Financial statements
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NAMESILO TECHNOLOGIES CORP. Consolidated Financial Statements (Expressed in Canadian dollars) For the Years Ended December 31, 2024 and 2023 Index Independent Auditor's Report Consolidated Financial Statements Consolidated Statements of Financial Position Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements
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Mao & Ying LLP CHARTERED PROFESSIONAL ACCOUNTANTS 1488 - 1188 West Georgia Street, Vancouver, British Columbia, V6E 4A2 Telephone: 778-379-8518 Fax: 778-379-8502 INDEPENDENT AUDITOR’S REPORT To the Shareholders of NameSilo Technologies Corp. Opinion We have audited the consolidated financial statements of NameSilo Technologies Corp. (the “Company”), which comprise the statements of financial position as at December 31, 20 24 and 2023, and the statements of loss and comprehensive loss, changes in equity and cash flows for the year s then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 20 24 and 2023, and its financial performance and its cash flows for the year s then ended in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Basis for Opinion We conducted our audit s 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 Consolidated Financial Statements section of our report. We are independent of the Company in accordance with ethical requirements that are relevant to our audit of the consolidated 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. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter s described below to be the key audit matters to be communicated in this report. We have determined the matters described below to be the key audit matters to be communicated in this report: Revenue recognition As more fully described in Note 3 to the consolidated financial statements, the Company derives its revenue primarily from subscription fees for domain registration services, which it generally recognizes ratably over the related contractual terms. The processing and recognition of revenue involves capturing and processing significant volumes of customer registration transactions. Auditing the Company's accounting for revenue from contracts with customers was challenging due to the high volume of transactions. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others: • Obtaining an understanding of the Company’s significant process over its accounting for revenue recognition, including its internal controls and programs over the initiation and billing of subscriptions and the Company's cash to billings reconciliation process. • Testing the completeness and accuracy of the underlying data within the Company's domain registration system.
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• Performing tests of detail procedures to evaluate the completeness and accuracy of recorded revenue and deferred revenue amounts. • Testing samples of sales transactions to supporting underlying documents and reviewing the Company's cash to billings reconciliations. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the consolidated financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cas t significate doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other Information Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis. Our opinion on the consolidated 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 consolidated 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 consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, 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 Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated 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. Auditor’s responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 consolidated 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 consolidated 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.
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• 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 auditor's report to the related disclosures in the consolidated 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 auditor's 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. The engagement partner on the audit resulting in this independent auditor’s report is Shaohua Huang. Vancouver, Canada, April 30, 2025 Chartered Professional Accountants
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NAMESILO TECHNOLOGIES CORP. Consolidated Statements of Financial Position (Expressed in Canadian Dollars) The notes are an integral part of these consolidated financial statements 4 Notes December 31, 2024 $ December 31, 2023 $ ASSETS Current assets Cash and cash equivalents 3,003,106 2,379,275 Receivables 416,791 114,505 Prepaid expenses 126,572 5,031 Registry deposits 2,462,386 2,983,795 Prepaid domain name registry fees, current portion 24,130,275 20,580,013 30,139,130 26,062,619 Prepaid domain name registry fees, long-term portion 1,101,474 1,081,316 Digital currency 4 1,063,910 158,908 Investments 5 1,475,029 2,562,123 Convertible debenture receivable 6 99,999 - Promissory notes receivable 7, 8, 20 548,890 - Investment in joint venture 7 146,142 - Investment in associates 8 1,350,673 1,661,090 Equipment 9 107,734 64,644 Other intangible assets 10 174,221 - Customer relationships 12 614,529 1,533,193 Goodwill 13 8,774,492 8,065,288 Deferred income tax asset 25 559,305 382,883 46,155,528 41,572,064 LIABILITIES Current liabilities Accounts payable and accrued liabilities 14, 20 8,797,833 6,132,728 Customer deposits 4,583,534 3,043,598 Deferred revenue, current portion 15 30,138,387 24,969,653 Convertible debenture – liability portion 16 - 3,703,172 Promissory note payable 17 419,378 - 43,939,132 37,849,151 Deferred revenue, long-term portion 15 1,332,280 1,295,268 45,271,412 39,144,419 SHAREHOLDERS' EQUITY Share capital 18 34,156,623 34,480,957 Subscription advances 15,608 15,608 Convertible debt – equity portion 16 - 566,106 Contributed surplus 18 3,218,713 2,545,187 Accumulated other comprehensive loss (242,706) (48,718) Deficit (35,643,969) (35,300,832) Total equity attributable to shareholders of the Company 1,504,269 2,258,308 Attributable to non-controlling interest (620,153) 169,337 884,116 2,427,645 46,155,528 41,572,064 Nature of operations and going concern (note 1) Subsequent events (note 28) Approved on behalf of the Board “Paul Andreola” Director “Colin Bowkett” Director
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NAMESILO TECHNOLOGIES CORP. Consolidated Statements of Comprehensive Income (Loss) For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) The notes are an integral part of these consolidated financial statements 5 Notes 2024 $ 2023 $ REVENUE 15 55,233,043 48,962,799 COST OF SALES (43,152,984) (40,083,586) GROSS PROFIT 12,080,059 8,879,213 GENERAL AND ADMINISTRATION EXPENSES Amortization 9, 10, 12 1,015,601 1,102,392 Contractor fees 2,281,472 1,992,169 Management fees 20 360,000 360,000 Marketing 465,319 225,953 Merchant fees 2,285,530 1,566,234 Office and general 686,766 489,609 Product development costs 188,720 613,791 Professional fees 20 442,415 429,234 Salaries 276,525 231,483 8,002,348 7,010,865 Income before other items 4,077,711 1,868,348 OTHER ITEMS Foreign exchange gain (loss) 140,485 (49,132) Interest and accretion expense 16, 17 (612,475) (703,691) Other income 24,180 300 Realized gain on digital currency 4 1,073,739 325,702 Loss on investments 5 (502,920) (2,342,100) Share of loss from investment in joint venture 7 (321,469) - Loss from equity pick-up 8 (635,167) (153,910) Other expense 14 (1,856,370) (656,292) Share-based payment 18, 20 (107,420) - (2,797,417) (3,579,123) Income (loss) before income tax 1,280,294 (1,710,775) Income tax (expense) recovery 25 (975,416) 426,137 Net income (loss) 304,878 (1,284,638) Other comprehensive loss Digital currency revaluation (99,209) (94,170) Exchange difference on subsidiary translation (138,813) (59,864) Total comprehensive income (loss) 66,856 (1,438,672) Income (loss) attributable to: Shareholders of the Company (343,137) (1,814,501) Non-controlling interest 648,015 529,863 304,878 (1,284,638) Comprehensive income (loss) attributable to: Shareholders of the Company (537,125) (1,940,038) Non-controlling interest 603,981 501,366 66,856 (1,438,672) Basic income (loss) per share 0.00 (0.01) Diluted income (loss) per share 0.00 (0.01) Weighted average number of shares outstanding – basic 89,704,192 91,255,689 Weighted average number of shares outstanding – diluted 95,479,192 91,255,689
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NAMESILO TECHNOLOGIES CORP. Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars) The notes are an integral part of these consolidated financial statements 6 Number of Shares # Share Capital $ Number of Treasury Shares # Treasury Share Amount $ Subscription Advances $ Convertible Debenture – Equity Component $ Contributed Surplus $ AOCI $ Deficit $ NCI $ Total $ Balance, January 1, 2023 91,585,648 34,841,553 (1,483,500) (240,398) 15,608 566,106 2,545,187 76,819 (33,486,331) 417,780 4,736,324 Share repurchases - - (637,500) (120,198) - - - - - - (120,198) Cancellation of shares (1,720,500) (326,895) 1,720,500 326,895 - - - - - - - Distributions - - - - - - - - - (749,809) (749,809) Net and comprehensive income (loss) for the year - - - - - - - (125,537) (1,814,501) 501,366 (1,438,672) Balance, December 31, 2023 89,865,148 34,514,658 (400,500) (33,701) 15,608 566,106 2,545,187 (48,718) (35,300,832) 169,337 2,427,645 Share repurchases - - (907,500) (324,334) - - - - - - (324,334) Cancellation of shares (1,308,000) (358,035) 1,308,000 358,035 - - - - - - - Repayment of convertible debenture - - - - - (566,106) 566,106 - - - - Distributions - - - - - - - - - (1,393,471) (1,393,471) Share-based payment - - - - - - 107,420 - - - 107,420 Net and comprehensive income (loss) for the year - - - - - - - (193,988) (343,137) 603,981 66,856 Balance, December 31, 2024 88,557,148 34,156,623 - - 15,608 - 3,218,713 (242,706) (35,643,969) (620,153) 884,116
