital Inc. since August 2023; Head of Business Development & Investor Relations of Jackpot from April 2021 to August 2023 |
August 9, 2024 |
0 |
| (1) | For the purposes of disclosing positions held in the Company, "Company" shall include the Company and a parent or subsidiary thereof. |
| 8 |
| (2) | Unless otherwise stated above, all nominees have held the principal occupation or employment indicated for the past five years. |
| (3) | Common Shares beneficially owned, or controlled or directed, directly or indirectly, by Directors is based on information furnished to the Company by the nominees. |
| (4) | 1,394,656 Common Shares are held by Kalpakian Bros. of B.C. Ltd (private company controlled by Jake H. Kalpakian), and 126,264 Common Shares are held by 30 Rock Management Inc. (private company controlled by Jake H. Kalpakian). In addition, Mr. Jake Kalpakian’s indirect holdings include 302,831 Common Shares held by a family member. |
| (5) | Mr. McDonald was appointed as a director on August 9, 2024. |
The Company does not currently have an Executive Committee of its Board of Directors. The current members of the audit committee are Neil Spellman, Gregory McFarlane and Mathieu McDonald.
CEASE TRADE ORDERS, CORPORATE AND PERSONAL BANKRUPTCIES, PENALTIES AND SANCTIONS
No proposed Director (including any personal holding company of a proposed Director):
| (1) | is, as at the date of the Information Circular, or has been, within 10 years before the date of this Information Circular, a director, chief executive officer or chief financial officer of any company (including the Company) that: |
| (a) | was the subject of a cease trade order (including a management cease trade order which applies to directors or executive officers), an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days (collectively an “order”), that was issued while such person was acting in the capacity as director, chief executive officer or chief financial officer; |
| (b) | was subject to an order that was issued after such person ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer; |
| (2) | is, as at the date of this Information Circular, or has been within 10 years before the date of the Information Circular, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; |
| (3) | has, within the 10 years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed Director; or |
| (4) | has been subject to: |
| (a) | any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority since December 31, 2000 or before December 31, 2000 the disclosure of which would likely be important to a reasonable security holder in deciding whether to vote for a proposed Director; or |
| (b) | any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed Director. |
No proposed Director is to be elected under any arrangement or understanding between the proposed Director and any other person or company, except the Directors and executive officers of the Company acting solely in such capacity.
| 9 |
audit committee disclosure
The Audit Committee Charter and the disclosure required by National Instrument 52-110 are attached hereto as Schedule “A”. The Audit Committee monitors the integrity of internal controls and monitors the business conduct of the Company. The committee reviews matters on a quarterly basis, relating to the financial position of the Company in order to provide reasonable assurances that the Company is in compliance with applicable laws and regulations
APPOINTMENT AND REMUNERATION OF AUDITORS
Management recommends the re-appointment of Dale Matheson Carr-Hilton Labonte LLP (“DMCL”), Chartered Professional Accountants, of Suite 1500 - 1140 West Pender Street, Vancouver, British Columbia, V6E 4G1, as the Auditor of the Company to hold office until the next Annual General Meeting of the Shareholders at remuneration to be fixed by the Board of Directors, and the persons named in the enclosed Proxy intend to vote in favour of such re-appointment. DMCL were initially appointed as auditor of the Company on March 28, 2017.
Corporate governance
The information required to be disclosed by National Instrument 58-101 Disclosure of Corporate Governance Practices is attached to this Information Circular as Schedule “B”.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
Re-approval of the Stock Option Plan
At last year's annual general meeting held on December 12, 2023, the Company proposed and the Shareholders reapproved the Company's 20% “rolling” stock option plan (the "Stock Option Plan"). Shareholders are being asked to re-approve the Company’s Stock Option Plan at this year's Annual General Meeting.
1. Number of Common Shares Reserved for Issuance under the Plan
Under the Plan, that number of Common Shares as is equal to 20% of the Company's issued and outstanding Common Shares from time to time may be reserved for the granting of stock options.
2. Purposes of the Plan and Eligibility
The purpose of the Plan is to advance the interests of the Company by providing eligible persons with additional incentive; encouraging stock ownership of eligible persons; increasing the proprietary interest of eligible persons in the success of the Company; encouraging eligible persons to remain with the Company or its subsidiaries; and attracting new employees, Directors and officers.
Directors, senior officers, consultants, employees, and management company employees of the Company and its subsidiaries are eligible to participate in the Plan.
While the Board, or any Committee to which administration of the Plan may be delegated, may, at its discretion, decide which terms to include in any option agreement on a case-by-case basis and there is no obligation on the Board or such Committee, if any, to use an identical form of option agreement or stipulate identical terms for each category of optionee or otherwise, the Board imposes certain restrictions as set out below.
The aggregate number of Common Shares that may be reserved for issuance pursuant to an option or options granted to any one individual in any 12-month period shall not exceed 5% and in the case of insiders, 10%, of the issued and outstanding Common Shares, calculated at the date any such option is granted. The maximum number of Common Shares which may be issued to insiders under the Plan or any other share compensation arrangement within any 12-month period shall be 10% of the Common Shares issued and outstanding at the time of issuance.
3. Vesting Requirements
For any option granted under the Plan, the Board of Directors may, at its sole discretion, determine whether such option shall vest immediately or be subject to such vesting schedule as the Board may deem appropriate in the circumstances.
Notwithstanding the above, in the event of a take-over bid, as defined in applicable securities legislation (but excluding an exempt take-over bid pursuant to applicable securities legislation) is made by any offeror to acquire outstanding voting or equity securities of the Company, the Board of Directors shall have the power and authority to pass a resolution deeming options that have not vested at the time to have vested, so as to enable optionees to exercise their respective options to the fullest extent possible and to tender all shares thereunder to such take-over bid.
| 10 |
4. Termination or Expiry of Options
The Plan stipulates that options may be granted under the Plan with a maximum term of five years.
Except as otherwise determined by the Board options granted under the Plan must expire 90 days after an optionee ceases to be a Director, senior officer, consultant, employee or management company employee. Termination for cause shall result in expiry of the affected option effective immediately upon such termination.
In the event of an optionee's death, the deceased's option may be exercised by his or her heirs or administrators within one year after the date of death (to the extent that the optionee was entitled to exercise such option as of the date of death).
| 5. | Other Material Terms |
The exercise price for any option shall be fixed by the Board. The Plan stipulates that the minimum exercise price may be at a discount of 25% to the closing market price of the Company’s Common Shares on the day preceding the grant of the option but not less than $0.05 per share.
All options granted and any Common Shares issuable upon exercise thereof shall be subject to any resale restrictions under applicable securities laws.
