RE Royalties : 2022 Q3 Financial Statements

RE ROYALTIES LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2022 AND 2021

(Expressed in Canadian Dollars)

(Unaudited)

RE Royalties Ltd.			-		-
Condensed Consolidated Interim Statements of Financial Position
(Unaudited - Expressed in Canadian Dollars)
		September 30,	December 31,
	Note		2022		2021
ASSETS
Non-current assets
Secured loans and royalty interests	4	$	27,393,843	$	13,889,390
Deferred transaction costs	5		122,001		92,679
Investment in an associate and a joint venture	6		1		1
Right of use asset	8		69,766		84,375
			27,585,611		14,066,445
Current assets
Secured loans and royalty interests	4		5,882,510		274,204
Royalty interests held for sale	4		558,221
Amounts receivable and prepaid expenses	7		976,036		752,717
Cash and cash equivalents, including restricted cash	3		8,344,791		20,101,585
			15,761,558		21,128,506
TOTAL ASSETS		$	43,347,169	$	35,194,951
EQUITY
Share capital	12	$	30,282,447	$	23,159,638
Reserves	12(b)		2,357,463		1,731,760
Accumulated deficit			(11,505,490)		(10,485,353)
Equity attributable to owners of the Company			21,134,420		14,406,045
Non-controlling interests	14		389,608		-
Total equity			21,524,028		14,406,045
LIABILITIES
Non-current liabilities
Green bonds	10		19,457,542		18,702,484
Convertible notes	11		-		1,813,642
Lease liability	8		57,628		71,744
			19,515,170		20,587,870
Current liabilities
Lease liability	8		18,426		14,972
Cash-settledshare-based payment liability	13		36,694		-
Convertible notes	11		1,986,578		-
Income tax payable	4(i)		22,000
Trade payables and accrued liabilities	9		244,273		186,064
			2,307,971		201,036
Total liabilities			21,823,141		20,788,906
TOTAL EQUITY AND LIABILITIES		$	43,347,169	$	35,194,951
Events after the reporting period (note 18)

The accompanying notes are an integral part of these condensed consolidated interim financial statements

These condensed interim financial statements are approved for issuance by the Audit and Risk Committee of the Company's Board of Directors on November 29, 2022 and are signed on the Company's behalf by the following:

/s/ Bernard Tan	/s/ Rene Carrier
Bernard Tan	Rene Carrier
Director	Director

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RE Royalties Ltd.

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited - Expressed in Canadian Dollars, except for weighted average number of common shares)

	Three months ended September 30, Nine months ended September 30,
	Note		2022		2021		2022		2021
Revenue and income
Royalty revenue		$	195,828	$	189,939	$	580,535	$	603,147
Finance income			1,009,267		190,000		2,058,094		632,832
Gain on derecognition of financial asset			-		129,417		-		129,417
			1,205,095		509,356		2,638,629		1,365,396
Amortization and depletion
Depletion of royalty interest	4		79,786		72,112		238,139		215,083
			(79,786)		(72,112)		(238,139)		(215,083)
Gross profit			1,125,309		437,244		2,400,490		1,150,313
Share of income of OCEP Invest LLC	6		97,892		-		507,865		-
Gain (loss) on revaluation of financial asset at FVTPL	4		13,991		9,000		1,805		(4,796)
Gross profit, changes in fair value of financial assets, and
share of income of OCEP Invest LLC.			1,237,192		446,244		2,910,160		1,145,517
Expenses							-
Wages and benefits			190,894		176,571		554,935		508,863
Administration			87,327		86,541		300,832		273,720
Marketing and stakeholder communication			71,047		68,284		224,239		228,821
Audit and audit related			19,661		43,253		206,162		166,765
Consulting - financing			15,992		32,677		61,867		99,203
Consulting - other			26,247		22,059		55,227		98,358
Regulatory and transfer agency			9,698		8,780		97,510		61,487
Donations			-		25,000		25,000		51,000
Office lease and information technology			12,501		12,402		42,856		47,547
Legal			49,680		2,380		68,189		23,048
Equity-settledshare-based payment	12(b)		-		147,000		40,000		778,000
Cash-settledshare-based payment	13		3,013		-		36,694		-
Amortization of right-of-use asset	8		4,870		4,868		14,609		8,113
			(490,930)		(629,815)		(1,728,120)		(2,344,925)
Other items
Finance expenses			478,458		266,463		1,395,029		763,126
Loss upon derecognition of investment in joint venture	6		348,792		-		348,792		-
Foreign exchange (gain) loss			(573,125)		(8,347)		(729,478)		1,014
			(254,125)		(258,116)		(1,014,343)		(764,140)
Net income (loss) after income tax		$	492,137	$	(441,687)	$	167,697	$	(1,963,548)
Income tax expense	4(i)		(22,000)		-		(22,000)		-
Net income (loss) after income tax		$	470,137	$	(441,687)	$	145,697	$	(1,963,548)
Other comprehensive income
Items that may be subsequently reclassified to net income
Foreign exchange translation difference			446,511		-		532,726		-
Reclassification of Foreign exchange translation difference	4(i)		(100,475)		-		(100,475)		-
Total other comprehensive income			346,036		-		432,251		-
Total comprehensive income (loss)		$	816,173	$	(441,687)	$	577,948	$	(1,963,548)
Net income (loss) after income tax attributable to:
Owners of the Company			401,377		(441,687)		76,937		(1,963,548)
Non-controlling interests			68,760		-		68,760		-
			470,137		(441,687)		145,697		(1,963,548)
Total comprehensive income (loss) attributable to:
Owners of the Company			725,865		(441,687)		487,640		(1,963,548)
Non-controlling interests			90,308		-		90,308		-
			816,173		(441,687)		577,948		(1,963,548)
Basic and diluted income (loss) per share attributable to
shareholders of the Company	16	$	0.01	$	(0.01)	$	0.00	$	(0.06)
Weighted average number of common shares outstanding	16		43,127,607		33,289,927		37,145,721		33,289,927

The accompanying notes are an integral part of these condensed consolidated interim financial statements

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RE Royalties Ltd.