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NAMESILO TECHNOLOGIES CORP. Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) The notes are an integral part of these consolidated financial statements 7 Years ended December 31, 2024 $ 2023 $ CASH FLOWS PROVIDED BY (USED IN): Operating activities Net income (loss) for the year 304,878 (1,284,638) Adjustment for items not involving cash: Accretion expense 219,919 234,408 Amortization 1,015,601 1,102,392 Deferred income tax recovery (135,900) (1,102,115) Loss on investments 502,920 2,342,100 Realized gain on digital currency (1,073,739) (325,702) Share of loss from investment in joint venture 321,469 - Loss from equity pick-up 635,167 153,910 Share-based payment 107,420 - 1,897,735 1,120,355 Changes in non-cash working capital related to operations: Receivables (302,286) (48,313) Prepaid expenses (121,541) (189) Registry deposits 746,143 (514,770) Prepaid domain name registry fees (1,585,685) 1,019,732 Accounts payable and accrued liabilities 2,033,109 (348,121) Customer deposits 1,211,204 685,969 Deferred revenue 2,757,112 678,453 Net cash provided by operating activities 6,635,791 2,778,974 Investing activities Digital currency 225,500 185,858 Sale of investments 584,221 150,626 Purchase of investments (792,408) (1,065,000) Purchase of equipment (42,950) - Purchase of other intangible assets (171,225) - Convertible debenture receivable (99,999) - Promissory notes receivable (548,890) - Net cash used in investing activities (845,751) (914,374) Financing activities Share repurchases (324,334) (120,198) Distributions to non-controlling interest (1,393,471) (749,809) Loan repayment (4,900,000) - Loan proceeds 1,396,287 - Net cash used in financing activities (5,221,518) (870,007) Foreign exchange on cash 55,309 181,674 Increase in cash during the year 623,831 1,176,267 Cash – beginning of the year 2,379,275 1,203,008 Cash – end of the year 3,003,106 2,379,275 Cash paid for interest (392,556) (469,283) Cash paid for income tax (932,611) (375,274) Supplemental cash flow information (Note 24)
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 8 1. NATURE OF OPERATIONS AND GOING CONCERN NameSilo Technologies Corp. (the “Company”) is a publicly listed company incorporated in Canada with limited liability under the legislation of the Province of British Columbia. The Company’s shares are listed on the Canadian Securities Exchange (“CSE”). T he head office and principal address is 1100 – 1199 West Hastings Street, Vancouver, BC, Canada, V6E 3T5. The Company is a provider of domain name registration services and marketplace services for the buying and selling of domain names. These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. As at December 31, 2024, the Company had a working capital deficit of $13,800,002 and an accumulated deficit of $35,643,969. The Company’s ability to continue as a goin g concern is dependent upon generating positive cash flows from operations, earning sufficient returns on its investments , and upon obtaining additional financing. The outcome of these matters cannot be predicted at this time. These material uncertainties lend significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These consolidated financ ial statements do not includ e any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business. 2. BASIS OF PREPARATION (a) Statement of compliance These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements were approved by the Board of Directors on April 30, 2025. (b) Basis of consolidation These consolidated financial statements include the financial statements of the Company and the following subsidiaries subject to control by the Company: Percentage owned Incorporated in Status Dec 31, 2024 Dec 31, 2023 Netco Argentina S.A. Argentina Inactive 100% 100% 1155064 BC Ltd. Canada Active 100% 100% NameSilo, LLC (“NameSilo LLC”) USA Active 81.5% 81.5% NamePal.com, LLC (“NamePal”) USA Active 81.5% 81.5%
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 9 Control is achieved when the Company has the power to, directly or indirectly, govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is obtained and continue to be consolidated until the date that such control ceases. Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements. (c) Functional and presentation currency The functional currency of a company is the currency of the primary economic environment in which the Company operates. The presentation currency for a company is the currency in which the Company chooses to present its financial statements. The functional currency of the Company, Netco Argentina S.A. and 1155064 BC Ltd. is the Canadian dollar. The functional currency of NameSilo LLC and NamePal is the US dollar. The presentation currency of the Company is the Canadian dollar. Entities whose functional currencies differ from the presentation currency are translated into Canadian dollars as follows: assets and liabilities – at the closing rate as at the reporting date, and income and expenses – at the average rate of the period. All resulting changes are recognized in other comprehensive income as cumulative translation differences. Transactions in foreign currencies are translated into the functional currency at exchange rates at the date of the transactions. Foreign currency differences arising on translation are recognized in profit or loss. Foreign currency monetary assets and liabilities are translated at the functional currency exchange rate at the reporting date. Non -monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transaction s. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss. When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary are reallocated between controlling and non- controlling interests. (d) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 10 (e) Use of estimates and judgments The preparation of financial statements in compliance with IFRS requires management to make certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected. Significant accounting estimates: a. The judgment of indications of impairment of brand, customer relationship, other intangible assets and goodwill and related determination of the net realizable value and write -down of these assets where applicable; b. Fair value of investments in private companies; c. Recoverability of investment in associates; d. Recoverability of investment in joint venture; e. Estimate of indirect tax payable; and f. The tax basis of assets and liabilities and related deferred income tax assets and liabilities. Significant accounting judgments: a. The determination of categories of financial assets and financial liabilities has been identified as an accounting policy which involves judgments or assessments made by management; b. The Company has used judgment in determining the currency of the primary economic environment in which each entity operates. In making such determination, the management has considered the currency that mainly influences the sale prices and the cost of providing goods and services in each jurisdiction in which the Company operates. The Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained;
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 11 c. There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for digital currencies and management has exercised significant judgement in determining appropriate accounting treatment. In making this determination on the accounting for the digital currencies the Company has reviewed the sources and uses of the digital currencies in the operations of its busi ness. In the event authoritative guidance is enacted by the IASB, the Company may be required to change its policies which could result in a change in the Company’s financial position and earnings; and d. The going concern risk assessment (see note 1). 3. MATERIAL ACCOUNTING POLICY INFORMATION The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements and have been applied consistently by the Company. (a) Financial instruments Recognition and classification The Company recognize s a financial asset or financial liability on the statement of financial position when it becomes party to the contractual provisions of the financial instrument. The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liab ilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL. Measurement Financial assets and liabilities at FVTPL Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabili ties held at FVTPL are included in profit or loss in the period in which they arise. Where management has opted to recognize a financial liability at FVTPL, any changes associated with the Company’s own credit risk will be recognized in other comprehensive income. Financial assets at FVTOCI Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses recognized in other comprehensive income.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 12 Financial assets and liabilities at amortized cost Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment. Impairment of financial assets at amortized cost The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized. Derecognition Financial assets The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income. Financial liabilities The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets, is recognized in profit or loss. (b) Cash and cash equivalents Cash and cash equivalents comprise cash on hand , and cash equivalents that are readily convertible into cash and which are subject to insignificant risk of changes in value . (c) Registry deposits Registry deposits represent amounts on deposit with, or receivable from, various domain name registries to be used by the Company to make payments for future domain registrations or renewals. (d) Prepaid domain name registry fees Prepaid domain name registry services fees represent amounts paid to registries, and country code domain name operators for updating and maintaining the registries. Domain name registry fees are recognized on a straight-line basis over the life of the contracted registration term.