MAGNETIC NORTH ACQUISITION CORP. MAGNETIC NORTH ACQUISITION CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2024
(Expressed in Canadian Dollars)
Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
Introduction
This management's discussion and analysis ("MD&A") for Magnetic North Acquisition Corp. ("Magnetic North", the "Company", "we", "us" or "our") dated November 27, 2024, should be read in conjunction with our unaudited condensed interim financial statements and accompanying notes for the three and nine months ended September 30, 2024 and 2023, the December 31, 2023 audited annual financial statements and accompanying notes, and the December 31, 2023 MD&A.
All financial information, unless otherwise noted, presented in this MD&A is reported in Canadian dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Additional information relating to the Company, including the annual and quarterly financial statements and MD&A, is available on SEDAR at www.sedar.com.
This MD&A addresses matters we consider important for an understanding of the Company's business, financial condition and results of operations as at and for the three and nine months ended September 30, 2024.
Description of Business and Overview
Magnetic North with the registered and head office at 1000, 250 2nd Street SW, Calgary, AB T2P 0C1, and offices in Toronto, ON, was incorporated under the Business Corporations Act (Alberta) on July 18, 1997. On September 12, 2008, the Company continued under the Canada Business Corporations Act.
The Company's common shares and Series A preferred shares trade on the TSX Venture Exchange ("TSXV") under the symbol "MNC" and "MNC.PR.A", respectively.
On October 22, 2019, the Company completed an asset purchase transaction with a group of investment and business professionals to effect an arm's length "Change of Business" (as defined in TSXV Policy 5.2) transaction (the "Transaction") within the meaning of such terms in the policies of the TSXV. Under the Transaction, the Company acquired certain shareholdings (the "Purchased Assets") from Mr. Kevin Spall, Mr. Ian Wild and Mr. Andrew Osis (the "Vendors") in exchange for the issuance of 38,000,000 Common Shares of the Company at a deemed price of $0.05 per share and 100,000 Series A preferred shares of the Company at a deemed price of $10.00 per Series A preferred share. The Purchased Assets comprised of all the Vendors' equity interests in Previcare, Inc. ("Previcare"), Ignite Alliance Corp. ("Ignite"), and Power Symmetry Inc. With the completion of the Transaction, the Vendors were appointed officers and directors of the Company, the Company changed its primary business to merchant banking and changed its name from Black Bull Resources Inc. to Magnetic North Acquisition Corp.
Before the change of business, the Company was engaged in the acquisition, exploration, and evaluation of mineral properties of the Company's current holdings in Nova Scotia, Canada. After the completion of the Transaction, the Company changed its primary business to an investment entity comprised of a team of highly experienced professionals in finance and strategy. Magnetic North is primarily focused on investing in the following industries; clean power technology, oilfield services, consumer products, and technology (software and hardware).
In furtherance of the Company's new business objective, the following criteria is utilized to assess potential investment opportunities:
- management expertise and funding to expand, or improve the investee's business model, strategy, or geographic reach;
- an opportunity to provide strategic guidance on the investee's businesses or assets through board representation;
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
- cash flow positive, or close thereto, and through improvements to structure, operations or consolidation, cash flow can be positively impacted to provide sustainable cash flow;
- identifiable business improvements, expansion, consolidation, or acquisition opportunities that enhance the value of operations, and will result in increasing the investee company's valuation.
See "Risks and Uncertainties" below.
Status as an Investment Entity
The following are the criteria within IFRS 10 Consolidated Financial Statements, which the Company used to evaluate and determine that it meets the definition of an Investment Entity;
- Obtain funds from one or more investors for the purpose of providing those investor(s) with investment management services; and
- Commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and
- Measures and evaluates the performance of substantially all its investments on a fair value basis.
The Company has evaluated the above criteria and determined that it meets the definition of an Investment Entity. As a result of meeting the definition of an Investment Entity, subsidiaries which otherwise would have been consolidated are carried at fair value through profit or loss ("FVTPL").
Operational Highlights
- On March 6, 2024 the Company held an annual general and special meeting of the holders of common shares of the Company. At this meeting the Company's Omnibus long-term Incentive Plan, initially approved by the Board of Directors and its shareholders at the annual and special meeting of shareholders held on November 10, 2020, was re-approved. The policies of the TSXV require that share based incentive plans, such as the Omnibus Plan, which reserve for issuance up to 10% of a listed company's shares, be approved annually by the shareholders of the company. In addition, the audited financial statements of the Company for the financial years ended December 31, 2022 and 2021 and the auditor's report on those statements in addition to the unaudited condensed interim financial statements for the three and nine months ended September 30, 2023 were presented.