All options are non-assignable and non-transferable (subject to the options being exercisable by the optionee's heirs or administrators in the event of the optionee's death).
The Board of Directors may at any time, and from time to time, amend the Plan. However, no amendment shall be effective unless approved by the Shareholders of the Company to the extent shareholder approval is necessary for the Plan to satisfy any stock exchange or quotation system listing requirements. The Board shall not make any changes to any existing option agreements that are adverse to the optionee unless such optionee first consents in writing to any such changes.
If any change is made in the Common Shares subject to the Plan, or subject to any option (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to the Plan and the maximum number of securities subject to award to any person, and the outstanding options will be appropriately adjusted in the type(s) and number of securities and price per share of shares subject to such outstanding options.
The Board of Directors unanimously recommends that Shareholders ratify, confirm and approve the re-approval of the Stock Option Plan by voting in favour of the above resolution. It is the intention of the persons named in the enclosed Proxy, in the absence of instructions to the contrary, to vote the Proxy in favour of the resolution approving the re-approval of the Stock Option Plan.
Other Matters
As of the date of this Information Circular, management knows of no other matters to be acted upon at this Annual General Meeting. However, should any other matters properly come before the Meeting, the shares represented by the proxy solicited hereby will be voted on such matters in accordance with the best judgment of the persons voting the shares represented by the proxy.
additional information
Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca. Copies of the Company’s Financial Statements and Management Discussion and Analysis may be obtained without charge upon request from the Company, at Suite 575, 510 Burrard Street, Vancouver, BC V6C 3A8, phone (604) 681-0204 and such documents will be sent by mail or electronically by email as may be specified at the time of the request.
Director approval
The contents of this Information Circular and the sending thereof to the Shareholders of the Company have been approved by the Board of Directors.
DATED at Vancouver, British Columbia, this 5th
day of November, 2024.
"Jake H. Kalpakian"
________________________________________
JAKE H. Kalpakian
President, Chief Executive Officer and Director
| 11 |
37 CAPITAL INC.
(the "Company")
SCHEDULE "A"
FORM 52-110F2
AUDIT COMMITTEE DISCLOSURE
________________________________________________________________________________________________
| ITEM 1: | THE AUDIT COMMITTEE’S CHARTER |
Purpose
The overall purpose of the Audit Committee (the "Committee") of 37 Capital Inc. (the "Company") is to ensure that the Company's management has designed and implemented an effective system of internal financial controls, to review and report on the integrity of the financial statements and related financial disclosure of the Company, and to review the Company's compliance with regulatory and statutory requirements as they relate to financial statements, taxation matters and disclosure of financial information. It is the intention of the Board that through the involvement of the Committee, the external audit will be conducted independently of the Company’s Management to ensure that the independent auditors serve the interests of Shareholders rather than the interests of Management of the Company. The Committee will act as a liaison to provide better communication between the Board and the external auditors. The Committee will monitor the independence and performance of the Company's independent auditors.
Composition, Procedures and Organization
| (1) | The Committee shall consist of at least three members of the Board of Directors (the "Board"). |
| (2) | At least two (2) members of the Committee shall be independent and the Committee shall endeavour to appoint a majority of independent directors to the Committee, who in the opinion of the Board, would be free from a relationship which would interfere with the exercise of the Committee members’ independent judgment. At least one (1) member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices applicable to the Company. For the purposes of this Charter, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements. |
| (3) | The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee. |
| (4) | Unless the Board shall have appointed a chair of the Committee, the members of the Committee shall elect a chair and a secretary from among their number. |
| (5) | The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other. |
| (6) | The Committee shall have access to such officers and employees of the Company and to the Company’s external auditors, and to such information respecting the Company, as it considers to be necessary or advisable in order to perform its duties and responsibilities. |
| (7) | Meetings of the Committee shall be conducted as follows: |
| (a) | the Committee shall meet at least four times annually at such times and at such locations as may be requested by the chair of the Committee. The external auditors or any member of the Committee may request a meeting of the Committee; |
| (b) | the external auditors shall receive notice of and have the right to attend all meetings of the Committee; and |
| (c) | management representatives may be invited to attend all meetings except private sessions with the external auditors. |
| (8) | The internal auditors and the external auditors shall have a direct line of communication to the Committee through its chair and may bypass management if deemed necessary. The Committee, through its chair, may contact directly any employee in the Company as it deems necessary, and any employee may bring before the Committee any matter involving questionable, illegal or improper financial practices or transactions. |
| -2- |
Roles And Responsibilities
| (9) | The overall duties and responsibilities of the Committee shall be as follows: |
| (a) | to assist the Board in the discharge of its responsibilities relating to the Company’s accounting principles, reporting practices and internal controls and its approval of the Company’s annual and quarterly financial statements and related financial disclosure; |
| (b) | to establish and maintain a direct line of communication with the Company’s internal and external auditors and assess their performance; |
| (c) | to ensure that the management of the Company has designed, implemented and is maintaining an effective system of internal financial controls; and |
| (d) | to report regularly to the Board on the fulfilment of its duties and responsibilities. |
| (10) | The duties and responsibilities of the Committee as they relate to the external auditors shall be as follows: |
| (a) | to recommend to the Board a firm of external auditors to be engaged by the Company, and to verify the independence of such external auditors; |
| (b) | to review and approve the fee, scope and timing of the audit and other related services rendered by the external auditors; |
| (c) | review the audit plan of the external auditors prior to the commencement of the audit; |
| (d) | to review with the external auditors, upon completion of their audit: |
| A. | contents of their report; |
| B. | scope and quality of the audit work performed; |
| C. | adequacy of the Company’s financial and auditing personnel; |
| D. | co-operation received from the Company’s personnel during the audit; |
| E. | internal resources used; |
| F. | significant transactions outside of the normal business of the Company; |
| G. | significant proposed adjustments and recommendations for improving internal accounting controls, accounting principles or management systems; and |
| H. | the non-audit services provided by the external auditors; |
| (e) | to discuss with the external auditors the quality and not just the acceptability of the Company’s accounting principles; and |
| (f) | to implement structures and procedures to ensure that the Committee meets the external auditors on a regular basis in the absence of management. |
| (11) | The duties and responsibilities of the Committee as they relate to the internal control procedures of the Company are to: |
