CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
UNAUDITED - PREPARED BY MANAGEMENT
(Expressed in United States Dollars)
FOR THE THREE AND NINE MONTHS ENDED
OCTOBER 31, 2021 & 2020
NOTICE OF NO AUDITOR REVIEW
OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2021 & 2020
The accompanying unaudited condensed consolidated financial statements of Red Metal Resources Ltd. (the “Company”) for the three and nine months ended October 31, 2021 and 2020, have been prepared by, and are the responsibility of, the Company’s management.
The Company’s independent auditor has not performed a review of these condensed consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of the condensed statements by an entity’s auditor. These unaudited condensed consolidated financial statements include all adjustments, consisting of normal and recurring items, that management considers necessary for a fair presentation of the financial position, results of operations and cash flows.
RED METAL RESOURCES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in US Dollars)
(Unaudited)
|
| October 31, | January 31, | ||
| Note | 2021 | 2021 | ||
ASSETS |
|
|
| ||
|
|
|
| ||
Current |
|
|
| ||
Cash |
| $ | 55,225 | $ | 47,293 |
Cash held in trust | 6 |
| 785,634 |
| - |
Prepaids and other receivables |
|
| 47,135 |
| 994 |
Total current assets |
|
| 887,994 |
| 48,287 |
|
|
|
|
|
|
Equipment |
|
| 19,282 |
| 26,450 |
Unproved mineral properties | 4 |
| 647,026 |
| 702,941 |
Total assets |
| $ | 1,554,302 | $ | 777,678 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Accounts payable |
| $ | 130,953 | $ | 78,755 |
Accrued liabilities |
|
| 24,720 |
| 44,475 |
Due to related parties | 3 |
| 20,290 |
| 70,514 |
Subscription receipts payable | 6 |
| 782,567 |
| - |
Notes payable |
|
| - |
| 15,000 |
Total current liabilities |
|
| 958,530 |
| 208,744 |
|
|
|
|
|
|
Long-term notes payable to related parties | 3 |
| 1,226,182 |
| 1,093,417 |
Long-term amounts due to related parties | 3 |
| 145,359 |
| - |
Withholding taxes payable |
|
| 116,272 |
| 116,618 |
Total liabilities |
|
| 2,446,343 |
| 1,418,779 |
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
Common stock, no par value, unlimited number authorized 45,097,087 and 41,218,008 issued and outstanding at October 31, 2021 and January 31, 2021, respectively | 5 |
| 6,702,859 |
| 6,281,521 |
Additional paid-in capital | 5 |
| 2,948,139 |
| 2,891,764 |
Deficit |
|
| (10,371,630) |
| (9,744,146) |
Accumulated other comprehensive loss |
|
| (171,409) |
| (70,240) |
Total stockholders’ deficit |
|
| (892,041) |
| (641,101) |
Total liabilities and stockholders’ deficit |
| $ | 1,554,302 | $ | 777,678 |
Nature and continuance of operations (Note 1)
Approved on behalf of the Board of Directors:
Caitlin Jeffs |
| Joao (John) da Costa |
Director |
| Director |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
RED METAL RESOURCES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in US Dollars)
(Unaudited)
|
| Three months ended October 31, | Nine months ended October 31, | ||||||
| Note | 2021 | 2020 | 2021 | 2020 | ||||
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
| ||||
Amortization |
| $ | 1,600 | $ | 1,580 | $ | 5,477 | $ | 1,692 |
Consulting fees | 3 |
| 43,121 |
| 22,526 |
| 112,210 |
| 22,526 |
General and administrative |
|
| 35,124 |
| 6,251 |
| 94,040 |
| 21,010 |
Mineral exploration costs |
|
| 2,939 |
| 1,151 |
| 97,267 |
| 4,250 |
Professional fees |
|
| 53,025 |
| 42,505 |
| 177,701 |
| 63,469 |
Regulatory |
|
| 4,579 |
| 2,508 |
| 31,027 |
| 13,479 |
Rent | 3 |
| 2,388 |
| 2,253 |
| 7,212 |
| 2,253 |
Salaries, wages and benefits |
|
| 15,841 |
| 7,898 |
| 30,714 |
| 20,678 |
|
|
| (158,617) |
| (86,672) |
| (555,648) |
| (149,357) |
Other items |
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
| 696 |
| (909) |
| (1,918) |
| (840) |
Forgiveness of debt |
|
| - |
| 114,892 |
| - |
| 189,228 |
Interest on notes payable | 3 |
| (24,015) |
| (20,586) |
| (69,918) |
| (57,446) |
Net income (loss) |
|
| (181,936) |
| 6,725 |
| (627,484) |
| (18,415) |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
| (49,773) |
| (9,607) |
| (101,169) |
| 17,225 |
Comprehensive loss |
