Discovery Harbour Resources : Earnings Document

DISCOVERY HARBOUR RESOURCES CORP.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of Discovery Harbour Resources Corp.

Opinion

We have audited the consolidated financial statements of Discovery Harbour Resources Corp. and its subsidiaries (the "Company") which comprise the consolidated statements of financial position as at September 30, 2023 and 2022, and the consolidated statements of comprehensive income (loss), changes in equity and cash flows for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information (together, the "Financial Statements").

In our opinion, the accompanying Financial Statements present fairly, in all material respects, the financial position of the Company as at September 30, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the Financial Statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying Financial Statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements for the year ended September 30, 2023. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the consolidated preparation and fair presentation of the Financial Statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the Financial Statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are, therefore, the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors' report is Fernando J Costa.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

December 18, 2023

DISCOVERY HARBOUR RESOURCES CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

		September 30,	September 30,
	Note	2023	2022
		$	$
Assets
Current assets
Cash		89,011	347,262
Amounts receivable		6,373	3,060
Prepaid expenses and deposits		940	7,690
Total current assets		96,324	358,012
Non-current assets
Investment	5	297,000	1
Total assets		393,324	358,013
Liabilities
Current liabilities
Trade and other payables		9,663	10,286
Due to related parties	10	-	7,970
Loan payable	7	40,000	40,000
Total liabilities		49,663	58,256
Equity
Share capital	8	22,156,822	22,156,822
Contributed surplus	8	2,503,564	2,503,564
Accumulated deficit		(24,316,725)	(24,360,629)
Total equity		343,661	299,757
Total liabilities and equity		393,324	358,013

Nature of operations and going concern (Note 1)

These consolidated financial statements were approved and authorized for issue by the Board of Directors:

/s/"Mark Fields"

Director

/s/"Rodney Stevens"

Director

The accompanying notes form an integral part of these consolidated financial statements.

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DISCOVERY HARBOUR RESOURCES CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

		2023	2022
		$	$
Expenses
Accounting and audit fees		51,100	44,200
Consulting fees		1,964	1,909
Insurance		19,190	14,878
Investor communications		2,854	6,730
Legal		17,935	13,271
Management fees	10	-	30,000
Office and administration		7,178	9,052
Salaries and benefits	10	124,530	118,719
Share-based payments	9	-	51,730
Transfer agent and filing fees		16,784	20,295
Total expenses		(241,535)	(310,784)
Write-off of exploration and evaluation assets		(10,925)	(2,144,094)
Foreign exchange		(635)	2,964
Gain on sale of investments		-	2,174
Fair valuation gain on investment		296,999	-
		285,439	(2,138,956)
Net income (loss) and comprehensive loss for the		43,904	(2,449,740)
year
Earnings (loss) per common share, basic and diluted		0.00	(0.30)
Weighted average number of common shares		9,450,929	9,450,929
outstanding

The accompanying notes form an integral part of these consolidated financial statements.

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DISCOVERY HARBOUR RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

				Contributed Surplus	Accumulated Deficit
		Number of Shares	Share Capital	$	$	Total
			$			$
	Balance at September 30, 2021	9,450,929	22,156,822	2,451,834	(21,910,889)	2,697,767
	Share-based payments	-	-	51,730	-	51,730
	Net loss for the year	-	-	-	(2,449,740)	(2,449,740)
	Balance at September 30, 2022	9,450,929	22,156,822	2,503,564	(24,360,629)	299,757
	Net income for the year	-	-	-	43,904	43,904
Balance at September 30, 2023	9,450,929	22,156,822	2,503,564	(24,316,725)	343,661

The accompanying notes form an integral part of these consolidated financial statements.

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DISCOVERY HARBOUR RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

	2023	2022
	$	$
Operating activities
Net income (loss) for the year	43,904	(2,449,740)
Items not involving cash:
Write-off of exploration and evaluation assets	10,925	2,144,094
Share-based payments	-	51,730
Gain on sale of investments	-	(2,174)
Fair valuation gain on investment	(296,999)	-
Changes in non-cash working capital
accounts:
Amounts receivable	(3,313)	2,673
Due to related parties	(7,970)	(7,544)
Prepaid expenses	6,750	1,304
Trade and other payables	(623)	6,344
Total cash used in operating activities	(247,326)	(253,313)
Investing activities
Expenditures on exploration and evaluation assets	(10,925)	(682,617)
Cost recoveries on exploration and evaluation assets	-	187,969
Total cash used in investing activities	(10,925)	(494,648)
Financing activities
Proceeds from sale of investments	-	8,886
Total cash provided from financing activities	-	8,886
Total change in cash	(258,251)	(739,075)
Cash, beginning	347,262	1,086,337
Cash, end	89,011	347,262
Supplemental information
Interest paid	-	-
Income taxes paid	-	-

The accompanying notes form an integral part of these consolidated financial statements.