| (a) | review the appropriateness and effectiveness of the Company’s policies and business practices which impact on the financial integrity of the Company, including those relating to internal auditing, insurance, accounting, information services and systems and financial controls, management reporting and risk management; |
| (b) | review compliance under the Company’s business conduct and ethics policies and to periodically review these policies and recommend to the Board changes which the Committee may deem appropriate; |
| (c) | review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Company; and |
| (d) | periodically review the Company’s financial and auditing procedures and the extent to which recommendations made by the internal audit staff or by the external auditors have been implemented. |
| -3- |
| (12) | The Committee is also charged with the responsibility to: |
| (a) | review the Company’s quarterly statements of earnings, including the impact of unusual items and changes in accounting principles and estimates and report to the Board with respect thereto; |
| (b) | review and approve the financial sections of: |
| A. | the annual report to Shareholders; |
| B. | the annual information form, if required; |
| C. | annual and interim MD&A; |
| D. | prospectuses; |
| E. | news releases discussing financial results of the Company; and |
| F. | other public reports of a financial nature requiring approval by the Board, and report to the Board with respect thereto; |
| (c) | review regulatory filings and decisions as they relate to the Company’s financial statements; |
| (d) | review the appropriateness of the policies and procedures used in the preparation of the Company’s financial statements and other required disclosure documents, and consider recommendations for any material change to such policies; |
| (e) | review and report on the integrity of the Company’s financial statements; |
| (f) | review the minutes of any audit committee meeting of subsidiary companies; |
| (e) | review with management, the external auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments that could have a material effect upon the financial position or operating results of the Company and the manner in which such matters have been disclosed in the financial statements; |
| (f) | review the Company’s compliance with regulatory and statutory requirements as they relate to financial statements, tax matters and disclosure of financial information; and |
| (g) | develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board of Directors following each annual general meeting of shareholders. |
| (13) | The Committee shall have the authority: |
| (a) | to engage independent counsel and other advisors as it determines necessary to carry out its duties, |
| (b) | to set and pay the compensation for any advisors employed by the Committee; and |
| (c) | to communicate directly with the internal and external auditors. |
| ITEM 2: | COMPOSITION OF THE AUDIT COMMITTEE |
The members of the Committee are Neil Spellman, Gregory McFarlane and Mathieu McDonald. All of the members are financially literate. Gregory Todd McFarlane and Mathieu McDonald are considered to be independent. Neil Spellman is the Chief Financial Officer of the Company and is therefore not independent. "Independent" and "financially literate" have the meaning used in Multilateral Instrument 52-110 (the "Instrument") of the Canadian Securities Administrators.
| ITEM 3: | RELEVANT EDUCATION AND EXPERIENCE |
The Instrument provides that an individual is "financially literate" if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
All of the members of the Company's audit committee are financially literate as that term is defined in the Instrument.
| -4- |
The Chairman of the Audit Committee, Neil Spellman sits on the audit committee of another public issuer. In addition, Neil Spellman sits on the audit committee of another private issuer. All members have an understanding of the accounting principles used by the Company to prepare its financial statements and have an understanding of its internal controls and procedures for financial reporting.
| ITEM 4: | AUDIT COMMITTEE OVERSIGHT |
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor (currently, Dale Matheson Carr-Hilton Labonte LLP, not adopted by the Board.
| ITEM 5: | RELIANCE ON CERTAIN EXEMPTIONS |
Since the effective date of MI 52-110, the Company has not relied on the exemptions contained in sections 2.4 or 8 of MI 52-110. Section 2.4 provides an exemption from the requirement that the audit committee must pre-approve all non-audit services to be provided by the auditor, where the total amount of fees related to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the fiscal year in which the non-audit services were provided. Section 8 permits a company to apply to a securities regulatory authority for an exemption from the requirements of MI 52-110, in whole or in part.
| ITEM 6: | PRE-APPROVAL POLICIES AND PROCEDURES |
Formal policies and procedures for the engagement of non-audit services have yet to be formulated and adopted. Subject to the requirements of the Instrument, the engagement of non-audit services is considered by the Company's Board of Directors, and where applicable by the Audit Committee, on a case- by-case basis.
| ITEM 7: | EXTERNAL AUDITOR SERVICE FEES (BY CATEGORY) |
The aggregate fees charged to the Company by the external auditor in each of the last two fiscal years are as follows:
| FYE 2022 | FYE 2023 | |
| Audit fees for the year ended | $21,000 | $21,000 |
| Audit related fees | $nil | $nil |
| Tax fees | $1,063(1) | $1,063(1) |
| All other fees (non-tax) | $256(2) | $256(2) |
| Total Fees: | $22,319 | $22,319 |
| (1) | These fees are for the preparation and filing of the Company’s tax return. |
| (2) | These fees are charged by the Canadian Public Accountability Board (CPAB). |
| ITEM 8: | EXEMPTION |
In respect of the most recently completed financial year, the Company is relying on the exemption set out in section 6.1 of the Instrument with respect to compliance with the requirements of Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations) of the Instrument.
| -5- |
37 CAPITAL INC.
(the "Company")
SCHEDULE "B"
CORPORATE GOVERNANCE
________________________________________________________________________________________________
Pursuant to National Instrument 58-101 Disclosure of Corporate Governance Practices the Company is required to and hereby discloses its corporate governance practices as follows.
| ITEM 1. | BOARD OF DIRECTORS |
The Board of Directors of the Company facilitates its exercise of independent supervision over the Company’s management through frequent meetings of the Board.
Mr. Jake H. Kalpakian is the President, CEO and a Director of the Company and is therefore not independent.
Mr. Neil Spellman is the CFO & a Director of the Company and is therefore not independent.
Mr. Gregory T. McFarlane, a Director of the Company, is "independent" in that he has no direct or indirect material relationship with the Company.
Mr. Mathieu McDonald, a Director of the Company, is "independent" in that he has no direct or indirect material relationship with the Company.
| ITEM 2. | DIRECTORSHIPS |
The Directors of the Company are currently directors of the following other reporting issuers:
| Name of Director | Name of Reporting Issuer | Term |
|
Jake H. Kalpakian |
Jackpot Digital Inc. (TSX.V) Yo Eleven Gaming Inc. (not publicly traded) Kalma Capital Corp. |
January 1991 to present June 2021 to present March 2022 to present |
|
Gregory Todd MacFarlane |
Jackpot Digital Inc. (TSX.V) Yo Eleven Gaming Inc. (not publicly traded) |
October 1992 to present June 2021 to present |
|
Neil Spellman |
Jackpot Digital Inc. (TSX.V) Yo Eleven Gaming Inc. (not publicly traded) |
July 2002 to present June 2021 to present |
|
Mathieu McDonald |
N/A |
N/A |
| ITEM 3. | ORIENTATION AND CONTINUING EDUCATION |
The Board of Directors of the Company brief all new Directors with the policies of the Board of Directors, and other relevant corporate and business information.
| ITEM 4. | ETHICAL BUSINESS CONDUCT |
The Board has found that the fiduciary duties placed on individual Directors by the Company’s governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual Director’s participation in decisions of the Board in which the Director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.