| $ | (231,709) | $ | (2,882) | $ | (728,653) | $ | (1,190) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic and diluted |
| $ | (0.00) | $ | 0.00 | $ | (0.01) | $ | (0.00) |
Weighted average number of shares outstanding - basic and diluted: |
|
| 45,097,087 |
|
| 43,591,248 |
| 41,218,008 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
RED METAL RESOURCES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Expressed in US Dollars)
(Unaudited)
|
| Common Stock Issued | Additional |
| Accumulated Other |
| ||||||
| Note | Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Comprehensive Income/(Loss) | Total | |||||
|
|
|
|
|
|
|
| |||||
Balance, January 31, 2020 |
| 41,218,008 | $ | 6,281,521 | $ | 2,891,764 | $ | (9,584,892) | $ | (74,449) | $ | (486,056) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended October 31, 2020 |
| - |
| - |
| - |
| (18,415) |
| - |
| (18,415) |
Foreign exchange translation |
| - |
| - |
| - |
| - |
| 17,225 |
| 17,225 |
Balance, October 31, 2020 |
| 41,218,008 | $ | 6,281,521 | $ | 2,891,764 | $ | (9,603,307) | $ | (57,224) | $ | (487,246) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2021 |
| 41,218,008 | $ | 6,281,521 | $ | 2,891,764 | $ | (9,744,146) | $ | (70,240) | $ | (641,101) |
Shares issued for private placement | 5 | 3,849,668 |
| 477,982 |
| - |
| - |
| - |
| 477,982 |
Share issuance costs | 5 | - |
| (66,644) |
| 48,277 |
| - |
| - |
| (18,367) |
Shares issued for services | 5 | 29,411 |
| 10,000 |
| - |
| - |
| - |
| 10,000 |
Cash received from short sell fees | 5 | - |
| - |
| 8,098 |
| - |
| - |
| 8,098 |
Net loss for the period ended October 31, 2021 |
| - |
| - |
| - |
| (627,484) |
| - |
| (627,484) |
Foreign exchange translation |
| - |
| - |
| - |
| - |
| (101,169) |
| (101,169) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2021 |
| 45,097,087 | $ | 6,702,859 | $ | 2,948,139 | $ | (10,371,630) | $ | (171,409) | $ | (892,041) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
RED METAL RESOURCES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in US Dollars)
(Unaudited)
| Nine Months Ended October 31, | |||
| 2021 | 2020 | ||
Cash flows used in operating activities |
|
| ||
Net loss | $ | (627,484) | $ | (18,415) |
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
Accrued interest on related party notes payable |
| 69,918 |
| 57,446 |
Amortization |
| 5,477 |
| 1,692 |
| - |
| (3,933) | |
Forgiveness of debt |
| - |
| (189,228) |
Shares issued for services |
| 10,000 |
| - |
Changes in operating assets and liabilities |
|
|
|
|
Prepaids and other receivables |
| (32,220) |
| (8,902) |
Accounts payable |
| 38,090 |
| 7,035 |
Accrued liabilities |
| (12,159) |
| 1,962 |
Due to related parties |
| 92,559 |
| 35,544 |
Net cash used in operating activities |
| (455,819) |
| (116,799) |
|
|
|
|
|
Cash flows used in investing activities |
|
|
|
|
Acquisition of equipment |
| - |
| (27,725) |
Net cash used in investing activities |
| - |
| (27,725) |
|
|
|
|
|
Cash flows provided by financing activities |
|
|
|
|
Issuance of notes payable to related parties |
| 31,902 |
| 264,410 |
Cash received on subscription to shares |
| 459,615 |
| - |
Cash received on subscription to subscription receipts |
| 777,669 |
| - |
Repayments of notes payable |
| (15,000) |
| (21,067) |
Cash received from short sell fees |
| 8,098 |
| - |
Net cash provided by financing activities |
| 1,262,284 |
| 243,343 |
|
|
|
|
|
Effects of foreign currency exchange |
| (12,899) |
| (8,101) |
|
|
|
|
|
Increase in cash and cash held in trust |
| 793,566 |
| 90,718 |
Cash and cash held in trust, beginning |
| 47,293 |
| 9,865 |
Cash and cash held in trust, ending | $ | 840,859 | $ | 100,583 |
|
|
|
|
|
Cash |
| 55,225 |
| 100,583 |
Cash held in trust |
| 785,634 |
| - |
Total cash and cash held in trust | $ | 840,859 | $ | 100,583 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
1.NATURE AND CONTINUANCE OF OPERATIONS
Red Metal Resources Ltd. (the “Company”) is involved in acquiring and exploring mineral properties in Chile through its wholly-owned subsidiary, Minera Polymet SpA (“Polymet”) organized under the laws of the Republic of Chile. The Company has not determined whether its properties contain mineral reserves that are economically recoverable.