- During the Company's 2023 audit, Company management reviewed the accounting for, and classification of, the Series A preferred shares. It was determined that the Series A preferred shares are not a financial liability, rather they are more properly classified as equity.
There are three key terms, all of which were relevant to the determination of the classification of the Series A preferred shares: - Redemption option - at the discretion of the Company's Board of Directors.
- Dividend distribution - at the discretion of the Company's Board of Directors.
- Entitlement - Distribution of net investment gain upon future events, non-discretionary.
Each of these terms was analyzed individually under existing IFRS pronouncements.
Based on the analysis undertaken, the Preferred Shares are considered a compound instrument, consisting of both an equity component and a liability component. However, the liability component is initially recognized at nil value due to its nature as a contingent obligation which has an indeterminable payment probability and an amount that cannot be reliably measured. Therefore, the entire amount of the proceeds from the issue of Series A preferred shares was reallocated to the equity component.
The effect of this adjustment to the classification of the Series A preferred shares on the statements of financial position as at December 31, 2023 and September 30, 2024 is a decrease in Financial liability-Series A preferred shares within non- current liabilities of $17,404,079 and a net increase in Series A preferred Shares within Shareholders' equity of $16,467,597. The September 30, 2023 comparative figures presented have also been restated, as appropriate, to reflect a reclassification of Series A preferred shares to equity.
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
- On May 7, 2024 the Company was granted a Management Cease Trade Order by the Alberta Securities Commission, as a result of the Company being late to file its 2023 annual audited financial statements.
- On June 28, 2024 the Company repaid the US$10,000,000 Term Loan from the Canadian financial institution using the Restricted cash. Accrued interest on the Term Loan, in the amount of US$539,315.08, was converted to a non-interest bearing Demand Promissory Note.
- On July 12, 2024 the Alberta Securities Commission ("ASC") issued a Cease Trade Order (the "CTO"). The CTO was issued as a result of the delay in the filing of the Company's audited annual financial statements and the accompanying corresponding condensed interim financial statements, management discussion and analysis, and certifications for the period ended March 31, 2024.
- On July 15, 2024 the TSX Venture Exchange (the "Exchange") issued a suspension of trading of the
Company's common and Series A preferred shares. - On October 10, 2024 the Company filed its 2023 audited annual financial statements, 2023 management discussion and analysis and the condensed interim financial statements, management discussion and analysis, and certifications for the three month periods ended March 31 and June 30, 2024.
- On October 21, 2024 the ASC revoked the CTO.
- Effective November 28, 2024, the TSXV reinstated trading in the Company's securities.
Investments
The Company's investment portfolio consisted of the following as at September 30, 2024:
Financial | |||||||
Instrument | Company's | ||||||
Fair Value | ownership | ||||||
Investment | Instrument | Hierarchy | Cost $ | Fair Value $ | % | ||
CXTL Recycling (Canada) Corp. | Equity | 3 | $ | 9,031,396 | $ | 0 | 50% |
$ | 9,031,396 | $ | 0 |
The Company also held shares in the following companies that had no reportable fair value as at the end of September 2024: Previcare, Inc. 1.6 million shares representing approx. 32% of the common shares; Ignite Alliance Corp. 50,000 shares representing less than 1.0% of the common shares; Power Symmetry 400,000 shares representing 40.0% of the common shares; Bluenose Quartz Ltd. 100 common shares representing 100% of the common shares outstanding; and GrowthCell Global 335,000 common shares representing less than 1.5% of the common shares.
The Company's management review and approve the valuation results of all investments in the portfolio based on all observable and unobservable inputs. The Company will also engage an independent valuation firm to perform an independent valuation in situations where it requires additional expertise. The valuation results are reviewed with the audit committee as part of its quarterly approval of the Company's financial statements.