Under the corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and disclose to the board the nature and extent of any interest of the director in any material contract or material transaction, whether made or proposed, if the director is a party to the contract or transaction, is a director or officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. The director must then abstain from voting
on the contract or transaction unless the contract or transaction (i) relates primarily to their remuneration as a director, officer, employee or agent of the Company or an affiliate of the Company, (ii) is for indemnity or insurance for the benefit of the director in connection with the Company, or (iii) is with an affiliate of the Company. If the director abstains from voting after disclosure of their interest, the directors approve the contract or transaction and the contract or transaction was reasonable and fair to the Company at the time it was entered into, the contract or transaction is not invalid and the director is not accountable to the Company for any profit realized from the contract or transaction. Otherwise, the director must have acted honestly and in good faith, the contract or transaction must have been reasonable and fair to the Company and the contract or transaction be approved by the shareholders by a special resolution after receiving full disclosure of its terms in order for the director to avoid such liability or the contract or transaction being invalid.
| -2- |
| ITEM 5. | NOMINATION OF DIRECTORS |
The Board of Directors is responsible for identifying individuals qualified to become new Board members and recommending to the Board new Director nominees for the next annual meeting of the shareholders.
New nominees must have a track record in general business management, special expertise in an area of strategic interest to the Company, the ability to devote the time required, shown support for the Company’s mission and strategic objectives, and a willingness to serve.
| ITEM 6. | COMPENSATION |
The Board of Directors conducts reviews with regard to Directors’ compensation once a year. To make its recommendation on Directors' compensation, the Board of Directors takes into account the types of compensation and the amounts paid to Directors of comparable publicly traded Canadian companies.
| ITEM 7. | OTHER BOARD COMMITTEES |
The Board of Directors has no other committees other than the Audit Committee.
| ITEM 8. | ASSESSMENTS |
The Board of Directors monitors the adequacy of information given to Directors, communication between the board and management and the strategic direction and processes of the Board and the Audit Committee.
| -3- |
NEWS RELEASE
Symbols: JJJ - CSE
HHHEF – OTC Pink
37 Capital Extends Proposed Private Placement Financing
VANCOUVER, BRITISH COLUMBIA. November 20, 2024. 37 Capital Inc. (the "Company" or "37 Capital") announces that further to its news releases dated October 1, 2024 and November 4, 2024 regarding the proposed non-brokered private placement of up to $200,000, the Company extends the Proposed Financing by an additional forty-five (45) days from the date of this news release.
There may be finder’s fees payable, and certain insiders may participate in this Proposed Financing. All securities that will be issued in connection with this Proposed Financing will include a hold period in accordance with applicable securities laws. The proceeds of this Proposed Financing shall be utilized for general working capital purposes.
For more information on the Company, you may contact us at (604) 681-0204, or visit the Company’s website at www.37capitalinc.com, or the CSE’s website by using the following direct link: http://thecse.com/en/listings/mining/37-capital-inc.
On Behalf of the Board of 37 Capital Inc.,
“Jake H. Kalpakian”
____________________
Jake H. Kalpakian,
President and CEO
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Trading in the securities of the Company should be considered speculative.
Certain statements contained herein are “forward-looking”. Forward-looking statements may include, among others, statements regarding future plans, projected or proposed financings, costs, objectives, economic or technical performance, or the assumptions underlying any of the foregoing. In this News Release, words such as “may”, “would”, “could”, “will”, “likely”, “enable”, “feel”, “seek”, “project”, “predict”, “potential”, “should”, “might”, “objective”, “believe”, “expect”, “propose”, “anticipate”, “intend”, “plan”, “plans” “estimate”, and similar words are used to identify forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, projections and estimations, there can be no assurance that these assumptions, projections or estimations are accurate. Readers, shareholders and investors are therefore cautioned not to place reliance on any forward-looking statements as the plans, assumptions, intentions or expectations upon which they are based might not occur.
NEWS RELEASE
Symbols: JJJ - CSE
HHHEF – OTC Pink
37 Capital announces First Tranche Closing of Non-Brokered Private Placement
VANCOUVER, BRITISH COLUMBIA. November 4, 2024. 37 Capital Inc. (the "Company" or "37 Capital") announces that further to its news releases dated October 1, 2024, the Company has closed the first tranche of the private placement for gross proceeds of $65,000 and issued 650,000 units of the Company. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.15 per common share for a period of three (3) years. All securities issued in connection with the private placement include a hold period in accordance with applicable securities laws. The proceeds of this proposed financing shall be utilized for general working capital purposes.
The Company paid a finder’s fee of $1,500 in cash and issued 15,000 share purchase warrants exercisable for two (2) years at the price of $0.15 per share.
For more information on the Company, you may contact us at (604) 681-0204, or visit the Company’s website at www.37capitalinc.com, or the CSE’s website by using the following direct link: http://thecse.com/en/listings/mining/37-capital-inc.
On Behalf of the Board of 37 Capital Inc.,
“Jake H. Kalpakian”
____________________
Jake H. Kalpakian,
President and CEO
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Trading in the securities of the Company should be considered speculative.
Certain statements contained herein are “forward-looking”. Forward-looking statements may include, among others, statements regarding future plans, projected or proposed financings, costs, objectives, economic or technical performance, or the assumptions underlying any of the foregoing. In this News Release, words such as “may”, “would”, “could”, “will”, “likely”, “enable”, “feel”, “seek”, “project”, “predict”, “potential”, “should”, “might”, “objective”, “believe”, “expect”, “propose”, “anticipate”, “intend”, “plan”, “plans” “estimate”, and similar words are used to identify forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, projections and estimations, there can be no assurance that these assumptions, projections or estimations are accurate. Readers, shareholders and investors are therefore cautioned not to place reliance on any forward-looking statements as the plans, assumptions, intentions or expectations upon which they are based might not occur.
Form 51-102F1
37 CAPITAL INC.
Management’s Discussion & Analysis
Condensed Interim Financial Statements for the
Nine months ended September 30, 2024
The following discussion and analysis of the financial condition and financial position and results of operations of 37 Capital Inc. (the “Company” or “37 Capital”) should be read in conjunction with the condensed interim unaudited financial statements for the nine months ended September 30, 2024 and 2023 and the notes thereto, and the audited financial statements and notes thereto for the years ended December 31, 2023 and 2022. The condensed interim unaudited financial statements and the notes thereto for the nine months ended September 30, 2024 and 2023 have not been reviewed by the Company’s auditors.