Condensed Consolidated Interim Statements of Changes in Equity (Unaudited - Expressed in Canadian Dollars, except for number of shares)

		Share capital			Reserves
							Convertible		Foreign				Total equity
				Equity-settled	Share		note -		currency			attributable to	Non-controlling
		Number of			share-based	purchase	conversion	translation		Accumulated	shareholders of		interests
	Note	shares	Amount		payments	warrants		option		reserve		deficit		the Company		(note 14)		Total equity
Balance at January 1, 2021		33,289,927	$23,159,638	$	499,973	$ 229,802	$	87,000	$	54,874	$	(7,023,733)	$	17,007,554	$	-	$	17,007,554
Net loss		-	-		-	-		-		-		(1,963,548)		(1,963,548)		-		(1,963,548)
Other comprehensive loss		-	-		-	-		-		-		-		-		-		-
Total comprehensive loss		-	-		-	-		-		-		(1,963,548)		(1,963,548)		-		(1,963,548)
Equity-settledshare-based payments	12(b)	-	-		778,000	-		-		-		-		778,000		-		778,000
Distribution to shareholders	12(c)	-	-		-	-		-		-		(998,697)		(998,697)		-		(998,697)
Agent warrants issued pursuant to the Green Bond offering		-	-		-	7,111		-		-		-		7,111		-		7,111
Balance at September 30, 2021		33,289,927	$23,159,638	$	1,277,973	$ 236,913	$	87,000	$	54,874	$	(9,985,978)	$	14,830,420	$	-	$	14,830,420
Balance at January 1, 2022		33,289,927	$23,159,638	$	1,352,973	$ 236,913	$	87,000	$	54,874	$	(10,485,353)	$	14,406,045	$	-	$	14,406,045
Net income		-	-		-	-		-		-		76,937		76,937		68,760		145,697
Other comprehensive income		-	-		-	-		-		410,703		-		410,703		21,548		432,251
Total comprehensive income		-	-		-	-		-		410,703		76,937		487,640		90,308		577,948
Equity-settledshare-based payments	12(b)	-	-		40,000	-		-		-		-		40,000		-		40,000
Distribution to shareholders	12(c)	-	-		-	-		-		-		(1,097,074)		(1,097,074)		-		(1,097,074)
Common shares issued pursuant to the Public Offering	12(a)	9,837,680	7,122,809		-	-		-		-		-		7,122,809		-		7,122,809
Agent warrants issued pursuant to the Public Offering	12(b)	-	-		-	175,000		-		-		-		175,000		-		175,000
Change of control of OCEP Invest LLC	14	-	-		-	-		-		-		-		-		299,300		299,300
Balance at September 30, 2022		43,127,607	$30,282,447	$	1,392,973	$ 411,913	$	87,000	$	465,577	$	(11,505,490)	$	21,134,420	$	389,608	$	21,524,028

The accompanying notes are an integral part of these condensed consolidated interim financial statements

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RE Royalties Ltd.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in Canadian Dollars)

		Nine months ended September 30,
	Note
		2022		2021
Operating activities
Net income (loss)		$	145,697	$	(1,963,548)
Adjustments for:
Depletion of royalty interests			238,139		215,083
Finance income for the period, in excess of interest received			(1,503,711)		-
Interest received in excess of finance income for the period			-		464,120
(Gain) loss on revaluation of financial asset at FVTPL			(1,805)		4,796
Depreciation of right-of-use asset			14,609		8,113
Finance expenses			1,395,029		763,126
Equity-settledshare-based payments			40,000		778,000
Cash-settledshare-based payment			36,694		-
Share of income of OCEP Invest LLC			(507,865)		-
Loss upon derecognition of investment in joint venture			348,792		-
Unrealized exchange (gain) loss			(644,959)		1,200
Changes in working capital items:
Amounts receivable and prepaid expenses			(223,319)		(335,005)
Trade payables and accrued liabilities			58,209		75,423
Trade payables and accrued liabilities			22,000		-
Cash (used in) provided by operating activities			(582,490)		11,308
Investing activities
Acquisition of royalty interests and secured loans	4		(11,474,630)		(2,359,750)
Proceeds from repayment of secured loans	4		-		7,689,235
Investment in joint venture	6		(5,709,569)		-
Proceeds from repayment of secured loan at FVTPL			106,728		104,223
Cash distribution from joint venture	6		264,356		-
Deferred transaction costs	5		(29,322)		(83,402)
Cash (used in) provided by investing activities			(16,842,437)		5,350,306
Financing activities
Net proceeds from the Public Offering	12(a)		7,297,809		-
Net proceeds from the Green Bonds offering	10		-		320,853
Cash distribution to shareholders	12(c)		(1,097,074)		(998,697)
Payments of interest on borrowings			(918,256)		(452,621)
Payment of principal on lease	8		(10,592)		(7,189)
Payment of interest on lease	8		(4,878)		(2,479)
Other finance expenses			(20,771)		(9,283)
Cash provided by (used in) financing activities			5,246,238		(1,149,416)
(Decrease) increase in cash and cash equivalents			(12,178,689)		4,212,198
Effects of exchange rate fluctuations on cash held			421,895		(1,200)
Cash and cash equivalents, opening balance			20,101,585		11,704,731
Cash and cash equivalents, closing balance		$	8,344,791	$	15,915,729

Supplemental cash flow information (note 3)

The accompanying notes are an integral part of these condensed consolidated interim financial statements

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