As at September 30, 2024 all of the Company's investments are unlisted equity instruments and are categorized as Level 3 financial instruments. These investments are valued at cost for a limited period after the date of acquisition, provided the purchase price remains representative of the fair value at the reporting date; otherwise, these investments are valued using the most appropriate valuation methodology in light of the nature, facts and circumstances of the investment. Investments in early-stage companies not generating sustainable revenue or earnings and for which there has not been any recent independent funding, which represents 100% of the Company's current portfolio, are valued using alternative methodologies. The Company considers investee company performance relative to plan, going concern risk, continued funding availability, comparable peer group valuations, exit market conditions and general sector conditions and calibrates its valuation of each investment as appropriate. The Company may apply a further illiquidity discount to the fair value of an investment if conditions exist that could make it challenging to monetize the investment in the near term at a price indicated by the valuation models. The amount of illiquidity discount applied requires considerable judgment and is based on the facts and circumstances of each investment.
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties, and the resulting values may differ significantly from the values that would have been used had a ready market existed for the investments. These differences could be material to the fair value of investments in the portfolio.
As at September 30, 2024, based on management's fair value assessment of these investments under IFRS 13, the Company reported the fair value of CXTL as $nil (September 30, 2023 - $nil). Investments other than CXTL have also been assessed under IFRS 13 to have $nil fair value as at September 30, 2024 (September 30, 2023 - $nil).
As soon as there is additional progress and/or events that would assist in the determination of the probability of the key valuation assumptions used, the Company will re-evaluate its valuation model and determine a fair value in subsequent financial reporting periods.
Summary of Quarterly Results
As at September 30, 2024:
Summary of Quarterly Results | RESTATED | ||||||||||||||
Sept. 30 | June 30 | Mar 31 | Dec 31 | Sept 30 | Jun 30 | Mar 31 | Dec 31 | ||||||||
2024 | 2024 | 2024 | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||
Revenue | $ | 60,000 | $ | 60,000 | $ | 60,000 | $60,000 | $ | 60,000 | $ | 760,000 | $ | - | $ | - |
Operating income (loss) | (163,795) | (230,641) | (237,618) | (779,944) | (293,818) | 447,831 | (258,174) | (472,833) | |||||||
Net income (loss) | (169,975) | (905,405) | (717,087) | (1,302,677) | (293,998) | 447,651 | (258,304) | (9,645,442) | |||||||
Income (loss) per share - basic & diluted | (0.00) | (0.02) | (0.01) | (0.02) | (0.00) | 0.01 | (0.00) | (0.17) | |||||||
Operating income (loss) full year | (884,105) | (5,361,961) | |||||||||||||
Net income (loss) full year | (1,407,328) | (5,698,325) |
Management regularly monitors economic conditions and estimates their impact on the Company's operations and incorporates these estimates in both short-term operating and longer-term strategic decisions. Strong equity markets are favorable conditions for completing a public merger, financing or acquisition transaction. Apart from these and the risk factors noted under the heading "Risks and Uncertainties", management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company's business, financial condition or results of operations.
Results of Operations
For the three months ended Sept. 30, 2024 compared with the three months ended Sept. 30, 2023
For the three months ended Sept. 30, 2024, the Company's net loss was $ 169,975 which equates to ($0.00) per share, compared to a net loss of $293,998 or ($0.00) per share for the three months ended Sept. 30, 2023. The decrease in net loss of $124,023 is primarily a result of the following items:
Revenue
During the three months ended Sept. 30, 2024 the Company reported revenue of $60,000, which equals the $60,000 of revenue reported in the comparative 2023 period. Revenue is comprised of advisory fees received from Investee entities. Generally, revenue should be recognized when it is earned and can be reliably measured, regardless of when it is collected.
General and Administrative Expenses ("G&A")
G&A includes consulting fees, professional fees, investor relations, salaries and benefits, office and general, travel expenses and regulatory fees.
G&A decreased by $120,843 for the three months ended September 30, 2024 compared to the same period in 2023. G&A were lower in the 2024 period primarily due to lower consulting and professional fees required to support corporate activity in the 2024 period related to the Company's investments and investment acquisition activities, in addition to somewhat lower salaries and benefits costs.
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
Share-based compensation
Share-based compensation expense decreased by $8,678 for the three months ended September 30, 2024 compared to the 2023 period. Share-based compensation expense will vary from period to period depending upon the number of options granted and vested during a period and the fair value of the options calculated as at grant date. The comparative lower fair value of options granted in the most recent fiscal periods also affects share-based compensation expense.
Other items
Other items expense includes accretion, net finance income/(cost) and expected credit losses. Other items expense increased by $6,000 in the three months ended September 30, 2024 compared to the
2023 period, reflecting the accounting recognition of imputed interest expense on the non-interest-bearing short term loan in the amount of $250,000 received in November 2023 in an arm's length transaction from a shareholder of the Company.
