Magnetic North Acquisition : Q3 - September 30, 2024

MAGNETIC NORTH ACQUISITION CORP.

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS

ENDED SEPTEMBER 30, 2024 AND 2023

(EXPRESSED IN CANADIAN DOLLARS)

Notice to Reader

The accompanying unaudited condensed interim financial statements of Magnetic North Acquisition Corp. (the "Company") have been prepared by and are the responsibility of management.

These

unaudited condensed interim financial statements have not been reviewed by the Company's auditors.

Magnetic North Acquisition Corp.

Statements of Financial Position

(Expressed in Canadian Dollars) (Unaudited)

	As at September 30		As at December 31
		2024		2023
ASSETS
Current Assets
Cash and cash equivalents	$	4,962	$	6,976
Restricted cash (note 8)		-		13,226,000
Short-term investments (note 3)		27,400		27,400
Trade and other receivables		36,271		4,885
Due from related parties (note 17)		305,226		160,901
Advances to investees (note 4)		-		-
Prepaids and other current assets (note 8)		315,815		263,193
Total Current Assets	$	689,674	$	13,689,355
Non-current assets
Investments - fair value through profit or loss (note 5)		-		-
Property, plant and equipment		3		3
Mineral claims		1		1
Exploration and evaluation assets		1		1
Other assets (note 6)		330,724		330,724
Total assets	$	1,020,403	$	14,020,084
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities (note 7)	$	2,097,498	$	1,001,708
Short term loans payable (note 8)		426,984		13,574,230
Advances from investees (note 4)		1,494,810		651,813
Total Current Liabilities	$	4,019,292	$	15,227,751
Non-current liabilities
Asset retirement obligation (note 9)		660,432		659,892
Financial liability - Series A preferred shares (notes 2 and 10)		-		-
Total liabilities	$	4,679,724	$	15,887,643
Shareholders' equity
Common shares (note 11)		29,083,903		29,083,903
Warrants (note 12)		1,645,494		1,645,494
Series A preferred shares (notes 2 and 10)		16,467,597		16,467,597
Contributed surplus		3,663,787		3,644,570
Accumulated deficit		(54,520,102)		(52,709,123)
Total shareholders' equity		(3,659,321)		(1,867,559)
Total liabilities and shareholders' equity	$	1,020,403	$	14,020,084
Nature of operations and going concern (note 1)
Subsequent events (note 19)

The accompanying notes to the financial statements are an integral part of these statements.

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Magnetic North Acquisition Corp.

Statements of Loss and Comprehensive Loss (Expressed in Canadian dollars)

(Unaudited)

		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2024		2023		2024		2023
Revenue
Advisory fees (note 18)	$	60,000	$	60,000	$	180,000	$	820,000
Fair value adjustment of investments (note 5)		-		-		-		-
		60,000		60,000		180,000		820,000
Expenses
Exploration and evaluation expenses		3,427		3,930		20,540		13,255
General and administrative (note 14)		214,247		335,090		790,809		842,517
Share-based compensation (note 13)		6,120		14,798		19,217		68,389
Depreciation		-		-		-		-
Total Expenses		223,795		353,818		830,566		924,161
Loss before other items		(163,795)		(293,818)		(650,566)		(104,161)
Other Items
Accretion		(180)		(180)		(540)		(540)
Finance income/(cost), net		(6,000)		-		(1,159,873)		50
Preferred share-based transaction costs		-		-		-		-
Expected credit loss		-		-		-		-
Net and comprehensive loss for the period		(169,975)		(293,998)		(1,810,979)		(104,651)
Net and comprehensive loss per share	$	(0.00)	$	(0.00)	$	(0.03)	$	(0.00)
- Basic and Diluted (note 15)
Weighted average number of common shares outstanding
- Basic and Diluted (note 15)		59,097,178		59,097,178		59,097,178		59,097,178

The accompanying notes to the financial statements are an integral part of these statements.

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Magnetic North Acquisition Corp.

Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited)

		Nine Months Ended
		September 30,
		2024		2023
Operating activities
Net income (loss) for the period		(1,810,979)		(104,651)
Adjustments for:
Depreciation and amortization		-		-
Change in asset retirement obligation estimate		-		-
Accretion		540		540
Share based compensation		19,217		68,389
Fair value adjustment of investments		-		-
Restricted cash - exchange adjustment		-		-
Changes in non-cash working capital items:
Trade and other receivables		(31,386)		29,891
Prepaid expenses and other current assets		(52,622)		1,399
Deferred revenue		-		139,000
Due from related parties		(144,325)		-
Accounts payable and accrued liabilities		1,095,790		(482,488)
Short term loans payable		6,000		-
Net cash provided by (used in) operations		(917,765)		(347,920)
Investing activities
Advances to investees (note 4)		-		-
Net cash provided by (used in) investing activities		-		-
Financing Activities
Advances from investees (note 4)		842,997		342,918
Proceeds from private placement		-		-
Share issue costs		-		-
Receipt of Restricted cash from short tern bank loan (note 8)		-		-
Repayment of Short term loan from Restricted cash (note 8)		(13,153,246)		-
Net cash provided by (used in) 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
Cash is represented by:
Cash and cash equivalents	$	4,962	$	8,569
Restricted cash		-		-
	$	4,962	$	8,569
Supplemental information
Interest received		175		50

The accompanying notes to the financial statements are an integral part of these statements.