The condensed interim unaudited financial statements, including comparatives, have been prepared using accounting policies in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The Company’s condensed interim unaudited financial statements are expressed in Canadian (CDN) Dollars which is the Company’s functional currency. All amounts in this MD&A are in CDN dollars unless otherwise stated.
The following information is prepared as at November 27, 2024.
Forward-Looking Statements
Certain statements contained herein are “forward-looking” and are based on the opinions and estimates of management, or on opinions and estimates provided to and accepted by management. Forward-looking statements may include, among others, statements regarding future plans, costs, projections, objectives, economic performance, or the assumptions underlying any of the foregoing. In this MD&A, words such as “may”, “would”, “could”, “will”, “likely”, “seek”, “project”, “predict”, “potential”, “should”, “might”, “hopeful”, “objective”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “optimistic” and similar words are used to identify forward-looking statements. Forward-looking statements are subject to a variety of significant risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, projections and estimations, there can be no assurance that these assumptions, projections or estimations are accurate. Readers, shareholders and investors are therefore cautioned not to place reliance on any forward-looking statements in this MD&A as the plans, assumptions, intentions, estimations, projections, expectations or factors upon which they are based might vary or might not occur. The forward-looking statements contained in this MD&A are made as of the date of this MD&A, and are subject to change after such date. The Company undertakes no obligation to update or revise any forward-looking statements, except in accordance with applicable securities laws.
Description of Business
The Company is a junior mineral exploration company.
The Company was incorporated on August 24, 1984 in British Columbia, Canada. The principal business of the Company is the acquisition, exploration and, if warranted, the development of natural resource prospects.
| 1 |
37 Capital is a reporting issuer in the Provinces of British Columbia, Alberta, Quebec and Ontario and files all public documents on www.Sedar.com. The Company is a foreign private issuer in the United States of America and in this respect files, on EDGAR, its Annual Report on Form 20-F and other reports on Form 6K. The following link, http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=825171 will give you direct access to the Company’s filings with the United States Securities and Exchange Commission (“U.S. SEC”).
In Canada, the common shares of the Company trade on the Canadian Securities Exchange (CSE) under the symbol “JJJ”, and in the USA, the Company's common shares trade on the OTC Pink tier of the OTC markets under the trading symbol “HHHEF”. The Company’s office is located at Suite 575, 510 Burrard Street, Vancouver, British Columbia V6C 3A8, Canada, and its registered and records office is located at Suite 3200 - 650 West Georgia Street, Vancouver, British Columbia V6B 4P7. The Company’s registrar and transfer agent is Computershare Investor Services Inc., at 510 Burrard Street, Vancouver, British Columbia, V6C 3B9. The Company’s auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, at 1500-1140 West Pender Street, Vancouver, British Columbia V6E 4G1. The facsimile number is (604) 689-2778.
Results of Operations
For the nine months ended September30, 2024:
| • | The Company recorded operating expenses of $ 144,553 as compared to operating expenses of $13,759 in 2023. The increase is mainly due to a gain on debt settlement of $53,371 recognized in 2023 and the share-based payment of $72,155 recognized as employee benefits in 2024. |
| • | The Company recorded net loss and comprehensive loss of $ 144,553 as compared to net loss and comprehensive loss of $ 13,759 during the corresponding period in 2023. The increase is mainly due to a gain on debt settlement of $53,371 recognized in 2023 and the share-based payment of $72,155 recognized as employee benefits in 2024. |
| • | The basic and diluted loss per common share was 0.01 as compared to a basic and diluted of $0.00 during the corresponding period in 2023. |
| • | The Company’s total assets were $ 123,131 as compared to total assets of $112,366 during the corresponding period in 2023 (December 31, 2023: $121,374) |
| • | The Company’s total liabilities were $786,591 as compared to total liabilities of $697,367 during the corresponding period in 2023 (December 31, 2023: $741,436). |
| • | The Company had a working capital deficiency of $767,962 as compared to a working deficiency of $651,729 during the corresponding period in 2023 (December 31, 2023: working capital deficiency of $719,054). |
The Company is presently not a party to any legal proceedings whatsoever.
Pursuant to debt settlement agreements dated December 11, 2020 totaling the sum of $739,351.50 between the Company and certain creditors, including Jackpot Digital Inc. (“Jackpot’) and the Company’s President and CEO, on January 25, 2021 the Company issued a total of 2,957,406 common shares of the Company at a deemed price of $0.25 per common share (the “Debt Settlement Shares of the Company”), of which Jackpot acquired 597,380 Debt Settlement Shares of the Company and the Company’s President and CEO acquired 615,395 Debt Settlement Shares of the Company. As of the date of this MD&A, Jackpot owns 607,377 common shares of the Company representing 4.14% of the issued and outstanding common shares of the Company.
| 2 |
At the Company’s Annual General Meeting, which was held on December 12, 2023, the Company’s shareholders passed all the resolutions presented including the re-election of Jake H. Kalpakian, Gregory T. McFarlane, Neil Spellman and Bedo H. Kalpakian as Directors of the Company; re-appointed the Company’s Auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants for the ensuing year and authorized the Directors to fix the remuneration to be paid to the Auditor; and re-approved the Company’s Stock Option Plan. The next Annual General Meeting of the Company is scheduled to take place on Tuesday, December 10, 2024.
During 2019 the Company had intended to issue up to 800,000 flow-through units of the Company at a price of $0.25 per unit for gross proceeds to the Company of $200,000 in order to use the proceeds of this financing towards mineral exploration work expenditures located in the Province of British Columbia. However, due to the Covid-19 pandemic the Company was able to raise only the amount of $20,000 for which the Company has issued 80,000 flow-through units of the Company. Each flow-through unit consisted of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.50 for a period of two years. During the year-ended December 31, 2022, the Company made a formal application to Canada Revenue Agency and cancelled the Company’s flow-through share application which was submitted during the year ended December 31, 2020. On January 15, 2023, the non-flow through share purchase warrants expired unexercised.
In relation to the flow-through share private placement completed during January 2021, the Company was committed to incur and renounce $20,000 in Canadian exploration expenditures by December 31, 2022. The Company was unable to incur the $20,000. The Company has agreed to indemnify the flow-through shareholder for certain costs incurred by the shareholder as a result of the Company not meeting its obligation to spend the flow-through share proceeds on qualifying Canadian exploration expenditures in compliance with the applicable tax rules and pursuant to the share subscription agreement. As at December 31, 2023 and September 30, 2024, the Company has included a provision for indemnification of the flow through shareholder for an amount of $10,000 in accounts payable.
On May 15, 2023, the Company closed the non-brokered private placement financing which was announced in December 2022 for gross proceeds of $150,000 through the issuance of 6,000,000 units of the Company at $0.025 per unit. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.05 per common share for a period of 5 years. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws.