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DISCOVERY HARBOUR RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - Page 1

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Discovery Harbour Resources Corp. (the "Company") was incorporated under the Business Corporations Act of British Columbia on March 11, 2009. The Company completed a reverse takeover transaction with CVC Cayman Ventures Corp. on April 2, 2013. The Company is listed on the TSX Venture Exchange as a Tier 2 Venture Issuer having the symbol DHR-V.

The address of the Company's corporate office and principal place of business is Suite 250 - 750 West Pender Street, Vancouver, British Columbia, Canada.

During the year ended September 30, 2023, the Company consolidated its share capital on a 10:1 basis. These consolidated financial statements reflect the share consolidation retroactively.

The Company has not generated revenue from operations since inception. The Company has accumulated losses of $24,316,725 since inception and expects to incur further losses in the development of its business, all of which may cast significant doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to raise financing and generate future profitable operations. As the Company is in the exploration stage, the recoverability of costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties, future profitable production or proceeds from the disposition of the properties and the ability of the Company to acquire or invest in suitable projects and the attainment of profitable operations. The Company will periodically have to raise funds to continue operations, and although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.

These consolidated financial statements do not give effect to any adjustments which 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 consolidated financial statements. Such adjustments could be material.

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DISCOVERY HARBOUR RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - Page 2

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

2. BASIS OF PREPARATION

Statement of Compliance

These consolidated financial statements for the year ended September 30, 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The consolidated financial statements were authorized for issue by the Board of Directors on December 18, 2023.

Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value.

The consolidated financial statements are presented in Canadian dollars, which is also the Company's functional currency.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, 0845837 B.C. Ltd. (active) and Discovery Harbour (USA) LLC (dormant). Inter- company balances and transactions are eliminated on consolidation.

3. SIGNIFICANT ACCOUNTING POLICIES

1. Mineral Exploration and Evaluation Assets
   All costs related to the acquisition, exploration and development of resource properties are capitalized and classified as intangible assets. Upon commencement of commercial production, the related accumulated costs are amortized to income using the unit of production method over estimated recoverable ore reserves. Management periodically assesses carrying values of non-producing properties and if management determines that the carrying values cannot be recovered or the carrying values are related to properties that have lapsed, the unrecoverable amounts are expensed.
   The recoverability of the carried amounts of exploration and evaluation assets is dependent on the existence of economically recoverable ore reserves and the ability to obtain the necessary financing to complete the development of such ore reserves and the success of future operations. The Company has not yet determined whether any of its mineral properties contains economically recoverable reserves. Amounts capitalized as exploration and evaluation assets represent costs incurred to date, less write-downs and recoveries, and do not necessarily reflect present or future values.
   When options are granted on resource properties or properties are sold, proceeds are reflected as a reduction of the cost of the property. If sale proceeds exceed costs, the excess is reported as a gain in the consolidated statement of comprehensive income (loss).

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DISCOVERY HARBOUR RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - Page 3

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1. Impairment of Non-Financial Assets
   Impairment of exploration and evaluation assets is generally considered to have occurred if one of the following factors are present: the rights to explore have expired or are near to expiry with no expectation of renewal; no further substantive expenditures are planned; exploration and evaluation work is discontinued in an area for which commercially viable quantities have not been discovered; or indications in an area with development likely to proceed that the carrying amount is unlikely to be recovered in full by development or by sale.
   The recoverable amount is the higher of an asset's fair value less cost to sell or its value in use. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. Value in use is determined using discounted estimated future cash flows of the relevant asset. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are cash-generating units.
   The Company evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.
2. Financial Instruments Financial assets - Classification
   On initial recognition, a financial asset is classified as measured at: (i) amortized cost; (ii) fair value through other comprehensive income ("FVOCI"); or (iii) fair value through profit and loss ("FVTPL"). Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
   A financial asset is measured at amortized cost if it meets the following conditions and is not designated as at FVTPL:
3. • It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
   • Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within the business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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