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Magnetic North Acquisition Corp.

Statements of Changes in Shareholders' Deficiency (Expressed in Canadian Dollars)

(Unaudited)

	Issued common shares	Issued preferred shares			Contributed	Accumulated		Shareholders'
	Number (#)		Amount ($)	Number (#)		Amount ($)		Warrants		Surplus		Deficit	Equity (Deficiency)
Balance, December 31, 2022 Restated	59,017,187		29,083,903	1,712,927		16,310,597		1,088,072		3,284,907		(45,603,470)		3,958,708
Shared based compensation	-		-	-		-		-		68,389		-		68,389
Net and comprehensive loss for the period	-		-	-		-		-		-		(104,651)		(104,651)
Balance, September 30, 2023	59,017,187		29,083,903	1,712,927		16,310,597		1,088,072		3,353,296		(45,708,121)		4,127,747
Balance, December 31, 2023	59,017,187	$	29,083,903	1,750,825	$	16,467,597	$	1,645,494	$	3,644,570	$	(52,709,123)	$	(1,867,559)
Shared based compensation	-		-	-		-		-		19,217		-		19,217
Share issuance costs	-		-	-		-		-		-		-		-
Warrant issuance costs	-		-	-		-		-		-		-		-
Net and comprehensive loss for the period	-		-	-		-		-		-		(1,810,979)		(1,810,979)
Balance, September 30, 2024	59,017,187	$	29,083,903	1,750,825	$	16,467,597	$	1,645,494	$	3,663,787	$	(54,520,102)	$	(3,659,321)

The accompanying notes to the financial statements are an integral part of these statements.

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Magnetic North Acquisition Corp.

Notes to the Financial Statements

For the Three and Nine Months Ended Sept. 30, 2024 and 2023 (Expressed in Canadian Dollars)

(Unaudited)

1. Nature of operations and going concern

Prior to October 22, 2019, Magnetic North Acquisition Corp. (the "Company" or "Magnetic North") (formerly Black Bull Resources Inc.) was in the business of mining, processing and marketing quartz from its White Rock claim in Nova Scotia, Canada. The Company also investigated the commercialization of its kaolin resource.

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 Policy 5.2 of the TSX Venture Exchange ("TSXV")) transaction (the "Transaction") within the meaning of such terms in the policies of the TSXV. With the completion of the Transaction, the Company changed its primary business to merchant banking and changed its name to Magnetic North Acquisition Corp. Magnetic North is an investment and merchant banking company focused on creating shareholder value by providing strategic and financial advice and services to companies in the clean power technology, consumer products, manufacturing and information technology sectors.

The Company's common shares and Series A preferred shares trade on the TSXV under the symbol "MNC" and "MNC.PR.A", respectively. The Company was incorporated under the Business Corporations Act (Alberta) on July 18, 1997. On June 12, 2008, the Company continued under the Canada Business Corporations Act. The Company's registered and head office is at 1000, 250 2nd Street SW, Calgary, Alberta.

These financial statements of the Company were reviewed, approved and authorized for issue by the Board of Directors on November 27, 2024.

These unaudited condensed interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Accordingly, these unaudited condensed interim financial statements do not give effect to the 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 meet its liabilities and commitments in other than the normal course of business and at amounts different from those in these unaudited condensed interim financial statements.

The Company continues to incur operating losses. The Company has minimal revenue-generating operating activities and has a significant accumulated deficit. The Company has incurred losses in prior periods, with a current net and comprehensive loss of $1,810,979 during the nine months ended September 30, 2024 (nine months ended September 30, 2023 - net comprehensive loss of $104,651) and has an accumulated deficit of $54,520,102 as at September 30, 2024 (as at December 31, 2023 - $52,709,123). In addition, the Company had a working capital deficiency of $3,329,618 as at September 30, 2024 (December 31, 2023 - working capital deficiency of $1,538,396). Such material uncertainties cast significant doubt as to the ability of the Company to satisfy its obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

The Company's continued existence is dependent upon the success of its new business focus as an investment company. However, there can be no assurances that the steps management have taken will be successful. Management's opinion is that the Company will balance its current cash resources against new opportunities and additional financings. Management is actively working on obtaining additional funds from investors, from potential financial transactions and from monetizing its current investments.

