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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report: _______

Commission file number 000-16353

37 CAPITAL INC.

(Exact name of Registrant as specified in its charter)

 

British Columbia, Canada

(Jurisdiction of Incorporation or organization)

 

Suite 575, 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3A8

(Address of principal executive offices)

 

Jacob Kalpakian, (604) 681-0204, Email: info@37capitalinc.com, Facsimile (604) 681-9428,

Suite 575, 510 Burrard Street, Vancouver, BC, Canada V6C 3A8

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
     

Securities registered or to be registered pursuant to Section 12(g) of the Act:

  Common Stock, Fully Paid and Non-Assessable Common Shares Without Par Value  
  (Title of Class)  

Securities for which there is a reporting obligation pursuant to  Section 15(d) of the Act:

     
  (Title of Class)  

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 13,745,947 common shares as of December 31, 2023. No preferred shares issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐  No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.

Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer
    Emerging growth company

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued By the International Accounting Standards Board ☒ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐   Item 18 ☐

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes☒ No ☐

 1 

 

37 CAPITAL INC.

FORM 20-F ANNUAL REPORT 2022

TABLE OF CONTENTS

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 3
ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE 3
ITEM 3.  KEY INFORMATION 4
ITEM 4.  INFORMATION ON THE COMPANY 6
ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS 11
ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 17
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 20
ITEM 8.  FINANCIAL INFORMATION 24
ITEM 9.  THE  OFFER & LISTING 25
ITEM 10. ADDITIONAL INFORMATION 28
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 36
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 37
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 37
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 37
ITEM 15. CONTROLS AND PROCEDURES 38
ITEM 16.  AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES. 38
ITEM 17. FINANCIAL STATEMENTS 39
ITEM 18. FINANCIAL STATEMENTS 39
ITEM 19. LIST OF EXHIBITS 40
SIGNATURE PAGE 78

 

 2 

 

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Name of Directors and/or Officers of the Issuer Position Held as at the date of this Annual Report
Jacob H. Kalpakian, Vancouver, British Columbia, Canada President, CEO and Director
Neil Spellman*, Carlsbad, CA, USA CFO & Director
Bedo H. Kalpakian*1, Delta, British Columbia, Canada Director
Gregory T. McFarlane*, Washington, Utah, USA Director
Maria P. Arenas, Surrey, British Columbia, Canada Corporate Secretary

*Members of the Audit Committee

1Bedo Kalpakian was appointed to the Board of Directors on May 25, 2021

Fred Tejada stepped down from the Board of Directors on May 1, 2021.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Item 3.A. Selected Financial Data

The selected financial data in Table I has been derived from the audited financial statements of 37 Capital Inc. (hereinafter referred to as the “Company” or the “Registrant” or “37 Capital”). The financial data under 2023, 2022, 2021, 2020 and 2019 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The information should be read in conjunction with the Registrant's financial statements and notes thereto included in Item 17 of this Annual Report.

All financial figures presented herein and throughout this Annual Report are expressed in Canadian dollars (Cdn$) unless otherwise specified. All common shares and per share amounts included in this Annual Report on Form 20-F (2023) have been restated to give retroactive effect to the 5:1 share consolidation, which took effect on June 20, 2021 as further described in Results of Operations in Item 4.(a) of this document.

TABLE I

The financial data under the tables 2023, 2022, 2021, 2020 and 2019 have been prepared in accordance with IFRS.

   Year Ended December 31, 2023 

Year Ended December 31, 2022

 

Year Ended December 31, 2021

  Year Ended December 31, 2020  Year Ended December 31, 2019
Operating Revenue  $0    0    0    0    0 
Interest Income  $0    0    0    0    0 
Comprehensive loss  $(48,820)   (125,036)   (1,044,863)   (133,379)   (147,137)
Basic and diluted loss per common share before other items  $(0.00)   (0.03)   (0.24)   (0.09)   (0.10)
Total Assets  $121,374    55,683    2,113    40,573    33,180 
Capital Stock  $27,736,269    27,536,269    27,511,269    25,864,950    25,857,450 
Number of common shares at year-end   13,745,947    5,745,947    4,495,947    1,458,542    1, 438,542 
Long-term obligations  $0    0    0    0    0 
Cash dividends  $0    0    0    0    0 

 3 

 

Bank of Canada Exchange Rates

    Monthly High ($)(1)   Monthly Low ($)(1)
July 2023     0.7617       0.7492  
August 2023     0.7524       0.7350  
September 2023     0.7450       0.7313  
October 2023     0.7358       0.7209  
November 2023     0.7363       0.7207  
December 2023     0.7573       0.7353  

(1) The high and low exchange rates have been calculated using the rates of the Bank of Canada.