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 13 (e) Digital currency The Company accepts digital currencies as a form of payment as consideration for their services. Revenue is measured based on the quoted service price to the customers. The fair value of digital currency is determined using the spot price of the digital currency on the date of receipt, based on Blockchain.info. Difference between the quoted price and the fair value of the digital currencies received is recognized as realized gain/loss of digital currencies in profit or loss in the period. The Company has classified its digital currencies as indefinite life intangible assets. The Company is using the re -valuation model to account for the digital currencies if there is an active market for their digital currencies and a significant value of daily transactions and a determinable market price for the digital currencies. The digital currencies are recorded on the consolidated statement of financial position at their fair value and re-measured at each reporting date. Revaluation gains or losses are recognized in other comprehensive income. Realized gains and losses are transferred from accumulated other comprehensive income to profit or loss. Digital currencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in o perating costs and expenses in the consolidated statements of operations. (f) Furniture and equipment Furniture and e quipment is stated at cost, less accumulated amortization. Amortization is provided using the straight-line method over a useful life of five years for furniture and equipment and ten years for servers. (g) Investment in associates An associate is an entity over which the Company has significant influence, and which is neither a subsidiary nor a joint arrangement. The Company elects to use the accumulated cost method to account for the step acquisition of financial instruments which become investment in associates. The Company has significant influence over an entity when it has the power to participate in the financial and operating policy decisions of the associate but does not have control or joint control. Under the equity method, the Company’s investment in the common shares of the associate is initially recognized at cost and subsequently increased or decreased to recognize the Company’s share of net income and losses of the associate, after any adjustments necessary to give effect to uniform accounting policies, any other movement in the associate’s reserves, and for impairment losses after the initial recognition date. The Company’s share of income and losses of the associate is recognized in profit or loss during the period. Dividends and repayment of capital received from an associate are accounted for as a reduction in the carrying amount of the Company’s investment.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 14 At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an associate is impaired. Objective evidence includes observable data indicating there is a significant or prolonged decline in the fair value of an equity investment below its cost. When there is objective evidence that an investment is impaired, the carrying amount of such investment is compared to its recoverable amount, being the higher of its fair value less costs of disposal and valu e-in-use. If the recoverable amount of an investment is less than its carrying amount, the carrying amount is reduced to its recoverable amount and an impairment loss is recognized in the period in which the relevant circumstances are identified. When an i mpairment loss reverses in a subsequent period, the carrying amount of the investment is increased to the revised estimate of recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been deter mined had an impairment loss not been previously recognized. A reversal of an impairment loss is recognized in profit or loss in the period in which the reversal occurs. (h) Joint arrangements A joint arrangement is a contractual arrangement where two or more parties undertake an economic activity that is subject to joint control. Joint control exists when the parties involved in the contractual arrangement agree to share control over the economic activity, and the financial and operating decisions are agreed to be made by unanimous consent. There are two types of joint arrangements: joint operations and joint ventures. A joint operation exists when the parties with joint control have rights to the assets and the obligations for the liabilities. A joint venture exists when the parties with j oint control have the rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method, which involves recognition in the income statement of the Company’s share of the net result of the joint ventures for the year. The Company’s interest in a joint venture is carried in the consolidated statements of financial position at its share in the net assets of the joint venture, less any impairment loss. When the share in the losses exceeds the carrying amount of an equity -accounted company (including other receivables forming part of the net investment in the joint venture), the carrying amount is written down to nil. After the entity's interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the entity has incurred legal or constructive obligations or made payments on behalf of the joint venture. If the joint venture subsequently reports profits, the entity resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized. After application of the equity method, the Company determines whether it is necessary to recognize an impairment loss on its investment in joint venture. At each reporting date, the Company determines whether there is objective evidence that the investme nt in joint venture is impaired. If there is such evidence, the Company calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value, and then recognizes the share of profit/loss of a joint venture in the consolidated statements of loss.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 15 (i) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization p eriod or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in profit or loss in the expense category that is consistent with the function of the intangible assets. The Company has determined the useful life of the brand to be 5 years and the customer relationships to be 7 years. Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash -generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognised. (j) Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible assets acquired. Goodwill is not subject to amortization and an impairment test is performed annually or as events occur that could indicate impairment. Goodwill is reported at cost less any impairment. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows ( “cash generating units ” or “CGU”s). To test for impairment, goodwill is allocated to each of the Company’s CGUs, groups of CGUs, or an operating segment expected to benefit from the acquisition. Goodwill is tested by combining the carrying amounts of equipment, intangible assets and goodwill and comparing this to the recoverable amount, which is the higher of value in use and fair value less costs to sell . Fair value less costs of disposal is price to be received in an orderly transaction between market participants. Value in use is assessed using the present value of the expected future cash flows. Any excess of the carrying amount over the recoverable amou nt is recorded as impairment. Impairment charges, which are not tax affected, are recognized in in profit or loss and are not reversed.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 16 (k) Impairment of long-lived assets The Company reviews long -lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of their carrying amount to the recoverable amount. The recoverable amount is the higher of the fair value less selling costs or the value in use. Value in use is determined by the present value of the future cash flows from the asset. If the recoverable amount is less tha n the carrying amount, then there is impairment. Where an impairment loss exists, the portion of the carrying amount exceeding the recoverable amount is recorded as an expense immediately. Assets that have been impaired in prior periods are tested for possible reversal of impairment whenever events or changes in circumstance indicate that the impairment has reversed. If the impairment has reversed, the carrying amount of the asset is increased to its recoverable amount but not beyond the carrying amount tha t would have been determined had no impairment loss been recognized for the asset in prior periods. The reversal is recognized in profit or loss immediately. (l) Customer deposits Customer deposits are collections and credits from customers that can be redeemed for services offered by the Company or returned to the customers. (m) Deferred revenue Deferred revenue primarily relates to the unearned portion of revenues received in advance related to the unexpired term of registration fees from domain name registrations. (n) Convertible Debenture The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. This accounting treatment requires that the ca rrying amount of embedded derivatives be marked -to-market at each statement of financial position date and carried at fair value. In the event that the fair value is recorded as a liability, the change in fair value during the period is recorded in profit or loss in the statement of loss and comprehensive loss as either income or expense. Upon conversion, exercise or modification to the terms of a derivative instrument, the instrument is marked to fair value at the conversion date and then the related fair value is reclassified to equity. The classification of financial instruments, including whether such instruments should be recorded as liabilities or as equity, is re -assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subje ct to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the statement of financial position as current or non - current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the statement of financial position date.