These condensed consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As at October 31, 2021, the Company has not generated any significant revenues from mineral sales, has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support of its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. The Company’s ability to achieve and maintain profitability and positive cash flows is dependent upon its ability to locate profitable mineral properties, generate revenues from mineral production and control production costs. Based upon its current plans, the Company expects to incur operating losses in future periods. The Company plans to mitigate these operating losses through controlling its operating costs. The Company plans to obtain sufficient working capital through additional debt or equity financing and private loans. At October 31, 2021, the Company had a working capital deficit of $70,536 and accumulated losses of $10,371,630 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to generate significant revenues in the future. These unaudited condensed consolidated financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these unaudited condensed consolidated financial statements.
The Company’s head office is located at 1130 West Pender Street, Suite 820, Vancouver, British Columbia, V6E 4A4. Its registered office address is 700 - 595 Burrard Street, Vancouver, British Columbia, V7X 1S8. The Company's mailing address is 278 Bay Street, Suite 102, Thunder Bay, Ontario, P7B 1R8. Polymet's head office is located in Vallenar, III Region of Atacama, Chile.
Uncertainty Associated with Global Outbreak of COVID-19
In March of 2020, the World Health Organization declared an outbreak of COVID-19 a global pandemic. The COVID-19 outbreak has impacted vast array of businesses through the restrictions put in place by most governments internationally, including the USA, Canadian and Chilean governments, as well as provincial and municipal governments, regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown to what extent the COVID-19 outbreak may impact the Company and its operations as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place world-wide to fight the spread of the virus. While the extent of the impact is unknown, the COVID-19 outbreak may hinder the Company’s ability to raise financing for exploration or operating costs due to uncertain capital markets, supply chain disruptions, increased government regulations and other unanticipated factors, all of which may also negatively impact the Company’s business and financial condition.
5
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
2.BASIS OF PREPARATION
These condensed consolidated financial statements were authorized for issue on December 23, 2021, by the directors of the Company.
a) Statement of Compliance and Basis of Presentation
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information. They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended January 31, 2021, included in the Company’s Annual Report on Form 10-K, filed with the SEC on May 3, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with those audited consolidated financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended October 31, 2021, are not necessarily indicative of the results that may be expected for the year ending January 31, 2022.
b) Accounting standards issued but not yet effective
A number of new accounting standards, amendments to standards, and interpretations have been issued but not yet effective up to the date of issuance of the Company's unaudited condensed consolidated financial statements. The Company intends to adopt the standards when they become effective. The Company has not yet determined the impact of these standards on its financial statements, but does not anticipate that the impact will be significant.