On June 5, 2023, the Company announced a non-brokered private placement offering to raise funds for gross proceeds of up to $100,000 by the issuance of up to 4,000,000 flow-through units of the Company at the price of $0.025 per unit. On July 24, 2023, the Company closed the flow-through share offering through the issuance of 2,000,000 flow-through units of the Company at $0.025 per unit for gross proceeds of $50,000. Each flow-through unit consists of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.05 for a period of five years. The funds raised from this financing were utilized towards exploration work expenditures on the Company’s mineral property located in the Province of British Columbia. In the event that the Company’s shares trade on the CSE at $0.20 per share or above for a period of 10 consecutive trading days, a forced exercise provision will come into effect for the warrants issued in connection with this financing. In relation to the flow-through private placement, the Company is committed to incur and renounce $50,000 in Canadian exploration expenditures by December 31, 2024.
| 3 |
As at December 31, 2023, the Company had incurred $44,991 and had renounced the $50,000 with the remaining $5,009 spent during January 2024.
On March 27, 2024, the Company announced a private placement to raise gross proceeds of up to $30,000 by issuing up to 300,000 units of the Company, at the price of $0.10 per unit. Each unit will consist of one (1) common share of the Company and one (1) share purchase warrant to purchase an additional common share of the Company, at the price of $0.15 per common share, for a period of three (3) years from the closing date. On September 20, 2024, the Company closed gross proceeds of $29,000 and issued a total of 290,000 units of the Company. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws.
On October 1, 2024, the Company announced a private placement to raise gross proceeds of up to $200,000 by issuing up to 2,000,000 units of the Company, at the price of $0.10 per unit. Each unit will consist of one (1) common share of the Company and one (1) share purchase warrant to purchase an additional common share of the Company, at the price of $0.15 per common share, for a period of three (3) years from the closing date. On October 31, 2024, the Company closed the first tranche for gross proceeds of $65,000 and issued a total of 650,000 units of the Company. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws.
Mineral Properties
1. Extra High Claims
Previously the Company held a 33% interest in the Extra High Claims which are located in the Kamloops Mining Division of the Province of British Columbia (“Extra High Property”).
On October 31, 2019, as amended on November 4, 2019, the Company entered into an agreement with Colt Resources Inc. (“Colt Resources”) to purchase the remaining 67% right, interest and title in and to the Extra High Property.
During the year ended December 31, 2021, the Company recorded an impairment loss of $25,001 relating to the Extra High Property.
Pursuant to the Company’s offer letter to Colt Resources dated July 6, 2022 which was accepted by Colt Resources, the Company has made a cash payment of $15,000 and, has issued 50,000 common shares in the capital of the Company to Colt Resources as consideration for the full and final settlement of all matters between the Company and Colt Resources in respect to the Extra High Property. The 50,000 common shares in the capital of the Company were subject to a hold period from trading which expired on December 10, 2022.
During 2023 the Company hired the services of Discovery Consultants of Vernon, British Columbia (“Discovery “) to plan, conduct, and complete the Company’s exploration work program on the Extra High Property (the “Company’s 2023 Exploration Work Program”). The Company’s 2023 Exploration Work Program consisted of 2 Phases. The Company incurred $20,000 of exploration related expenditures for Phase 1, and the Company incurred $24,991 of exploration related expenditures for Phase 2, for a total amount of $44,991. The mineral claims covering the Extra High Property are valid until December 28, 2028.
As at September 30, 2024, the Company owns a 100% undivided right, interest and title in and to the Extra High Property.
| 4 |
The Extra High Property is subject to a 1.5% Net Smelter Returns Royalty (“NSR”) payable to a third party, 50% of which, or 0.75%, can be purchased by the Company at any time by paying $500,000.
2. Ontario Mineral Leases (Lithium)
During the year ended December 31, 2008, the Company sold all of its Ontario Mineral Leases (Lithium). In the event that at a future date the Ontario Mineral Leases (Lithium) are placed into commercial production, then the Company is entitled to receive a 0.5% gross receipts royalty after six months from the date of commencement of commercial production from the Ontario Mineral Leases (Lithium).
Third Quarter (September 30, 2024)
During the three months [third quarter] period ended September 30, 2024:
| · | The Company had a net loss and comprehensive loss of $33,790 or $0.00 per share as compared to a net loss and comprehensive loss of $21,948 or $0.00 per share during the same three month [third quarter] period ended September 30, 2023. |
| · | The Company’s had Operating costs of $33,790 as compared to operating costs of $21,948 for the same three month [third quarter] period ended September 30, 2023. |
Summary of Quarterly Results
| For the Quarterly Periods ended: | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | ||||||||||||
| Total Revenues | 0 | 0 | 0 | 0 | ||||||||||||
| Net income/(loss) and Comprehensive income/(loss) | (33,790 | ) | (42,468 | ) | (68,295 | ) | (35,061 | ) | ||||||||
| Income/(loss) per share | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
| For the Quarterly Periods ended: | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||
| Total Revenues | 0 | 0 | 0 | 0 | ||||||||||||
| Net income/(loss) and Comprehensive income/(loss) | (21,948 | ) | 27,072 | (18,883 | ) | (57,456 | ) | |||||||||
| Loss per share | (0.00 | ) | 0.00 | (0.00 | ) | (0.01 | ) | |||||||||
The Company’s business is not of a seasonal nature.
| 5 |
Risks related to our Business
The Company, and the securities of the Company, should be considered a highly speculative investment. The following risk factors should be given special consideration when evaluating an investment in any of the Company's securities:
| · | The Company does not anticipate to generate any revenue in the foreseeable future. In the event that the Company generates any revenues in the future, then the Company intends to retain its earnings in order to finance growth. |
| · | There are a number of outstanding securities and agreements pursuant to which common shares of the Company may be issued in the future. This will result in further dilution to the Company's shareholders. |
| · | Governmental regulations, including those regulations governing the protection of the environment, taxes, labour standards, occupational health, waste disposal, mine safety and other matters, could have an adverse impact on the Company. |
| · | Trading in the common shares of the Company may be halted or suspended or may be subject to cease trade orders at any time and for any reason, including, but not limited to, the failure by the Company to submit documents to the Regulatory Authorities within the required time periods. |
| · | The exploration of mineral properties involves significant risks which even experience, knowledge and careful evaluation may not be able to avoid. The prices of metals have fluctuated widely, particularly in recent years as it is affected by numerous factors which are beyond the Company’s control including international, economic and political trends, expectations of inflation or deflation, currency exchange fluctuations, interest rate fluctuations, global or regional consumptive patterns, speculative activities and increased production due to new extraction methods. The effect of these factors on the price of metals, and therefore the economic viability of the Company’s interest in its mineral exploration property cannot be accurately predicted. Furthermore, changing conditions in the financial markets, and Canadian Income Tax legislation may have a direct adverse impact on the Company’s ability to raise funds for its interest in the Extra High mineral exploration property. A drop in the availability of equity financings will likely impede spending on mineral properties which can affect the Company. |
| · | The Company has outstanding debts, has working capital deficiency, has no revenues, has incurred operating losses, and has no assurances whatsoever that sufficient funding can be available for the Company to continue its operations uninterruptedly. |
| · | The market price of the Company’s common shares has experienced considerable volatility and may continue to fluctuate in the future. Furthermore, there is a limited trading market for the Company’s common shares and as such, the ability of investors to sell their shares cannot be assured. |
Liquidity and Capital Resources
The Company has incurred operating losses over the past three fiscal years, has limited resources, and does not have any source of operating cash flow.