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 17 In circumstances where the convertible debt does not have an embedded derivative , the convertible debenture is separated into liability and equity components. The fair value of the liability component is calculated as the discounted cash flows for the convertible debenture using the rate for convertible debentures without a conversion feature and accreted up to the face value of convertible debt on the maturity date . The fair value of the equity component (conversion feature) is determined as the difference between the face value of the convertible debenture and the fair value of the liability component. Transaction costs are allocated pro - rata between the liability and equity components. (o) Share capital Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share warrants and options are classified as equity instruments. Expired and unexercised warrants are reclassified to contributed surplus. Incremental costs directly attributable to the issue of new shares or options are recognized as a deduction from equity. Valuation of equity units issued in private placements The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then t he residual value, if any, to the less easily measurable component. The fair value of the common shares issued in the private placements is determined to be the more easily measurable component and is valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded in contributed surplus. (p) Revenue recognition Revenue is recognized when control of the promised product or service is transferred to our customers, in an amount reflecting the consideration we expect to be entitled to in exchange for such product. The Company’s revenues are derived from domain name registration fees, marketplace transactions and the sale of domain names. Amounts received in advance of meeting the revenue recognition criteria described below are recorded as deferred revenue. We have determined that our contracts do not include a significant financing component. Domain services The Company earns registration fees in connection with each new, renewed and transferred - in registration. Service has been provided in connection with registration fees once the Company has confirmed that the requested domain name has been appropriately recorded in the registry under contractual performance standards. For each domain registration or renewal we provide, we have one performance obligation to our customers consisting of two promises: (1) to ensure the exclusive use of the domain during the app licable registration term and (2) to ensure the domain is accessible and appropriately directed to its underlying content. After the contract term expires, unless renewed, the customer can no longer access or use the domain. We have determined these promises are not distinct within the context of our contracts
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 18 as they are highly interdependent and interrelated and are inputs to a combined benefit. Accordingly, we concluded that each domain registration or renewal represents one product offering and is a single performance obligation. Domain names are generally purchased for terms of one to ten years. Registration fees charged for domain name registration and provisioning services are recognized on a straight - line basis over the life of the contracted term. Marketplace Transactions and Sales of Domain Names If the Company acts in the capacity of an agent rather than as the principal in a transaction such as a marketplace transaction or sale of domain names , then the revenue recognized is the net amount of commission made by the Company. The Company recognizes revenue upon transfer of control of the domain to the purchaser of the domain or winning bidder, at an amount that reflects the consideration to be received (the winning bid). (q) Share-based payments Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into t he fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to non -employees, they are recorded at the fair value of the goods or services received in profit or loss, unless they are related to the issuance of shares. Amounts related to the issuance of shares are recorded as a reduction of share capital. When the value of goods or services received in exchange for the share -based payment cannot be reliably estimated, the fair value is measured by use of a valuation model. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioral considerations. All equity-settled share-based payments are reflected in contributed surplus, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in contributed surplus is credited to share capital, adjusted for any consideration paid. The amount remains in contributed surplus if the options expire unexercised. Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 19 equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense. (r) Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that if the income tax expense is related to items recognized directly in equity, the income tax expense would also be recognized in equity. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date , and any adjustment to tax payable in respect of previous years. Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the t ax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable r ight to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. (s) Earnings (loss) per share Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed by dividing the net income or loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding, if potentially dilutive instruments were converted. (t) Changes in accounting policies Classification of liabilities as current or non-current (amendments to IAS 1) The amendments aim to promote consistency in applying the requirements by helping entities determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or poten tially due to be settled within one year) or non-current. The amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2024, with early application permitted. This amendment did not have a material impact on the Company's financial statements.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 20 (u) Future Changes in Accounting Standards IFRS 18 Presentation and Disclosure in Financial Statements IFRS 18 introduces three sets of new requirements to give investors more transparent and comparable information about companies’ financial performance for better investment decisions. 1. Three defined categories for income and expenses (operating, investing and financing) to improve the structure of the income statement, and require all companies to provide new defined subtotals, including operating profit. 2. Requirement for companies to disclose explanations of management-defined performance measures (MPMs) that are related to the income statement. 3. Enhanced guidance on how to organise information and whether to provide it in the primary financial statements or in the notes. This new standard is effective for reporting periods beginning on or after January 1, 2027. The Company is currently in the process of assessing its impact on future financial statements. 4. DIGITAL CURRENCY The Company holds 7.91 bitcoins with a fair value of $ 1,063,910 (US$739,391) as at December 31, 2024 (2023 – 2.84 bitcoins with a fair value of $158,908 (US$120,148)). The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices or lack of an active market for the digital currencies would have a minima l impact on the Company’s other comprehensive income and financial position. The Company uses kraken as the exchange to transact in bitcoin. The 7.91 bitcoins have been converted to fiat currency and collected by the Company subsequent to December 31, 2024. 5. INVESTMENTS December 31, 2024 Number Amount Number Amount Number Amount Number Amount Balance, Dec 31 , 2023 523,332 78,500$ 1 8,000 3,600$ 74,000 1 4,060$ 557,500 1 ,263,1 56$ Exchanged - - - - (72,254) - - - Proceeds from sale - - - - - - (557,500) (584,221 ) Gain (loss) - - - (1 ,1 70) - (7,320) - (678,935) Balance, Dec 31 , 2024 523,332 78,500$ 1 8,000 2,430$ 1 ,746 6,740$ - -$ Number Amount Number Amount Number Amount Number Amount Total Balance, Dec 31 , 2023 971 ,079 1 ,1 07,030$ - 63,390$ - 32,387$ - -$ 2,562,1 23$ Purchased - - - - - - 3,260 47 47 Proceeds from sale - - - - - - - - (584,221 ) Gain (loss) - 1 84,505 - - - - - - (502,920) Balance, Dec 31 , 2024 971 ,079 1 ,291 ,535$ - 63,390$ - 32,387$ 3,260 47$ 1 ,475,029$ Bomb BeveragesAtlas Engineered Products Ltd. Allur Group ImmunoPrecise Antibodies Ceapro Inc. Yuansfer West M ining Corp. Domai Technologies Ltd