For the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023
For the nine months ended September 30, 2024, the Company's net loss was $1,810,979 or ($0.03) per share, compared to a net loss of $104,651 or ($0.00) per share for the nine months ended September 30, 2023. The increase in net loss of $1,706,328 is a result of the following:
Revenue
During the nine months ended Sept. 30, 2024 the Company reported revenue of $180,000 as compared to $820,000 in the comparative period in 2023. Revenue is comprised of advisory fees from its investees CXTL and Previcare, Inc. Revenue is comprised of advisory fees received from Investee entities. Generally, revenue should be recognized when it is earned and can be reliably measured, regardless of when it is collected. Advisory fees received in the nine months to September 30,2023 encompassed amounts owing for the period from mid-2020 to mid-2023. The portion of advisory fee revenue related to those prior fiscal periods was not recognized in the Company's annual audited financial statements in those prior fiscal periods as the circumstances did not meet IFRS 5 revenue recognition requirements. IFRS accounting pronouncements recommend that if the collectability issue has been resolved and the revenue is now reliably measurable, it should be recognized in the current period when it is collected rather than being restated as a prior period adjustment. The Advisory services revenue for the period from mid-2020 to mid-2023 included in the nine- months to September 30, 2023 represents a one-time catchup and is not a recurring item.
General and Administrative Expenses ("G&A")
G&A include consulting fees, professional fees, investor relations, salaries and benefits, office and general, travel expenses and regulatory fees. G&A decreased by $51,708 for the nine months ended September 30, 2024 compared to the same period in 2023. G&A were lower in the 2024 period principally due to lower consulting and professional fees required to support corporate activity related to the Company's investments and investment acquisition activities and lower salaries & benefits costs, partially offset by increased office & general expenses.
Share-based compensation
Share-based compensation expense decreased by $49,172 for the nine months ended Sept. 30, 2024 compared to the 2023 period. Share-based compensation expense will vary from period to period depending upon the number of options granted and vested during a period and the fair value of the options calculated as at grant date.
Other items
Other items expense includes accretion, net finance income/(cost) and expected credit losses. Other items expense increased by $1,159,923 in the nine months ended Sept. 30, 2024 compared to the
2023 period primarily due to interest expense in the first 6 months of 2024 on the US$10.0M loan and the amortization of a portion of the commitment fees incurred in 2023 related to securing a CDN$14.0 million letter of credit to support the loan. The US$10.0M loan was repaid at the end of June, 2024 using Restricted cash.
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
Liquidity and Financial Position
The activities of the Company, now merchant banking and formerly the acquisition, exploration and evaluation of mineral properties, are financed through equity offerings. The Company continues to seek capital through various means including the issuance of equity.
The Company has minimal operating revenues and therefore must utilize its current cash reserves and other financing transactions to maintain its capacity to meet ongoing discretionary and committed exploration and operating activities.
As at September 30, 2024, the Company had a working capital deficiency of $3,329,618 (December 31, 2023 - a $1,538,396 working capital deficiency). The Company's use of cash at present occurs, and in the future will occur, principally in two areas, namely, funding of its general and administrative expenditures and funding of its investment activities. Those investing activities include the purchase of investments. For fiscal 2024, the Company's expected estimated operating expense is approx. $100,000 per month for recurring operating costs.
The Company does not have sufficient cash to fund its operating expenses for the twelve months ending September 30, 2025. The Company will have to raise additional capital during the rest of fiscal 2024 in amounts sufficient to fund both investment activities and working capital requirements. The major variables are expected to be the size, timing and results of the Company's investment activities and its ability to continue to access capital to fund its ongoing operations.
The following table sets out the condensed interim statement of cash flows for the nine months ended September 30, 2024 and 2023.
Nine Months Ended | Six Months Ended | |||
Summary statement of cash flows | Sept. 30, 2024 | Sept. 30, 2023 | ||
Net cash flows provided by (used in)operating activities | $ | (917,765) | $ | (347,920) |
Net cash flows provided by (used in) investing activities | - | - | ||
Net cash flows provided by financing activities | (12,310,249) | 342,918 | ||
Net change in cash and cash equivalents | (13,228,014) | (5,002) | ||
Cash and cash equivalents, beginning of period | 13,232,976 | 13,571 | ||
Cash and cash equivalents, end of period | $ | 4,962 | $ | 8,569 |
Operating activities for the nine months ended September 30, 2024 were mainly affected by: adjustments for share-based compensation expense; accrued interest expense on the US$10.0M loan; the amortization of commitment fees incurred in 2023 related to securing the letter of credit supporting the US$10.0M Term loan; an increase in Prepaids and other current assets, including a $295,000 deposit made as part of a potential financial transaction the Company is currently negotiating to complete; an increase in Due from related parties; and, a net increase in accounts payable and accrued liabilities balances. See also comments on financing activities below.