3.RELATED-PARTY TRANSACTIONS
The following amounts were due to related parties as at:
| October 31, 2021 | January 31, 2021 | ||
Due to a company owned by an officer (a) | $ | - | $ | 17,481 |
Due to a company controlled by directors (a) |
| 12,714 |
| 12,731 |
Due to the Chief Executive Officer (“CEO”) (a), (b) |
| 3,202 |
| 27,543 |
Due to the Chief Financial Officer (“CFO”) (a), (b) |
| 1,000 |
| 8,042 |
Due to a major shareholder (a), (b) |
| 2,500 |
| 2,500 |
Due to a company controlled by a director (a) |
| 874 |
| 2,217 |
Total due to related parties | $ | 20,290 | $ | 70,514 |
(a)Amounts are unsecured, due on demand and bear no interest.
(b)On July 29, 2020, Polymet entered into mining royalty agreements (the “NSR Agreements”) with the Company’s CEO, CFO, and the major shareholder (the “Purchasers”) to sell net smelter returns (the “NSR”) on its mineral concessions. NSR range from 0.3% to 1.25% depending on particular concession and the Purchaser. The Company’s CEO agreed to acquire the NSR for $1,500, CFO agreed to acquire the NSR for $1,000, and the major shareholder agreed to acquire the NSR for $2,500.
The NSR will be paid quarterly once commercial exploitation begins and will be paid on gold, silver, copper and cobalt sales. If, within two years, the Company does not commence commercial exploitation of the mineral properties, an annual payment of $10,000 per purchaser will be paid.
6
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
3.RELATED-PARTY TRANSACTIONS (CONTINUED)
Pursuant to Chilean law, the NSR agreements will come in force only when registered against the land title in Chile. Due to temporary safety restrictions associated with COVID-19 pandemic, the registration of the NSR Agreements has been deferred, therefore the payments made by the CEO, CFO, and the major shareholder have been recorded as advances on the books of the Company and will be applied towards the NSR Agreements, once they are fully legalized.
On October 31, 2021, the Company and its related parties agreed to defer certain debt the Company owed to them until January 31, 2023. As such, the following amounts were reclassified to long-term debt:
| October 31, 2021 | |
Due to a company owned by an officer (c) | $ | 63,237 |
Due to a company controlled by directors (c) |
| 13,687 |
Due to a company controlled by a director (c) |
| 68,435 |
Total due to related parties | $ | 145,359 |
(c)Amounts are unsecured, bear no interest, and are payable on or after January 31, 2023.
The following amounts were due under the notes payable the Company issued to related parties:
| October 31, 2021 | January 31, 2021 | ||
Note payable to CEO (d) | $ | 636,467 | $ | 581,233 |
Note payable to CFO (d) |
| 11,018 |
| 10,380 |
Note payable to a company controlled by directors (d) |
| 443,577 |
| 378,449 |
Note payable to a major shareholder (d) |
| 135,120 |
| 123,355 |
Total notes payable to related parties | $ | 1,226,182 | $ | 1,093,417 |
(d)The notes payable to related parties are based on Level 2 inputs in the ASC 820 fair value hierarchy. The notes payable to related parties accumulate interest at a rate of 8% per annum, are unsecured, and are payable on or after January 31, 2023, as renegotiated by the Company on August 31, 2021.
During the three-month period ended October 31, 2021, the Company accrued $24,015 (October 31, 2020 - $20,568) in interest expense on the notes payable to related parties.
During the nine-month period ended October 31, 2021, the Company accrued $69,918 (October 31, 2020 - $56,457) in interest expense on the notes payable to related parties.