| 6 |
During 2024, the Company shall require additional financing to conduct its operations uninterruptedly. In order to meet this requirement, the Company intends to seek equity and/or debt financing through private placements and/or public offerings and/or loans. In the past, the Company has been successful in securing equity and debt financings in order to conduct its operations uninterruptedly. While the Company does not give any assurances whatsoever that in the future it will continue being successful in securing equity and/or debt financing in order to conduct its operations uninterruptedly, it is the Company’s intention to pursue these methods for future funding of the Company.
As at September 30, 2024:
| • | the Company’s total assets were $123,131 as compared to $112,366 for the corresponding period in 2023 (December 31, 2023: $121,374). |
| • | the Company’s total liabilities were $786,591 as compared to $697,367 for the corresponding period in 2023 (December 31, 2023: $741,436). |
| • | the Company had $10,180 in cash as compared to $44,308 in cash for the corresponding period in 2023 (December 31, 2023: $18,304). |
| • | the Company had GST/HST receivable in the amount of 6,273 as compared to $1,330 for the corresponding period in 2023 (December 31, 2023: $4,078). |
Private Placement Financings
During the nine months ended September 30, 2024 and up to the date of this MD&A, the following transactions have occurred:
| (i) | On September 20, 2024, the Company closed the non-brokered private placement financing which was announced in March 2024 for gross proceeds of $29,000 through the issuance of 290,000 units of the Company at $0.10 per unit. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.15 per common share for a period of three (3) years. Based on the residual value the warrants were valued at $nil. |
| (ii) | On October 31, 2024, the Company closed the first tranche of the non-brokered private placement financing which was announced in October 2024 for gross proceeds of $65,000 through the issuance of 650,000 units of the Company at $0.10 per unit. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.15 per common share for a period of three (3) years. |
During the year ended December 31, 2023, the following transactions have occurred:
| (i) | On July 24, 2023, the Company closed a non-brokered private placement financing which was announced on June 5, 2023 for gross proceeds of $50,000 through the issuance of 2,000,000 flow-through units of the Company at $0.025 per unit. Each unit consists of one flow-through common share in the capital of the Company and non-flow-through share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.05 per common share for a period of 5 years. Based on the residual method the warrants were valued at $nil. The units were issued below the then market price of the Company shares, therefore a flow-through premium was recorded. |
| 7 |
| (ii) | On May 15, 2023, the Company closed the non-brokered private placement financing which was announced in December 2022 for gross proceeds of $150,000 through the issuance of 6,000,000 units of the Company at $0.025 per unit. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.05 per common share for a period of 5 years. Based on the residual value the warrants were valued at $nil. |
During the year ended December 31, 2021, the following share transactions occurred:
| (i) | On January 15, 2021, the Company issued 80,000 flow-through units for proceeds of $20,000. Each flow-through unit consists of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.50 for a period of two years. During the year-ended December 31, 2022, the Company made a formal application to Canada Revenue Agency and cancelled the Company’s flow-through share application which was submitted during the year ended December 31, 2020. As at December 31, 2023 and September 30, 2024, the Company has included a provision for indemnification of the flow through shareholder for an amount of $10,000 in accounts payable. |
Loan Payable
During May 2021, an arm’s length party has lent the Issuer the amount of $50,000. As of September 30, 2024, the loan is outstanding and has accrued interest in the amount of $16,726.
Convertible Debentures Financing 2015
On January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000. The convertible debentures matured on January 6, 2016, and bear interest at the rate of 12% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company at a conversion price of $1.50 per share. The liability component of the convertible debentures was recognized initially at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a market interest rate of 25%. On the initial recognition of the convertible debentures, the amount of $222,006 was recorded under convertible debentures and the amount of $27,994 has been recorded under the equity portion of convertible debenture reserve.
On October 29, 2021, the Company entered into an Addendum to the convertible debentures whereby the maturity date of the principal amount totaling $250,000 of the convertible debentures together with the accrued interest has been extended indefinitely, until mutual consent of the Company and Lender has been reached.
As at September 30, 2024, the Company recorded interest expense of $22,500 (December 31, 2023 - $30,000). As of September 30, 2024, $250,000 of the convertible debentures are outstanding plus the accrued interest of $292,089 (December 31, 2023 - $269,589).
Warrants
As at September 30, 2024, a total of 9,490,000 share purchase warrants exercisable at the price of $0.05 and $0.15 per warrant share were outstanding. Subsequent to the nine-month period ended September 30, 2023, a total of 650,000 share purchase warrants were issued exercisable at $0.15 per share. As of the date of this MD&A, there are 10,155,000 share purchase warrants outstanding.
| 8 |
While there are no assurances whatsoever that any warrants may be exercised, however if any warrants are exercised in the future, then any funds received by the Company from the exercising of warrants shall be used for general working capital purposes.
Stock Options
As at September 30, 2024, a total of 1,750,000 were granted to directors, officers and consultants exercisable at $0.10 per share for a period of three (3) years (September 30, 2023 – Nil).
The weighted average remaining contractual life for options outstanding at September 30, 2024 is 2.33 years (September 30, 2023 – nil).
The Company applies the fair value method using the Black-Scholes option pricing model in accounting for its stock options granted. Accordingly, share-based payments of $72,155 (September 30, 2023 - $nil) were recognized as employee benefits and $nil (September 30, 2023 - $nil was recognized as consulting fees for options granted to consultants.
Material Accounting Policy Information
The condensed interim financial statements for the nine months ended September 30, 2024 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretation Committee (“IFRIC”).
The Material Accounting Policies are detailed in Note 4 of the Company’s condensed interim financial statements for the nine months ended September 30, 2024.