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 21 December 31, 2023 The investments in Yuansfer and Bomb Beverages are Simple Agreement for Future Equity (“SAFE”) investments. The Company designated the SAFEs at FVTPL. The fair value of the SAFEs, at each reporting period, is estimated using Level 3 inputs of the fair value hi erarchy. The Company holds investments where there is no quoted market price or active market for the investment. These investments a re currently measured at the fair value equivalent to the fair value of the shares from the initial purchase. There are no indicat ors during the current or prior periods that the value of the shares might not be representative of fair value. Effective November 15, 2023, West Mining Corp. completed the consolidation of its common shares on the basis of one post -consolidation common share for 10 pre-consolidation common shares. Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount Balance, Dec 31 , 2022 821 ,300 1 6,426$ 1 00,000 1 9,000$ 523,332 78,500$ 45,000 6,975$ 1 80,000 8,1 00$ 200,000 1 1 8,000$ 3,000 30,1 62$ Purchased - - - - - - - - - - - - - - Proceeds from sale (821 ,300) (1 6,231 ) (1 00,000) (1 6,953) - - (45,000) (1 0,650) - - (1 26,000) (74,656) (3,000) (20,571 ) Gain (loss) - (1 95) - (2,047) - - - 3,675 - (4,500) - (29,284) - (9,591 ) Balance, Dec 31 , 2023 - -$ - -$ 523,332 78,500$ - -$ 1 80,000 3,600$ 74,000 1 4,060$ - -$ Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount Total Balance, Dec 31 , 2022 560,000 3,953,600$ 971 ,079 728,309$ - 63,390$ 445,833 350,000$ 1 ,950,000 400,000$ - 32,387$ 5,804,849$ Purchased - - - - - - 294,1 1 8 250,000 3,61 0,000 81 5,000 - - 1 ,065,000 Proceeds from sale (2,500) (1 1 ,565) - - - - - - - - - - (1 50,626) Reclassification - - - - - - (739,951 ) (600,000) (5,560,000) (1 ,21 5,000) - - (1 ,81 5,000) Gain (loss) - (2,678,879) - 378,721 - - - - - - - - (2,342,1 00) Balance, Dec 31 , 2023 557,500 1 ,263,1 56$ 971 ,079 1 ,1 07,030$ - 63,390$ - -$ - -$ - 32,387$ 2,562,1 23$ ImmunoPrecise Antibodies Atlas Engineered Products Ltd. Pioneering Technologies Renoworks Software Inc. Allur Group Total Telcom Inc. Ceapro Inc. Sensus Healthcare Yuansfer West M ining Corp. Alchemy Labs Inc. (formerly Lawson West Capital Corp.) Ola M edia Innovations Inc. (formerly Erebus Capital Corp.) Bomb Beverages
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 22 6. CONVERTIBLE DEBENTURE RECEIVABLE On December 15, 2024, the Company subscribed for $99,999 of convertible debentures in 9302204 Canada Inc. dba Cheelcare (“Cheelcare”). The convertible debentures will mature in two years from the date of issuance and bear s interest at a rate of 8% per annum, with the first interest payment payable on the one -year anniversary of the issuance date and the second interest payment at maturity. The principal amount of the debentures can be convertible into common shares of Cheelcare upon the occurrence of certain events and Cheelcare will have the right to force conversion of the debentures into shares of Cheelcare upon the occurrence of certain e vents. Subsequent to December 31, 2024, a debenture certificate dated January 29, 2025 was issued pursuant to the subscription agreement. 7. TRANSACTION WITH SAW TECHNOLOGIES INC. On May 25, 2023, NameSilo LLC entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Saw Technologies Inc., a newly formed Florida company (“Newco”), pursuant to which NameSilo LLC sold certain assets (the “Assets”) relating to the domain brokerage business of NameLot (the “NameLot Business”) to Newco (the “Transaction”), and in consideration of which Newco issued an aggregate of 20,000,000 common shares in the capital of Newco to the shareholders of NameSilo LLC. Saw.com Incorporat ed (“Saw”) also sold the assets relating to its domain brokerage business of Saw.com to Newco in exchange for 20,000,000 common shares in the capital of Newco. On May 27, 2023, Saw entered into a promissory note with Newco, pursuant to which Saw may lend to Newco in the principal amount of up to US$598,500, accruing interest at the US Prime Rate, compounded annually and due within 5 years. NameSilo LLC has granted a guarantee with respect to the promissory note. Newco is owned as follows: 50% by Saw, 40.75% by the Company, 9.25% by remaining minority shareholders of NameSilo LLC. In accordance with the terms of the Asset Purchase Agreement, NameSilo LLC will: (i) be responsible for up to US$300,000 of marketing expenses of the NameLot Business over a period of two years following the closing date of the Transaction (the “Closing Date”); and (ii) provide support for the NameLot Business for a period of six months following the Closing Date, i ncluding IT and development services, in order to develop the NameLot Business. The US$300,000 has been spent and treated as contribution to the investment in joint venture as at December 31, 2024. The Transaction closed on May 27, 2023. NameSilo LLC and Saw signed a shareholders agreement (“Shareholders Agreement”) dated May 27, 2023, which governs the operations and activities of Newco. The Shareholders Agreement does not give each party the right to the assets and obligations for the liabilities relating to the arrangement, rather they split the net value. No profits can be distributed without consent by the majority of the board of directors . As such, the Transaction is determined to be a joint venture, because NameSilo LLC and Saw control the arrangement collectively, and joint control exists because the relevant activities require the unanimous consent of both parties. Newco is a related party to the Company, by virtue of common directors.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 23 On March 8, 2024, NameSilo LLC entered into a promissory note with Newco, pursuant to which NameSilo LLC has lent to Newco in the principal amount of US$100,000 (CAD$143,890), bearing no interest and maturing on May 27, 2028. Also see Note 20. The interest in the joint venture is accounted for using the equity method. The carrying amount of the initial investment was determined to be $nil. Summarized financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below: $ Balance, December 31, 2023 - Contribution 467,611 Dilution loss (277,060) Equity loss (44,409) Balance, December 31, 2024 146,142 Years ended December 31 2024 $ 2023 $ Revenue 3,837,678 - Expense (3,946,658) - Net and comprehensive loss (108,980) - Ownership percentage 40.75% 40.75% Proportion of the Company’s equity loss (44,409) - 8. INVESTMENT IN ASSOCIATES Ola Media Innovations Inc. During the year ended December 31, 2023, the Company purchased additional 3,610,000 shares of Ola Media Innovations Inc. (formerly Erebus Capital Corp.) (“Ola Media”). As a result, the Company’s ownership of Ola Media became 20% on October 10, 2023. In addition to share ownership interest, the Company considered various qualitative factors including representation rights on Ola Media’s board of directors in arriving at the determination that significant influence exists. Ola Media is a related party to the Company, by virtue of a common director. $ Balance, December 31, 2022 - Reclassification from investments 1,215,000 Equity loss (80,199) Balance, December 31, 2023 1,134,801 Purchase 110,000 Equity loss (534,569) Balance, December 31, 2024 710,232 The equity accounting for Ola Media is based on financial results for the year ended December 31, 2024. The Company’s estimated equity share of Ola Media’s net loss for the year ended December 31, 2024 was $534,569.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 24 Ola Media’s results for the year ended December 31, 2024 and the period from October 10, 2023 to December 31, 2023 are as follows: Year ended December 31, 2024 Period from October 31 to December 31, 2023 $ $ Net loss and total comprehensive loss 2,710,528 640,510 On July 10 , 2024, the Company entered into a promissory note receivable with Ola Media for $80,000. On August 15, 2024, the Company entered into another promissory note receivable with Ola Media for $75,000. The promissory notes are unsecured, non -interest bearing and have no repayment date. Alchemy Labs Inc. As at December 31, 2023, the Company owned 739,951 common shares of Alchemy Labs Inc. (formerly Lawson West Capital Corp.) (“Alchemy”), which account ed for only 3% of the issued shares of Alchemy. As at December 31, 2024, the Company’s ownership increased to 1,002,416 common shares, accounting for 4% of the issued shares of Alchemy. However, in addition to share ownership interest, the Company considered various qualitative factors including representation rights on Alchemy’s board of directors in arriving at the determination that significant influence exists. Alchemy is a related party to the Company, by virtue of a common director. $ Balance, December 31, 2022 - Reclassification from investments 600,000 Equity loss (73,711) Balance, December 31, 2023 526,289 Purchase 214,750 Equity loss (100,598) Balance, December 31, 2024 640,441 The Company’s estimated equity share of Alchemy’s net loss for the year ended December 31, 2024 was $100,598. Alchemy’s results for the years ended December 31, 2024 and 2023 are as follows: Years ended December 31, 2024 2023 $ $ Net loss and total comprehensive loss 2,872,269 2,490,235
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 25 On December 18, 2024, the Company entered into a convertible loan agreement with Alchemy, pursuant to which the Company has agreed to make available a non-revolving drawdown facility (the “Facility”) in the aggregate amount of up to $500,000 to Alchemy. Alchemy has agreed to pay a commitment fee of $15,000, to be satisfied by issuance of 17,647 common shares of Alchemy. The Company may elect to convert any portion of the drawdown amounts and accrued interest owing into common shares of Alchemy, commencing on the date that Alchemy is listed on a stock exchange and expiring two years from the effective date of the agreement. On December 18, 2024, Alchemy drew down $250,000 from the Facility and has entered into a promissory note with the Company for $250,000, which accrues interest at a rate of 12% per annum. Also see Note 20. 9. EQUIPMENT Furniture & Equipment Server & Domains Total $ $ $ Cost: Balance, December 31, 2022 8,517 89,652 98,169 Foreign exchange - (2,105) (2,105) Balance, December 31, 2023 8,517 87,547 96,064 Addition, net of disposal - 140,932 140,932 Reclassification - (121,681) (121,681) Foreign exchange - 8,669 8,669 Balance, December 31, 2024 8,517 115,467 123,984 Accumulated Amortization: Balance, December 31, 2022 6,972 14,489 21,461 Amortization 1,545 8,932 10,477 Foreign exchange - (518) (518) Balance, December 31, 2023 8,517 22,903 31,420 Amortization - 7,340 7,340 Reclassification - (23,699) (23,699) Foreign exchange - 1,189 1,189 Balance, December 31, 2024 8,517 7,733 16,250 Net Book Value: December 31, 2023 - 64,644 64,644 December 31, 2024 - 107,734 107,734 10. OTHER INTANGIBLE ASSETS During the year ended December 31, 2024, other intangible assets including domain name, website and content, trademarks and customer data were acquired. The domain name, website and content, and trademarks were amortized using the straight -line method over the useful life of 5 years. The customer data was amortized using the straight -line method over the useful life of 7 years. The changes in the value of other intangible assets during the year ended December 31, 2024 are as follows:
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 26 $ Balance, December 31, 2023 - Addition 171,225 Amortization (5,370) Foreign exchange 8,366 Balance, December 31, 2024 174,221 11. BRAND The brand was acquired as a result of the acquisition of NameSilo LLC. The brand was amortized using the straight-line method over the useful life of 5 years. The changes in the value of the brand during the year ended December 31, 2023 and 2024 are as follows: $ Balance, December 31, 2022 104,101 Amortization (103,740) Foreign exchange (361) Balance, December 31, 2023 and 2024 - 12. CUSTOMER RELATIONSHIPS The customer relationships were acquired as a result of the acquisition of NameSilo LLC. The customer relationships are amortized using the straight-line method over the useful life of 7 years. The changes in the value of the customer relationships during the years ended December 31, 2023 and 2024 are as follows: $ Balance, December 31, 2022 2,561,670 Amortization (988,175) Foreign exchange (40,302) Balance, December 31, 2023 1,533,193 Amortization (1,002,891) Foreign exchange 84,227 Balance, December 31, 2024 614,529 13. GOODWILL The goodwill was acquired as a result of the acquisition of NameSilo LLC. The changes in the value of the goodwill during the years ended December 31, 2023 and 2024 are as follows: $ Balance, December 31, 2022 8,259,207 Foreign exchange (193,919) Balance, December 31, 2023 8,065,288 Foreign exchange 709,204 Balance, December 31, 2024 8,774,492
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 27 The Company performs a goodwill impairment test annually and when circumstances indicate that the carrying value may not be recoverable. The CGU is the reportable segment, being domain registration and related services. The recoverable amount of the CGU was based on value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The cash flows were projected over a five-year period based on past experience and actual operating results. The Company performed its annual goodwill impairment test in April 202 5 for goodwill balance as of December 31, 2024 and no impairment was indicated for the period tested. The values assigned to the key assumptions represented management’s assessment of future trends in the industry and were based on historical data from both internal and external sources. The key assumptions applied in the impairment test include a discount rate of 20%, revenue growth rate of 7% per year and terminal value growth rate of 5%. 14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The Company is subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which the Company conducts business. Laws and regulations attempting to subject communications and commerce conducted over the internet to various indirect taxes are becoming more prevalent, both in Canada and internationally, and may impose additional burdens on the Company in the future. Taxing authorities may impose indirect taxes on the internet-related revenue generated by the Company based on regulations currently being applied to similar, but not directly comparable, industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. The Company may be audited in the future, which could result in changes to the indirect tax estimates. As at December 31, 2024, an accrual for estimated indirect tax liabilities of $ 5,577,952 (2023 – $3,748,148) has been included in accounts payable and accrued liabilities. This accrual reflects management’s best estimate of the probable liability based on an analysis of the Company’s business activities, revenues subject to indirect taxes and applicable regula tions. Although the Company believes its indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax a udits or settlements could be materially different than the amounts established for indirect tax contingencies. The current period effect of indirect tax is recognized as other expense in profit or loss , for the foreign jurisdictions where the Company is currently not registered with taxing authorities. For states and jurisdictions in which the Company is registered with taxing authorities, the indirect tax collected is offset against revenue. The indirect tax expense recorded for the year ended December 31, 2024 was $1,394,152 (2023 – $549,421) 15. DEFERRED REVENUE Deferred revenue consists of the following as at December 31, 2024 and 2023: December 31, 2024 $ December 31, 2023 $ Current 30,138,387 24,969,653 Non-current 1,332,280 1,295,268 31,470,667 26,264,921 The increase in the deferred revenue balance is primarily driven by payments received in advance of satisfying our performance obligations, affected by $ 48,861,531 of revenue recognized during the year ended December 31, 2024. The changes in the value of deferred revenue during the years ended December 31, 2023 and 2024 are as follows:
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 28 $ Balance, December 31, 2022 25,586,468 Additions 47,201,457 Transferred to revenue (46,523,004) Balance, December 31, 2023 26,264,921 Additions 54,067,277 Transferred to revenue (48,861,531) Balance, December 31, 2024 31,470,667 Revenue consists of the following types of services for the years ended December 31, 2024 and 2023: December 31, 2024 $ December 31, 2023 $ Domain Services 52,604,285 46,523,004 Market Place Transactions 1,977,572 1,561,410 Other 651,186 878,385 55,233,043 48,962,799 Costs of sales are the direct costs incurred by the Company in connection with selling an incremental product to its customers. Substantially all cost of sales relates to domain registration fees paid to the various domain registries. 16. CONVERTIBLE DEBENTURE On October 19, 2021, the Company entered into a loan agreement with a third party lender (the “Lender”) whereby the Lender advanced to the Company a total of $3,900,000 (the “Loan”). The Loan had a term of three years and accrued interest at a rate of 12% per annum. Under the terms of the loan agreement, the Lender could convert, at its option, all or any portion of the principal to common shares of the Company at a price of $0.25 per share. The Lender was granted certain security interests in the business of the Company. During the year ended December 31, 2024, the Company recorded interest expense of $ 374,399 (2023 - $469,283) on the Loan. On October 7, 2024, the Company repaid the outstanding balance of the Loan in the amount of $3,900,000. The changes in the value of the convertible debenture during the years ended December 31, 2023 and 2024 are as follows: Liability Component ($) Equity Component ($) Balance, December 31, 2022 3,468,764 566,106 Accretion 234,408 - Balance, December 31, 2023 3,703,172 566,106 Accretion 196,828 - Repayment (3,900,000) (566,106) Balance, December 31, 2024 - -
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 29 17. PROMISSORY NOTE PAYABLE On October 3, 2024, the Company entered into a promissory note with Pathfinder Partners' Fund (“Pathfinder”) for a loan of $1,500,000. The loan from Pathfinder bears interest at 8% per annum and is due one year from the date of the loan. The loan is secu red against the personal property of the Company. During the year ended December 31, 2024, the Company recorded interest expense of $ 12,822 on the promissory note. The changes in the value of the promissory note payable during the year ended December 31, 2024 are as follows: $ Balance, December 31, 2023 - Proceeds 1,500,000 Transaction costs (103,713) Repayment (1,000,000) Accretion 23,091 Balance, December 31, 2024 419,378 18. SHARE CAPITAL (a) Authorized Unlimited number of common shares without par value. Unlimited number of preferred shares without par value. (b) Issued On September 22, 2023, the Company announced its intention to initiate a NCIB through the facilities of the CSE. The NCIB commenced on September 26, 2023 and ended on September 26, 2024. All shares acquired have been returned to treasury and cancelled. During the year ended December 31, 2023, the Company repurchased 637,500 common shares at a price of $0.18 per share for a total of $120,198. 1,720,500 common shares have been cancelled during the year ended December 31, 2023. During the year ended December 31, 2024, the Company repurchased 907,500 common shares at a price of $0. 36 per share for a total of $ 324,334. 1,308,000 common shares have been cancelled during the year ended December 31, 2024. (c) Stock options The Company has a stock option plan in accordance with the policies on the Canadian Securities Exchange whereby, from time to time at the discretion of the Board of Directors, stock options are granted to directors, officers and certain consultants. Under the plan, up to 10% of the total number of issued common shares of the Company, calculated on a non -diluted basis, at the time an option is granted are available for the issuance of stock options. The exercise price of each option is based on the market price of the Company’s common stock at the date of the grant less an applicable discount. The