7
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
3.RELATED-PARTY TRANSACTIONS (CONTINUED)
Transactions with Related Parties
During the three and nine months ended October 31, 2021 and 2020, the Company incurred the following expenses with related parties:
| Three Months ended October 31, | Nine Months ended October 31, | ||||||
| 2021 | 2020 | 2021 | 2020 | ||||
Consulting fees to a company owned by CFO | $ | 11,937 | $ | - | $ | 36,058 | $ | - |
Consulting fees to a company controlled by CEO |
| 11,937 |
| - |
| 36,058 |
| - |
Consulting fees paid or accrued to a company controlled by VP of Finance |
| 6,147 |
| - |
| 12,906 |
| - |
Prepaid consulting fees paid to a company controlled by VP of Finance |
| (6,281) |
| - |
| 11,879 |
| - |
Legal fees paid to a company controlled by a director |
| 8,204 |
| - |
| 16,876 |
| - |
Rent fees accrued to a company controlled by directors |
| 2,388 |
| - |
| 7,212 |
| - |
Total transactions with related parties | $ | 34,332 | $ | - | $ | 120,989 | $ | - |
4.UNPROVED MINERAL PROPERTIES
Following is the schedule of the Company’s unproved mineral properties as at October 31, 2021 and January 31, 2021:
Mineral Claims at October 31, 2021
Mineral Claims | January 31, 2021 | Effect of foreign currency translation | October 31, 2021 | |||
Farellón Project |
|
|
| |||
Farellón | $ | 369,863 | $ | (29,421) | $ | 340,442 |
Quina |
| 142,560 |
| (11,340) |
| 131,220 |
Exeter |
| 144,793 |
| (11,517) |
| 133,276 |
|
| 657,216 |
| (52,278) |
| 604,938 |
|
|
|
|
|
|
|
Perth Project |
| 45,725 |
| (3,637) |
| 42,088 |
|
|
|
|
|
|
|
Total Costs | $ | 702,941 | $ | (55,915) | $ | 647,026 |
Mineral Claims at January 31, 2021
Mineral Claims | January 31, 2020 | Effect of foreign currency translation | January 31, 2021 | |||
Farellón Project |
|
|
| |||
Farellón | $ | 343,648 | $ | 26,215 | $ | 369,863 |
Quina |
| 132,455 |
| 10,105 |
| 142,560 |
Exeter |
| 134,530 |
| 10,263 |
| 144,793 |
|
| 610,633 |
| 46,583 |
| 657,216 |
|
|
|
|
|
|
|
Perth Project |
| 42,484 |
| 3,241 |
| 45,725 |
|
|
|
|
|
|
|
Total Costs | $ | 653,117 | $ | 49,824 | $ | 702,941 |
8
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
5.COMMON STOCK
On February 10, 2021, the Company changed its corporate jurisdiction from the State of Nevada to the Province of British Columbia. The Articles of Incorporation and Bylaws of the Company, under the Nevada Revised Statutes, were replaced with the Articles of the Company, under the Business Corporations Act (British Columbia). The authorized capital of the Company was amended to an unlimited number of common shares without par value (the “Shares”). The Company retroactively reclassified $6,240,304 associated with the historical share issuances from additional paid-in capital to common stock.
On May 17, 2021, the Company closed a non-brokered private placement by issuing 3,849,668 units at a price of CAD$0.15 per unit (each a “Unit”) for gross proceeds of $477,982 (CAD$577,450) (the “Unit Offering”). Each Unit consisted of one common share and one common share purchase warrant (the “Warrant”). Each Warrant entitles the holder thereof to purchase one additional common share of the Company at an exercise price of CAD$0.20 per common share for a period of 24 months from the date of issue. The Warrants are subject to an acceleration clause in the event that the common shares are listed on a recognized stock exchange and trade at a price of CAD$0.30 or greater for 10 consecutive trading days, in which event the Company may notify warrant holders that the Warrants must be exercised within a period of 30 days. In case the Warrant holders do not exercise them within the accelerated 30-day period, the warrants will expire automatically.
In connection with the Unit Offering, the Company paid cash commissions aggregating $18,367 (CAD$22,397) and issued 149,310 Warrants to registered broker-dealers valued at $48,277. The Warrants are subject to the same terms and conditions as the Warrants purchased by other subscribers in the Unit Offering. The Company used Black-Scholes option pricing model to determine the value of the broker warrants. The following assumptions were used:
Expected Life of the broker warrants | 2 years |
Risk-Free Interest Rate | 0.16% |
Expected Dividend Yield | Nil |
Expected Stock Price Volatility | 255% |
Fair Value at the date of transaction | $0.34 |
On May 14, 2021, the Company issued 29,411 shares of its common stock to a consultant for investor relations services. The Shares were issued pursuant to an independent contractors services agreement whereby the Company agreed to a $5,000 monthly fee payable to a consultant during a three-month period commencing on April 14, 2021. At the discretion of the Company, the cash fee can be paid in common shares of the Company at a deemed price of $0.17 per share for a total of 29,411 shares per month. At the time of the share issuance, the fair market value of the shares was $0.34, therefore the Company recognized $10,000 as part of its investor relation fees.