Investing activities relate to providing advice and support for and to existing investments related to the development of their business plans in addition to work related to examining and assessing additional potential investment opportunities for the Company. Repayments and Advances from an Investee exceeded total Advances made to the Investee during the nine months ended Sept. 30, 2024, which resulted in a net cash inflow to the Company. Net advances to the Company have been reclassified from Investing to Financing activities.
Financing activities for the nine months ended September 30, 2024 generated cash of $842,997 from the net Advances from Investees discussed above, offset by the repayment from Restricted cash of the US$10.0 million Term loan. The financial transactions and investment opportunities contemplated when the Company entered into the Credit Agreement for the US$10.0M Term Loan either did not materialize, were assessed to be inconsistent with the restrictions placed on the use of the funds or were not economically beneficial to the Company and, as a result, on June 28th the Company repaid the Term Loan using US$10.0 million of Restricted cash. Accrued interest of $US 539,315.08 was converted to a non-interest bearing Demand Promissory Note.
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
Other Commitments and Contingencies
The Company has commitments for financial liabilities, minimum payments due as of September 30, 2024, as follows:
Other Commitments and Contingencies | ||||||||||
Carrying | Less than | |||||||||
As at September 30, 2024 | Value | 1 year | 1 to 3 years | 4 to 5 years | Total | |||||
Trade and accrued liabilities | $ | 2,097,498 | $ | 2,097,498 | $ | - | $ | - | $ | 2,097,498 |
Short term loans payable | 426,984 | 426,984 | - | - | 426,984 | |||||
Advances from investees | 1,494,810 | 1,494,810 | 1,494,810 | |||||||
Total commitments | $ | 4,019,292 | $ | 4,019,292 | $ | - | $ | - | $ | 4,019,292 |
Outstanding Share Data
The total number of fully diluted outstanding and issuable Common shares and total Common share and Preferred share options and warrants is as follows:
Outstanding Share Data | ||
Sept. 30, 2024 | Sept. 30, 2023 | |
Common shares | 59,097,178 | 59,097,178 |
Common share stock options | 4,990,000 | 4,443,927 |
Series A preferred share stock options | 97,500 | 12,500 |
Series A preferred share purchase warrants | 993,162 | 443,162 |
Total | 65,177,840 | 63,996,767 |
Related Party Transactions
Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||
Sept. 30, 2024 | Sept. 30, 2023 | Sept. 30, 2024 | Sept. 30, 2023 | ||||||
Consulting fees | $ | 100,000 | 108,117 | $ | 300,000 | $ | 286,350 | ||
Share-based compensation | 2,686 | - | $ | 8,170 | $ | - | |||
Salaries and benefits | 36,816 | - | $ | 110,448 | $ | - | |||
$ | 139,502 | $ | 108,117 | $ | 418,618 | $ | 286,350 | ||
Investments in companies with common management personnel: | |||||||||
Fair | |||||||||
Entity | Type of investment | Holdings (# of shares) | value ($) | ||||||
CXTL Recycling (Canada) Corp. (1) | Common shares | 115,592 | nil | ||||||
Previcare, Inc. (2) (3) | Common shares | 1,600,000 | nil | ||||||
Ignite Alliance Corp. | Common shares | 50,000 | nil | ||||||
Bluenose Quartz Ltd. (4) | Common shares | 100 | nil |
- Andrew Osis, Co-Chief Executive Officer of the Company, is also the Executive Chairman of CXTL and Ian Wild, Director of the Company is also a Director of CXTL
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
- Kevin Spall, Co-Chief Executive Officer of the Company, is also the Treasurer/VP and a Director of Previcare, Inc.
- Lance McIntosh, CFO of the Company, is also the Chief Financial Officer of Previcare, Inc.
- Andrew Osis and Kevin Spall, Co-Chief Executive Officers of the Company, are also the directors of Bluenose Quartz Ltd.