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 30 options can be granted for a maximum term of 10 years. The maximum number of options that may be granted to any one person must not exceed 5% of the common shares issued and outstanding at the time of grant unless disinterested shareholder approval is obtained. Any options granted to consultants or persons performing Investor Relations under the Amended Stock Option Plan shall vest to the optionee as follows: 25% at date of grant, 25% six months from date of grant, 25% nine months from date of grant and the remaining 25% twelve months from the date of grant. All other options granted under the stock option plan shall have vesting terms set at the discretion of the Board of Directors. In September 2024, the Company granted a total of 675,000 stock options to its officers, directors and consultants. The options are exercisable at a price of $0.315 per share for a period of five years from the date of grant. The fair value of the options granted was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: share price at the time of issuance $0.315; risk -free interest rate of 2.79%; expected life of 5 years; dividend yield of 0%; forfeiture rate of 0% and annualized volatility of 56%. Expected price volatility was calculated based on the Company’s historical share prices. Changes in these assumptions can materially affect the estimated fair value of the stock options granted. For the year ended December 31 , 2024, $107,420 (2023 - $nil) has been recorded as share-based payment. A summary of the stock option activity is as follows: December 31, 2024 December 31, 2023 Number Weighted Average Exercise Price Number Weighted Average Exercise Price Balance, beginning of year 5,425,000 $0.21 6,725,000 $0.24 Granted 675,000 $0.315 - - Expired (325,000) $0.42 (1,300,000) 0.35 Balance, end of year 5,775,000 $0.21 5,425,000 $0.21 As at December 31 , 2024 , the Company has outstanding directors’ and employees’ incentive stock options enabling the holders to acquire additional common shares as follows: Number of options outstanding Number of options exercisable Exercise Price Expiry Date 2,750,000 2,750,000 $0.22 September 17, 2027 2,350,000 2,350,000 $0.18 October 25, 2027 675,000 675,000 $0.315 September 6, 2029 5,775,000 5,775,000 2.51 years remaining
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 31 19. DISTRIBUTIONS FROM NAMESILO LLC In January , May , June, August, October and December 2023, NameSilo LLC made cash distributions to all its members. The total amount of distributions made to the 18.5% non-controlling interest were $749,809 (US$555,538) during the year ended December 31, 2023. In January, June, July, August , September, October and December 2024, NameSilo LLC made cash distributions to all its members. The total amount of distributions made to the 18.5% non - controlling interest were $1,393,471 (US$1,017,281) during the year ended December 31, 2024. 20. RELATED PARTY TRANSACTIONS The aggregate amount of expenditures made to parties not at arm’s length to the Company for the years ended December 31, 2024 and 2023 are: 2024 $ 2023 $ Professional fees 139,264 107,405 Management fees 360,000 360,000 Share-based payment 95,484 - 594,748 467,405 During the years ended December 31, 2024 and 2023, Paul Andreola, President and Director was paid or accrued management fees of $180,000 (2023 - $180,000), Colin Bowkett, Director was paid or accrued management fees of $180,000 (2023 - $180,000), and Malaspina Consultants Inc., a company in which Natasha Tsai, Chief Financial Officer is a shareholder, was paid or accrued professional fees of $139,264 (2023 - $107,405). Included in accounts payable and accrued liabilities at December 31 , 2024 is $ 2,003 (2023 - $2,210) due to officers and directors for unpaid management fees. Other related party transactions are disclosed in Notes 7 and 8. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties, unless otherwise noted. There were no post -employment benefits, termination benefits or other long -term benefits paid to key management personnel for the years ended December 31, 2024 and 2023. 21. DETERMINATION OF FAIR VALUES The Company’s financial assets were classified into the following categories: ■ FVTPL – Cash and cash equivalents, and investments ■ FVOCI – None ■ Amortized Cost – Receivables Estimates of the fair value of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 32 are subjective in nature, involving uncertainties and matters of significant judgement, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. At December 31, 202 4, the Company's financial instruments include cash and cash equivalents, receivables, registry deposits, investments, convertible debenture receivable, promissory note receivable, accounts payable and accrued liabilities, customer deposits and promissory note payable. Receivables, registry deposits, convertible debenture receivable, promissory note receivable, accounts payable and accrued liabilities, customer deposits and promissory note payable are recognized on the consolidated statement of financial position at their carrying values which approximated their fair value. All financial instruments measured at fair value are categorized into a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for id entical assets (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are described below: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy. December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 3,003,106 $ - $ - $ 3,003,106 Investment - shares $ 1,300,752 $ - $ 78,500 $ 1,379,252 Investment – SAFE $ - $ - $ 95,777 $ 95,777 December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 2,379,275 $ - $ - $ 2,379,275 Investment - shares $ 2,387,846 $ - $ 78,500 $ 2,466,346 Investment – SAFE $ - $ - $ 95,777 $ 95,777 22. FINANCIAL RISK MANAGEMENT (a) Overview The Company’s activities expose it to a variety of financial risks that arise as a result of its activities such as:
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 33 ■ market risk ■ credit risk ■ liquidity risk This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk. The Board of Directors oversees management’s establishment and execution of the Company’s risk management framework. Management has implemented and monitors compliance with risk management policies. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. (b) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk. (i) Interest rate risk The Company’s cash and cash equivalents are held in bank accounts and due to the short-term nature of these financial instruments fluctuations in market interest rates do not have significant impact on the fair value as at December 31, 202 4. The Company’s promissory note receivable and promissory note payable have a fixed rate of interest and therefore are not exposed to interest rate risk. The Company’s sensitivity to interest rates is currently immaterial due to the short- term maturity of its monetary assets and liabilities. (ii) Foreign currency risk Currency risk is the risk to the Company's earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. At December 31, 202 4, the Company had the following financial assets and liabilities in foreign currencies: US Dollars Argentine Pesos Cash $1,831,556 - Receivables $ 288,529 225,523 Promissory note receivable $ 100,000 - Registry deposits $1,711,298 - Accounts payable $6,030,455 445,323 Customer deposits $3,185,443 - At December 31, 202 4 US dollar amounts were converted at a rate of $1.00 US dollars to $1.4389 Canadian dollars and Argentine pesos amounts were converted at a rate of 1.00 Argentine pesos to $0.0219 Canadian dollars. A 10% increase or decrease in the US dollar exchange rate will impact net income (loss) by approximately $550,000.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 34 (iii) Other price risk Other price risk is the risk that the fair or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk. The Company is exposed to significant other price risk. A 10% increase or decrease in the value of its investments will impact net income (loss) by approximately $148,000. (c) Credit risk Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to discharge an obligation. The Company’s cash and cash equivalents, receivables, registry deposits and promissory note receivable are exposed to credit risk. The credit risk on cash and cash equivalents is considered small because the majority of funds have been placed with major Canadian and US financial institutions. Management believes that the credit risk related to its receivables, registry deposits and promissory note receivable is remote. The carrying value of the receivables , registry deposits and promissory note receivable represents the maximum credit exposure. (d) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet liabilities when due. At December 31, 2024, the Company had a cash balance of $3,003,106 and receivables of $416,791. The Company has accounts payable and accrued liabilities of $ 8,797,833. The Company intends to raise adequate funds to meet its liquidity needs for the next twelve months via cash flows from operations, private placement or the sale of over -performing investments. Contractual cash flow requirements as at December 31, 2024 were as follows: < 1 year $ 1 – 2 years $ 2 – 5 years $ >5 years $ Total $ Accounts payable and accrued liabilities 8,797,833 - - - 8,797,833 Promissory note payable 419,378 - - - 419,378 Total 9,217,211 - - - 9,217,211
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 35 Contractual cash flow requirements as at December 31, 2023 were as follows: < 1 year $ 1 – 2 years $ 2 – 5 years $ >5 years $ Total $ Accounts payable and accrued liabilities 6,132,728 - - - 6,132,728 Convertible debenture 4,275,682 - - - 4,275,682 Total 10,408,410 - - - 10,408,410 23. CAPITAL MANAGEMENT The Company considers its capital structure to include working capital (deficiency) and shareholders’ equity. Management’s objective is to ensure that there is sufficient capital to minimize liquidity risk and to continue as a going concern. Management reviews its capital management approach on an ongoing basis and believes that its approach, given the relative size of the Company, is reasonable. The Company is not subject to any external capital restrictions and the Company did not change its approach to capital management during the year. 24. SUPPLEMENTAL CASH FLOW INFORMATION The following changes in liabilities arose from financing activities: December 31, 2023 $ Cash Flows $ Accretion $ December 31, 2024 $ Convertible debenture 3,703,172 (3,900,000) 196,828 - Promissory note payable - 396,287 23,091 419,378 3,703,172 (3,503,713) 219,919 419,378 December 31, 2022 $ Cash Flows $ Accretion $ December 31, 2023 $ Convertible debenture 3,468,764 - 234,408 3,703,172 The following is a breakdown of cash and cash equivalents: December 31, 2024 $ December 31, 2023 $ Cash 2,991,606 2,367,775 Cash equivalents 11,500 11,500 3,003,106 2,379,275