Effective January 1, 2019, the Company adopted IFRS 16 which supersedes IAS 17 Leases (“IAS 17”). The Company has applied the new standard using the modified retrospective approach with no restatement of comparative periods. There were no adjustments to retained earnings as a result of adoption. The Company has elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Company relied on its previous assessment made under IAS 17 and IFRIC 4 Determining whether an arrangement contains a lease. The definition of a lease under IFRS 16 was applied only to contracts entered into or modified on or after January 1, 2019.
On transition to IFRS 16, the Company did not recognize any lease assets or liabilities as its operating leases had a remaining term of less than 12 months from the date of initial application.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Trends
During the last several years commodity prices have fluctuated significantly, and should this trend continue or should commodity prices remain at current levels, then companies such as 37 Capital will have difficulty in raising funds and/or acquiring mineral properties of merit at reasonable prices.
| 9 |
Related Party Transactions
The Company shares office space and certain employees with Jackpot, a company related by certain common key management personnel.
The Company has an office lease agreement with Jackpot. Under the agreement, the Company is entitled to have office space from Jackpot at a monthly rate of $1,000 plus applicable taxes. Furthermore, Jackpot or the Company may terminate this agreement by giving each other three months’ notice in writing.
The Company has an office support services agreement with Jackpot which has been extended until September 30, 2025. Under the agreement, the Company is entitled to receive office support services from Jackpot at a monthly rate of $1,000 plus applicable taxes. Either Jackpot or the Company may terminate this agreement by giving each other three months’ notice in writing.
Jackpot is related to the Company by virtue of the fact that Jackpot has certain directors and officers who are also directors and officers of the Company.
The amounts due to related parties are unsecured, payable on demand which consist of the following:
September 30, 2024 | December 31, 2023 | |||||||
| Advances from directors (interest at prime plus 1%) | $ | — | $ | — | ||||
| Entities controlled by directors (non-interest-bearing) | 103,503 | 82,328 | ||||||
| $ | 103,503 | $ | 82,328 | |||||
During the nine-month period ended September 30, the following amounts were charged by related parties:
| 2024 | 2023 | |||||||
| Interest charged on amounts due to related parties | $ | 8 | $ | 1,110 | ||||
| Rent charged by entities with common directors | 9,000 | 9,000 | ||||||
| Office expenses charged by, and other expenses paid on behalf of the Company by a company with common directors | 12,204 | 11,660 | ||||||
| $ | 21,212 | $ | 21,770 | |||||
The Company, together with Jackpot, a related company with certain common directors, have entered into an office lease agreement, and an office support services agreement.
On January 6, 2015, the Company closed convertible debentures financing with two directors of the Company for the principal amount of $250,000. The convertible debentures have a maturity date of twelve months from the date of closing, and bear interest at the rate of 12% per annum payable on a quarterly basis. The principal amount of $250,000 together with the accrued interest of the convertible debentures became due and payable on January 6, 2016 (the “Due Date”). However, on the Due Date the Company was unable to repay the principal amount and the accrued interest to the two directors. On October 29, 2021 the Company entered into an Addendum to the Convertible Debentures whereby the maturity date of the principal amount of $250,000 of the convertible debentures together with the accrued interest has been extended indefinitely, until mutual consent of the Company and Lender has been reached.
| 10 |
The convertible debentures and accrued interest of $542,089 (December 31, 2023 - $519,589) is owed to the Chief Executive Officer, and to a director of the Company.
As of the date of this MD&A, Jackpot owns 607,377 common shares of the Company representing 4.14% of the Company’s issued and outstanding common shares.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
| (a) | Risk management overview |
The Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital. The Company employs risk management strategies and policies to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the responsibility to administer and monitor these risks.
| (b) | Fair value of financial instruments |
The fair values of cash, accounts payable and accrued liabilities, due to related parties, refundable subscription, loan payable and convertible debentures approximate their carrying values due to the short-term maturity of these instruments.
IFRS establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
| (c) | Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.
|
(d) |
Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.
At September 30, 2024, the Company had cash of $10,180 (December 31, 2023 - $18,304) available to apply against short-term business requirements and current liabilities of $786,591 (December 31, 2023 - $741,436). All of the current liabilities are due within 90 days. Amounts
| 11 |
due to related parties are due on demand. As of September 30, 2024, two convertible debentures together with the accrued interest for a total amount of $542,089 are outstanding, and the loan payable in the amount of $50,000 plus accrued interest in the amount of $16,726 are due. Liquidity risk is assessed as high.
| (e) | Market risk |
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net earnings or the value of financial instruments. As at September 30, 2024, the Company is not exposed to significant interest rate risk, currency risk or other price risk on its financial assets and liabilities due to the short-term maturity of its financial liabilities and the fixed interest rate on the outstanding convertible debentures.
Analysis of expenses
For a breakdown of general and administrative expenditures, please refer to the Statements of Comprehensive Loss in the Company’s Condensed Interim Financial Statements for the nine months ended September 30, 2024 and 2023.
Capital Stock
Authorized share capital: Unlimited number of common shares without nominal or par value
Unlimited number of preferred shares without nominal or par value
| Outstanding Share Data | No. of Common Shares | No. of Preferred Shares | Exercise Price per Share | Expiry Date |
|
Issued and Outstanding as at November 27, 2024 |
14,685,947 | Nil | N/A | N/A |
|
Warrants |
250,000 750,000 200,000 6,000,000 2,000,000 290,000 650,000 10,140,000 |
Nil |
$0.05 $0.05 $0.05 $0.05 $0.05 $0.15 $0.15
|
August 31, 2027 October 7, 2027 October 31, 2027 May 15, 2028 July 24, 2028 September 20, 2027 October 31, 2027 |
|
Stock Options |
1,750,000 |
Nil |
$0.10 |
January 29, 2027 |
|
Fully Diluted as at November 27, 2024 |
26,575,947 |
Nil |
| 12 |
Director Approval
The contents of this MD&A and the sending thereof to the Shareholders of the Company have been approved by the Company’s Board of Directors.
Outlook
Management’s efforts are directed towards pursuing opportunities of merit for the Company, and Management is hopeful that, in due course, the Company shall be able to acquire an opportunity of merit. However, there are no assurances whatsoever that Management’s efforts shall succeed.
| 13 |
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Jake H. Kalpakian, President and Chief Executive Officer of 37 Capital Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of 37 Capital Inc. (the “issuer”) for the interim period ended September 30, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: November 27, 2024.
“Jake H. Kalpakian”
____________________
Jake H. Kalpakian
President & CEO
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Neil Spellman, Chief Financial Officer of 37 Capital Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of 37 Capital Inc. (the “issuer”) for the interim period ended September 30, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: November 27, 2024.
“Neil Spellman”
____________________
Neil Spellman
CFO
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.