If the going concern assumption were not appropriate for these unaudited condensed interim financial statements, adjustments might be necessary to the carrying value of assets and liabilities, reported revenues and expenses and the statement of financial position classifications used.

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Magnetic North Acquisition Corp.

Notes to the Financial Statements

For the Three and Nine Months Ended Sept. 30, 2024 and 2023 (Expressed in Canadian Dollars)

(Unaudited)

2. Basis of presentation Statement of compliance

The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IFRS Accounting Standards")

These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by the IASB.

Restatement

During the 2023 audit, the Company reviewed the accounting for, and classification of, its Series A preferred shares and determined that its Series A preferred shares are not a financial liability and are more properly classified as equity. There are 3 key terms that are relevant to the determination of classification:

1. Redemption option - at the discretion of the Company's Board of Directors.
2. Dividend distribution - at the discretion of the Company's Board of Directors.
3. 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 should be allocated to the equity component

The effect of this adjustment on the statement of financial position as at December 31, 2023 and September 30, 2024 is

1. 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 2023 comparative figures presented in these unaudited condensed interim financial statements have been restated, as required, to reflect the reclassification.

Basis of measurement and presentation

These unaudited condensed interim financial statements have been prepared on a historical cost basis, with the exception of financial instruments classified as fair value through profit or loss. In addition, these unaudited condensed interim financial statements have been prepared using the accrual basis of accounting except for cash flow information. These unaudited condensed interim financial statements are presented in Canadian dollars, which is also the Company's functional currency.

Material accounting judgments, estimates and new accounting policies

The preparation of these unaudited condensed interim financial statements in accordance with IFRS requires management to make judgments and estimates that could materially affect the amounts recognized in the unaudited condensed interim financial statements. By their nature, judgments and estimates may change in light of new facts and circumstances in the internal and external environment. The following judgments and estimates are those deemed by management to be material to the Company's unaudited condensed interim financial statements.

Judgments

Going Concern

At each reporting period, management exercises judgment in assessing the Company's ability to continue as a going concern by reviewing the Company's performance, resources and future obligations. See also note 1 above.

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Magnetic North Acquisition Corp.

Notes to the Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023 (Expressed in Canadian Dollars)

(Unaudited)

2. Basis of presentation (continued)

Fair value of financial instruments

For Level 3 investments where quoted prices are not readily available, the Company values its investments using recognized valuation models. Some, or all, of the significant inputs into these models may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ significant unobservable inputs requires a higher degree of management judgment and estimation in the determination of fair value.

Impairment

Significant judgment is required to assess when impairment indicators exist, and impairment testing is required. The assessment of impairment indicators is based on management's judgment of whether there are internal and external factors that would indicate that a cash generating unit ("CGU") and specifically the non-financial assets within the CGU, are impaired. The determination of a CGU is also based on management's judgment and is an assessment of the smallest group of assets that generate cash inflows independently of other assets.

Investment Entity Status

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;
• 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").

Management exercises judgment in applying the relevant criteria in IFRS 10 Consolidated Financial Statements, which determines the Company's status as an investment entity.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities arise from temporary differences between the tax bases of assets and liabilities and their carrying amounts reported in the financial statements. Deferred income tax assets also reflect the benefit of unutilized tax losses that can be carried forward to reduce income taxes in future years. Such method requires the exercise of significant judgment in determining whether or not the Company's deferred tax assets are probable of recovery from taxable income of future years and therefore can be recognized in the financial statements. Also, estimates are required to determine the expected timing upon which tax assets will be realized and upon which tax liabilities will be settled.

Critical Accounting Estimates

Asset Retirement Obligation

The Company's estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of future expenditures. These costs are estimated based on the Company's interpretation of current regulatory requirements and constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of restoration liabilities that may occur upon decommissioning of the property.

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Magnetic North Acquisition Corp.

Notes to the Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023 (Expressed in Canadian Dollars)

(Unaudited)

Impairment of Non-Financial Assets

In determining the estimated recoverable amount of a CGU subject to impairment testing, the Company measures the estimated recoverable amount of a CGU as the higher of fair value less costs of disposal and its value in use. Estimated recoverable amounts of a CGU are evaluated and calculated using various data and assumptions. The data and assumptions used in the estimates of recoverable amount are assessed for reasonableness based on the information available at the time the estimate of recoverable amount is prepared. The estimate of recoverable amount for a CGU involves certain significant assumptions including the forecasted revenue growth rates, forecasted earnings before finance costs, taxes, depreciation and amortization and the discount rate.