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 36 25. INCOME TAXES Income tax expense varies from the amount that would be computed from applying the combined federal and provincial income tax rate to loss before taxes as follows: 2024 2023 Income (loss) for the year before income tax $ 1,280,294 $ (1,710,775) Statutory Canadian corporate tax rate 27.00% 27.00% Anticipated tax recovery 345,680 (461,909) Change in tax rates resulting from: Effect of jurisdictional tax rate difference (198,876) (101,385) Foreign exchange 59,718 (2,669) Prior year true up (233,814) (1,103,575) Intercorporate dividends 306,940 165,161 Unrecognized items for tax 304,696 339,630 Tax benefits not realized 391,045 738,610 Income tax expense (recovery) $ 975,389 $ (426,137) Income tax expense (recovery) consists of: 2024 2023 Current income tax $ 1,111,316 $ 675,978 Deferred income tax (135,927) (1,102,115) $ 975,389 $ (426,137) The significant components of the Company’s deferred tax assets (liabilities) are as follows: 2024 2023 Exploration and evaluation assets $ 670,517 $ 670,517 Non-capital loss carry forwards 3,713,195 3,400,798 Capital Assets 67,138 67,138 Capital loss carry forwards 2,770,166 2,481,397 Investments 101,733 51,367 Intangibles 404,468 382,883 Deferred revenue and prepaid 61,856 - Convertible debenture and loans - (53,144) Other 1,516,673 977,270 9,305,746 7,978,226 Unrecognized deferred tax assets (8,746,441) (7,595,343) Deferred income tax assets $ 559,305 $ 382,883 At December 31, 2024, the Company has available non-capital tax losses for Canadian income tax purposes of approximately $13,753,000, expiring as follows:
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 37 Canada 2028 $ 20,000 2029 260,000 2030 166,000 2031 325,000 2032 365,000 2033 270,000 2034 306,000 2035 268,000 2037 227,000 2038 1,318,000 2039 2,291,000 2040 2,278,000 2041 1,564,000 2042 1,584,000 2043 1,305,000 2044 1,206,000 $ 13,753,000 26. SEGMENTED INFORMATION AND ECONOMIC DEPENDENCE At December 31, 202 4 and 202 3, the Company has one reportable segment, being domain registration and related services . The Company’s corporate segment is located in Canada and NameSilo LLC is located in the USA as at December 31, 202 4. All of the revenues are generated by NameSilo LLC and are attributed to the USA which is NameSilo LLC’s country of domicile. During the year ended December 31, 202 4, the Company had sales to nil (20 23 - nil) customer who in aggregate accounted for more than 10% (2023 – 10%) of revenue. The Company’s revenues are allocated according to revenue types for the years ended December 31, 2024 and 2023 as follows: December 31, 2024 $ December 31, 2023 $ Domain Services 52,604,285 46,523,004 Market Place Transactions 1,977,572 1,561,410 Other 651,186 878,385 55,233,043 48,962,799 The Company’s non-current assets are allocated to geographic segments as at December 31, 2024 and 2023 as follows: December 31, 2024 $ December 31, 2023 $ Corporate – Canada 3,330,654 4,223,213 NameSilo LLC – USA 12,685,744 11,286,232 16,016,398 15,509,445
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 38 The segmentation of the Company’s revenues by customer location is as follows: December 31, 2024 $ December 31, 2023 $ USA 21,698,327 19,798,723 East and South Asia 11,676,827 10,405,540 South East Asia and Australasia 9,342,019 5,909,864 Other 12,515,870 12,848,672 55,233,043 48,962,799 Geographic segmentation of the Company’s net income (loss) is as follows: December 31, 2024 $ December 31, 2023 $ Corporate – Canada (2,876,440) (4,148,759) NameSilo LLC – USA 3,181,318 2,864,121 304,878 (1,284,638) Geographic segmentation of interest and accretion, and amortization and depreciation is as follows: Interest and accretion December 31, 2024 $ December 31, 2023 $ Corporate – Canada 612,475 703,691 NameSilo LLC – USA - - 612,475 703,691 Amortization and depreciation December 31, 2024 $ December 31, 2023 $ Corporate – Canada - 1,545 NameSilo LLC – USA 1,015,601 1,100,847 1,015,601 1,102,392 27. CONTINGENCY NameSilo LLC and NamePal were named defendants in a lawsuit. The plaintiff filed a complaint against certain websites and numerous domain registrars, including NameSilo LLC and NamePal, alleging that false and defamatory language was posted on these websites registered by the related domain registrars . NameSilo and NamePal are not the owners and operators of the websites therefore have no control on the contents to be posted on the websites. No loss provision has been recorded because m anagement believes t he claim to be frivolous towards the Company and without merit. There is no individual amount claimed by the plaintiff against each individual defendant.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 39 28. SUBSEQUENT EVENTS On January 6, 2025, Alchemy drew down an additional $250,000 from the Facility and has entered into a second promissory note with the Company for $250,000, which accrues interest at a rate of 12% per annum. On February 4, 2025, the convertible loan agreement with Alchemy (see Note 7) was amended, such that the aggregate amount of the Facility has been increased to up to $750,000. The commitment fee has also been amended to a total of $22,500, with the difference of $7,500 to be satisfied by the issuance of an additional 8,823 common shares of Alchemy. On February 4, 2025, Alchemy drew down an additional $250,000 from the Facility and has entered into a third promissory note with the Company for $250,000, which accrues interest at a rate of 12% per annum. On March 5, 2025, the Company entered into a convertible loan agreement with Cheelcare, pursuant to which the Company has agreed to make available a revolving drawdown facility in the aggregate amount of up to $300,000 to Cheelcare (“Cheelcare Facilitaty”). Cheelcare has agreed to pay a commitment fee of $9,000 (“Commitment Fee”) and issue 200,000 common share purchase warrants (“Commitment Warrants”) of Cheelcare to the Company, with each Commitment Warrant to be exercisable to acquire 1 Commitment Warran t share at a price of $1.50 per share until the date that is two years following the date of issuance . The Company may elect to convert any portion of the drawdown amounts and accrued interest owing into common shares of Cheelcare at a price of $0.75 per share, commencing on the effective date of the agreement and expiring one year from the effective date. On March 6, 2025 , Cheelcare drew down $ 150,000 from the Cheelcare Facility . On March 21, 2025, Cheelcare drew down an additional $150,000 from the Cheelcare Facility and has entered into a second promissory note with the Company for $150,000 The promissory notes accrue interest at a rate of 12% per annum. On March 7, 2025, the Company exercised 440,000 share purchase warrants of Ola Media at $0.25 per share and increased its investment in Ola Media by $110,000. On March 25, 2025, the convertible loan agreement with Alchemy (see Note 7) was amended, such that the aggregate amount of the Facility has been increased to up to $1,000,000. The commitment fee has also been amended to a total of $ 30,000, with the difference of $7,500 to be satisfied by the issuance of an additional 8,823 common shares of Alchemy. On March 25, 2025, Alchemy drew down an additional $250,000 from the Facility and has entered into a third promissory note with the Company for $250,000, which accrues interest at a rate of 12% per annum. On April 2, 2025 , the Company subscribed for $ 100,000 of convertible debentures in Canadabis Capital Inc. (“Canadabis”). The convertible debentures will mature on April 2, 2029 and will bear interest at a rate of 11% per annum, payable quarterly in arrears. Interest shall be paid in cash or common shares of Canadabis at Canadabis' sole discretion. The principal amount of each debenture is convertible, at the option of the holder, for no additional consideration, into common shares of Canadabis , following August 3, 2025, and prior to April 2, 2029 at a conversion price equal to $0.10 per share. The debentures will be repaid in cash at the maturity date. On and following September 2, 2025, CanadaBis shall have the right to either partially or fully redeem the outstanding debentures in cash at 105% of the outstanding principal amount at the time of redemption, plus accrued interest in cash, provided, however, that if the debentures are redeemed before being outstanding for six months, CanadaBis shall pay the holder all accrued and unpaid interest, plus an additional amount to ensure the holder receives at least six months of interest on the principal amount being redeemed, net of any interest already paid.
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NAMESILO TECHNOLOGIES CORP. Notes to the Consolidated Financial Statements For the years ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) 40 On April 11, 2025, the convertible loan agreement with Cheelcare was amended, such that the aggregate amount of the Cheelcare Facility has been increased to up to $ 450,000. The commitment fee has also been amended to a total of $ 13,500 and the number of Commitment Warrants has been amended to 300,000 . On April 11, 2025, Cheelcare drew down an additional $150,000 from the Cheelcare Facility and has entered into a third promissory note with the Company for $150,000, which accrues interest at a rate of 12% per annum.