Correction of a disclosure in the 2023 audited financial statements and the Q1 and Q2 2024 condensed interim financial statements
In a press release dated November 29, 2023 the Company announced that, in connection with certain financing transactions, subject to the approval of the TSX Venture Exchange, the Company would grant an aggregate of 550,000 warrants as consideration for the financing transactions. Each Warrant entitled the holder to purchase one Series A preferred share in the capital of the Company at an exercise price equal to $7.50 per share until November 25, 2024. The Warrants have expired and are void and of no further value.
In the Company's audited 2023 financial statements, Q1 2024 and Q2 2024 condensed interim financial statements and the 2023 annual MD&A these 550,000 Warrants were disclosed as having a term of 24 months from the date of issuance. This mis-statement was corrected in the Company's Q3 2024 condensed interim financial statements. The mis-statement of the term related to the 550,000 Warrants did not have a material impact on the results of operations reported in the Company's 2023 audited financial statements nor in its Q1 2024 and Q2 2024 condensed interim financial statements.
Financial Instruments and Risk Management
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk, foreign currency risk and commodity and equity price risk). Risk management is carried out by the Company's management team with guidance from the Board of Directors.
The Company has exposure to the following risks from its use of financial instruments:
- Credit Risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The
Company's credit risk is primarily attributable to cash and cash equivalents and trade and other receivables. Cash and cash equivalents are held with select major Canadian chartered banks. Trade and other receivables consist of sales taxes receivable from government authorities in Canada and advisory fees. The Company does not have significant concentration risk from cash and cash equivalents, due from related parties and trade and other receivables.
- Liquidity Risk
Liquidity risk is the risk the Company will encounter difficulties in meeting its financial liability obligations. The Company manages its liquidity risk through cash management, which includes monitoring forecasts of the Company's cash and cash equivalent on the basis of projected cash flow. As at September 30, 2024, the Company had cash of $4,962 (December 31, 2023 - $13,232,976) to settle current liabilities of $4,019,292 (December 31, 2023 - $15,227,751). Historically, the Company's primary source of funding has been the issuance of securities for cash through private placements. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.
- Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and commodity and equity prices. The Company is exposed to market risks associated with the inherent volatility and external factors that can impact the fair value of equity instruments, including the following:
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Magnetic North Acquisition Corp.
Management's Discussion & Analysis for the
Three and Nine Months Ended Sept. 30, 2024
Discussion dated: November 27, 2024
-
Interest Rate Risk
The Company has cash balances invested in guaranteed investment certificates that are issued by a Canadian Chartered bank. The Company has no interest-bearing debt. At prevailing market interest rates, the impact on interest income is minimal.
-
Interest Rate Risk
- Foreign Currency Risk
The Company does not have a material amount of assets or liabilities denominated in a foreign currency.- Commodities Price Risk
. The Company may be exposed to price risk only with respect to certain commodity prices. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices as they relate to valuable minerals to determine the appropriate course of action to be taken by the Company.
Fair Value of Financial Instruments
The Company measures fair value in accordance with IFRS 13 Fair Value Measurement, which provides a single source of fair value measurement guidance. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value, which requires a fair value hierarchy to be applied to all fair value measurements:
- Level 1 - valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities.
- Level 2 - valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. Level 2 financial instruments do not include the Series A preferred shares.
- Level 3 - valuation techniques with significant unobservable market inputs. Level 3 financial instruments include investments.
The fair values of cash and cash equivalents, short-term investments, trade and other receivables, due from related parties, advances to or from investees, accounts payable and accrued liabilities, and promissory notes payable included in the condensed interim statement of financial position approximate their carrying amount due to the short- term maturity of these instruments.
The fair value of investments is measured at fair value through profit or loss and considered to be under Level 3 hierarchy. There were no transfers between levels in the fair value hierarchy during the nine-month period ended September 30, 2024.
Outlook
For the immediate future, the Company plans to continue to implement its investment strategy, as described above, and focus on investments in, but not limited to, clean power technology, consumer products, oilfield services, and technology (software and hardware). The Company will also continue to explore and evaluate the option of finding a joint venture partner for its exploration property in Nova Scotia. The Company continues to monitor its spending and will amend its plans and budgets based on operational results and expectations of raising financing as and when required.
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Magnetic North Acquisition Corp. published this content on December 05, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on December 05, 2024 at 19:41:03.979.