Warrants
The changes in the number of warrants outstanding during the nine months period ended October 31, 2021, and for the year ended January 31, 2021, are as follows:
| Nine months ended October 31, 2021 |
| Year ended January 31, 2021 | ||||
| Number of warrants | Weighted average exercise price |
| Number of warrants | Weighted average exercise price | ||
Warrants outstanding, beginning | - | $ | n/a |
| 2,500,000 | $ | 0.1875 |
Warrants issued | 3,998,978 | $ | 0.20 |
| - | $ | n/a |
Warrants expired | - | $ | n/a |
| (2,500,000) | $ | 0.1875 |
Warrants outstanding, ending | 3,998,978 | $ | 0.20 |
| - | $ | n/a |
9
RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
5.COMMON STOCK (CONTINUED)
Details of warrants outstanding as at October 31, 2021, are as follows:
Number of warrants exercisable | Grant date | Exercise price |
3,849,668 | May 17, 2021 | $0.20 expiring on May 17, 2023 |
149,310 (1) | May 17, 2021 | $0.20 expiring on May 17, 2023 |
3,998,978 |
|
|
(1)Broker warrants issued on closing of the Unit Offering.
At October 31, 2021, the weighted average life and exercise price of the warrants was 1.54 years and $0.20, respectively.
Recovery of Short-Swing Profits
During the nine months ended October 31, 2021, the Company received $8,098 related to the recovery of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company did not have similar transactions during the nine months ended October 31, 2020.
6.SUBSCRIPTION RECEIPTS PAYABLE
On June 15, 2021, the Company closed a non-brokered private placement by issuing 6,460,872 subscription receipts (each a “Subscription Receipt”) at a price of CAD$0.15 per Subscription Receipt for aggregate gross proceeds of $777,669 (CAD$969,131) (the “SR Offering”).
Each Subscription Receipt automatically entitled the holder thereof, without payment of any additional consideration and without further action on the part of the holder, to acquire one Subscription Receipt Unit (an “SR Unit”). Each SR Unit consists of one common share and one common share purchase warrant of the Company (each, an “SR Warrant”). Each SR Warrant entitles the holder to purchase an additional common share of the Company at a price of CAD$0.30 per common share, if exercised during the first year following the release from escrow, and at a price of CAD$0.60, if exercised during the second year following the release from escrow.
Until the escrow release conditions (including the listing of the Company’s common shares on a recognized stock exchange in Canada) were met in full, the Subscription Receipts, and the proceeds of the SR Offering were held in trust by an escrow agent appointed by the Company.
Subsequent to October 31, 2021, on November 18, 2021, the Company received a receipt for a final non-offering prospectus with the B.C. Securities Commission after which, having satisfied the escrow release conditions, the escrowed funds were released to the Company effective November 22, 2021, and an aggregate of 6,460,872 Subscription Receipts were automatically converted, without any further consideration, into 6,460,872 common shares of the Company and 6,460,872 SR Warrants.
In connection with the SR Offering, the Company agreed to pay finders fees to certain registered broker dealers payable on the Escrow Release Date consisting of: (1) a cash commission in an amount equal to 7% of the gross proceeds raised from subscribers to the SR Offering who were introduced by such finders, and (2) finders warrants in an amount equal to 7% of the number of Subscription Receipts purchased by subscribers introduced by such finders to the Company (the "Finder's Warrants"). The Finder's Warrants would have the same terms as the SR Warrants as defined above. As such on November 22, 2021, the Company paid finders cash commissions totaling $34,258 and issued a total of 228,389 Finder’s Warrants.
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RED METAL RESOURCES LTD.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Expressed in US Dollars)
(Unaudited)
7.SUBSEQUENT EVENTS
Subsequent to October 31, 2021, the Company granted stock options pursuant to its incentive stock option plan to certain directors, officers management company employees, and consultants of the Company to purchase an aggregate of 1,750,00 Common Shares at an exercise price of CAD$0.25 per Common Share, expiring on November 24, 2026. Options to acquire up to 1,700,000 Common Shares vested immediately and an option to acquire up to 50,000 shares vests quarterly over a period of 12 months from the date of grant. The options are subject to applicable policies of the CSE and applicable securities laws and are subject to a hold period expiring on March 25, 2022.
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