Fair value of financial instruments

The Company measures its financial instruments at fair value or amortized cost. Fair value is determined on the basis of market prices from independent sources, if available. If there is no available market price, then fair value is determined by using valuation models. The inputs to these models, such as expected volatility and liquidity discounts, are derived from observable market data where possible, but where observable date is not available, judgment is required to establish fair values. There is inherent uncertainty and imprecision in estimating the factors that can affect fair value, and in estimating fair values generally, when observable data is not available. Changes in assumptions and inputs used in valuing financial instruments could affect the reported fair values.

Share-Based Compensation

The Company uses an option pricing model to determine the fair value of equity-settled share-based compensation including stock options and warrants. Inputs to the model are subject to various estimates relating to volatility, interest rates, dividend yields and expected life of the units issued. Fair value inputs are subject to market factors as well as internal estimates. The Company considers historic trends together with any new and comparative information to determine the best estimate of fair value at the date of grant.

Recent Accounting Pronouncements

The Company has reviewed new and amended accounting pronouncements that have been issued but are not yet effective:

IAS 1 - Classification of liabilities : The amendments clarify how to classify debt and other liabilities as current or non- current. The amendments to IAS 1 apply to annual reporting periods beginning on or after January 1, 2024. The Company is currently assessing the impact of this amendment.

3. Short-term investments

The Company has provided an assignment of cash as security on the irrevocable standby letter of credit to the Province of Nova Scotia and for corporate credit card liabilities. As at September 30, 2024 $27,400 (December 31, 2023 - $27,400) was held in guaranteed investment certificates as security.

4. Advances to (from) investees

As per the terms of the Unanimous Shareholders Agreement ("USA") discussed in note 5, the Company is required to contribute capital to CXTL as part of its 50% ownership. During the nine months ended September 30, 2024, the Company provided capital to CXTL to cover its operating expenses. These advances have initially been categorized as Advances to investee, rather than equity. The capital amount provided by the Company was offset by repayment of Advances to investee and additional advances to the Company during the nine months ended September 30, 2024 totaling $842,997 (nine months ended September 30, 2023 - $342,918). As at September 30, 2024, Advances from investees totaled $1,494,810 (December 31, 2023 - Advances from investees totaled $651,813).

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Magnetic North Acquisition Corp.

Notes to the Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023 (Expressed in Canadian Dollars)

(Unaudited)

As at September 30, 2024, the gross amount net of ECL advanced to Previcare in 2024 was $nil. As at December 31, 2023, the gross amount before ECL advanced to Previcare was $116,427 (December 31, 2022 - $71,377). During the 2023 fiscal year an additional ECL of $45,050 (December 31, 2022 - $ 71,377) was recorded to bring the net amount advanced to Previcare to $nil. The Company also has a net advance outstanding to Ignite Alliance Corp. of $nil as at September 30, 2024 (December 31, 2023 - $nil).

5. Investments

The following chart lists the investments carried at FVTPL as at September 30, 2024:

		September 30, 2024			December 31, 2023
Investments		Cost	Fair Value			Cost	Fair Value
CXTL Recycling (Canada) Corp.
(115592 common shares - 50%)		9,031,396		-		9,031,396		-
Private company investments - FVTPL	$	9,031,396	$	-	$	9,031,396	$	-

The Company also held shares in the following companies for which fair value was adjusted to nil at initial recognition: Previcare, Inc. 1,600,000 common shares representing approx. 32% of the common shares issued and outstanding, Ignite Alliance Corp. 50,000 shares representing less than 1% of the common shares, Power Symmetry 400,000 shares representing 40% of the common shares, GrowthCell Global 335,000 common shares representing less than 1.5% of the common shares, and a 100% owned company, Bluenose Quartz Ltd ("Other investments").

During the fall of 2019, the Company and Cirque Innovations Ltd. ("Cirque") agreed in principle to jointly work together on Cirque's technology on a 50/50 basis. In April 2020, the Company entered into an exclusive sale and usage agreement with Cirque Innovations Ltd. ("Cirque") for the exclusive world-wide right for CXTL Recycling (Canada) Corp. ("CXTL") to use in their recycling operations. Magnetic North agreed to issue Cirque shares representing a 50% equity ownership in CXTL concurrently with such parties entering into a unanimous shareholder agreement ("USA") to provide for their rights in relation to CXTL. Cirque will contribute the technology and staff, and Magnetic North will contribute capital and management expertise as needed. Magnetic North and Cirque executed the USA, effective December 31, 2020, as per the terms of the sale and usage agreement to provide each party with a 50% equity ownership into CXTL.

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. 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, management determined that, in the absence of sufficient independent observable evidence

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