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Risks Arising from Financial Instruments and Risk Management
 6 Months Ended 12 Months Ended
Jun. 30, 2025
Dec. 31, 2024
Risks Arising from Financial Instruments and Risk Management [Abstract]    
Risks Arising from Financial Instruments and Risk Management
18. Risks Arising from Financial Instruments and Risk Management

 

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risks), credit risk and liquidity risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial risks.

 

(a)Market risk

 

Foreign exchange risk: is the risk that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange rates. The Company has not entered into any foreign exchange hedging contracts. The Company is exposed to currency risk from the British Pound (“GBP”), Euro (“EUR”) and Canadian dollar (“CAD”) through the following foreign currency denominated financial assets and liabilities:

 

As at (expressed in GBP)  June 30,
2025		   December 31,
2024		 
Financial assets        
Cash and cash held in trust  £100   £16,558 
Trade and other receivables   354    293,055 
Loan receivable   
-
    469,233 
   £454   £778,846 
Financial liabilities          
Trade and other payables  £2,126   £820,809 
   £2,126   £820,809 
As at (expressed in EUR)  June 30,
2025		   December 31,
2024		 
Financial assets        
Cash  €12,504   €12,504 
Trade and other receivables   3,076    3,076 
   €15,580   €15,580 
Financial liabilities          
Trade and other payables  €22,777   €838 
Loans and borrowings   124,890    124,890 
   €147,667   €125,728 

 

As at (expressed in CAD)  June 30,
2025		   December 31,
2024		 
Financial assets        
Cash  $3,433,592   $5,473,500 
Loans receivable   1,391,457    515,197 
   $4,825,049   $5,988,697 
Financial liabilities          
Trade and other payables  $2,973,090   $2,809,356 
Due to related party   434,691    425,962 
Lease liabilities   298,812    
-
 
Loans and borrowings   49,683    315,557 
   $3,756,276   $3,550,875 

 

Based on the above net exposures as at June 30, 2025, assuming that all other variables remain constant, a 5% appreciation or deterioration of the USD against the GBP would result in a corresponding increase or decrease, respectively on the Company’s net income of approximately $nil (December 31, 2024 - $2,000), EUR - $6,000 (December 31, 2024 - $5,000) and CAD - $39,000 (December 31, 2024 - $85,000).

 

(b)Credit risk

 

Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligation and arises principally from the Company’s cash and accounts receivable. The carrying amounts of the financial assets represents the maximum credit exposure. The Company limits its exposure to credit risk on cash by placing these financial instruments with high-credit quality financial institutions.

 

At December 31, 2024, the Company was subject to a concentration of credit risk related to its accounts receivable as 74% of the balance of amounts owing is from two customers. The Company did not record any bad debt expense during the years ended December 31, 2024. As at December 31, 2024, the expected credit lifetime credit losses for accounts receivable aged as current were nominal amounts. The Company considers a financial asset in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

At June 30, 2025, the Company was no longer subject to any concentration of credit risk related to accounts receivable due to the Company having no trade receivables during the six months ended June 30, 2025.

(c)Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities and to ensure that it will have sufficient liquidity to meet its liabilities and commitments when due and to fund future operations. The Company’s trade and other payables are due within the current operating year.
19.Risks Arising from Financial Instruments and Risk Management

 

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risks), credit risk and liquidity risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial risks.

(a)Market risk

 

Foreign exchange risk: is the risk that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange rates. The Company has not entered into any foreign exchange hedging contracts. The Company is exposed to currency risk from the British Pound (“GBP”), Euro (“EUR”) and Canadian dollar (“CAD”) through the following foreign currency denominated financial assets and liabilities:

 

As at (expressed in GBP)  December 31,
2024		   December 31,
2023		 
Financial assets        
Cash  £16,558   £20,087 
Trade and other receivables   293,055    104,753 
Loan receivable   469,233    466,000 
   £778,846   £590,840 
Financial liabilities          
Trade and other payables  £820,809   £998,092 
Loans and borrowings   
-
    36,771 
   £820,809   £1,034,863 

 

As at (expressed in EUR)  December 31,
2024		   December 31,
2023		 
Financial assets        
Cash  €12,504   €46,202 
Trade and other receivables   3,076    136,963 
   €15,580   €183,165 
Financial liabilities          
Trade and other payables  €838   €2,171,878 
Loans and borrowings   124,890    3,225,389 
   €125,728   €5,397,267 

 

As at (expressed in CAD)  December 31,
2024		   December 31,
2023		 
Financial assets        
Cash and cash held in trust  $5,473,500   $22,949 
Loans receivable   515,197    
-
 
   $5,988,697   $22,949 
Financial liabilities          
Trade and other payables  $2,809,356   $3,356,916 
Due to related party   425,962    2,744,510 
Holdback payable   
-
    511,238 
Lease liabilities   
-
    179,412 
Loans and borrowings   315,557    340,469 
   $3,550,875   $7,132,545 

 

Based on the above net exposures as at December 31, 2024, assuming that all other variables remain constant, a 5% appreciation or deterioration of the USD against the GBP would result in a corresponding increase or decrease, respectively on the Company’s net income of approximately $2,000 (2023 - $17,000), EUR - $5,000 (2023 - $236,000) and - $85,000 (2023 - $268,000).

 

(b)Credit risk

 

Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligation and arises principally from the Company’s cash and accounts receivable. The carrying amounts of the financial assets represents the maximum credit exposure. The Company limits its exposure to credit risk on cash by placing these financial instruments with high-credit quality financial institutions.

At December 31, 2024, the Company was subject to a concentration of credit risk related to its accounts receivable as 74% (2023 - 81% from four customers) of the balance of amounts owing is from two customers. The Company did not record any bad debt expense during the years ended December 31, 2024 and 2023. As at December 31, 2024 and 2023, the expected credit lifetime credit losses for accounts receivable aged as current were nominal amounts. The Company considers a financial asset in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

(c)Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities and to ensure that it will have sufficient liquidity to meet its liabilities and commitments when due and to fund future operations. The Company’s trade and other payables are due within the current operating year.