   For Year Ended December 31, 2023   For Year Ended   December 31, 2022  For Year Ended December 31, 2021  For Year Ended December 31, 2020  For Year Ended December 31, 2019
Average rate ($)(2)    0.7446    0.7692    0.7980    0.7461    0.7560 
High ($)(3)    0.7573    0.8031    0.8306    0.7863    0.7699 
Low ($)(3)    0.7353    0.7217    0.7727    0.6898    0.7393 

(2)The average exchange rate for the period has been calculated using the yearly rate of the Bank of Canada.

(3)The high and low exchange rates in each period were determined from the yearly rate of the Bank of Canada.

All of the amounts in the Exchange rates tables above are stated in U.S. currency. Accordingly, at the closing on December 31, 2023, the US $1.00 was equal to Cdn $1.3243.

Item 3.D. Risk Factors

The Company and the Securities of the Company, should be considered a highly speculative investment. The following risk factors should be given special consideration when evaluating an investment in any of the Company's Securities:

1). RISKS RELATED TO THE COMPANY’S BUSINESS

- Regulations: Mineral exploration programs are subject to extensive federal, provincial and local laws and regulations governing such exploration, development and operation of mining activities as well as the protection of the environment, including laws and regulations relating to obtaining permits to mine, protection of air and water quality, hazardous waste management, mine reclamation and the protection of endangered or threatened species.

- Exploration and Development: The resource properties in which the Company has an interest are in the exploration stages only and do not have a known body of commercial ore. Exploration and development of natural resource properties involve a high degree of risk and few properties which are explored are ultimately developed into producing properties. Substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit, no assurance can be given that resources will be discovered in sufficient quantities or grades to justify commercial operations or that the funds required for development can be obtained on a timely basis.

 4 

 

- Operating Hazards and Risks: Exploration for natural resources involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome.

- Fluctuating Metal Prices: The prices of those commodities have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond the Company's control including international, economic and political trends, expectations of inflation or deflation, currency exchange rate fluctuations, interest rates fluctuations, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the prices of metals determines the economic viability of exploration projects, which cannot be accurately predicted.

 - Environmental Factors: Should the Company decide to conduct any mineral exploration work then all phases of the Company's mineral exploration work shall be subject to environmental regulations. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees.

- Competition: The resource industry is intensely competitive in all of its respective phases, and the Company competes with many companies possessing much greater financial resources and technical facilities than the Company. As such, competition is adversely affecting the Company's ability to acquire suitable mineral exploration properties at reasonable prices.

- Management: The Company is dependent on a relatively small number of key employees, the loss of any of whom could have an adverse effect on the Company.

- Dilution: There are a number of outstanding securities and agreements pursuant to which common shares of the Company may be issued in the future. This will result in further dilution to the Company's shareholders.

- Revenues and Dividends: The Company does not anticipate to generate any revenue in the future and has not recognized any revenue in fiscal 2019, 2020, 2021, 2022 and 2023. In the event that the Company generates any revenues in the future, then the Company intends to retain its earnings in order to finance growth. Furthermore, apart from the Arrangement Agreement, the Company has not paid any dividends in the past and does not expect to pay any dividends in the future.

- Requirement of New Capital: As a company without any revenues, the Company typically needs more capital than it has available to it or can expect to generate through the sale of its assets. In the past, the Company has had to raise, by way of debt and equity financings, considerable funds to meet its capital needs. There is no assurance that the Company will be able to continue to raise funds needed for its business. Failure to raise the necessary funds in a timely fashion will limit the Company's growth or may jeopardize the Company’s ability to continue as a going concern. The Company has outstanding debts, has working capital deficiency, has no revenues, has incurred operating losses, and has no assurances that sufficient funding will be available to the Company to continue its operations for an extended period of time.

- U.S. Federal Income Tax Considerations: The Company is classified as a Passive Foreign Investment Company ("PFIC") for U.S. Federal Income Tax purposes. Classification as a PFIC will create U.S. Tax consequences to a U.S. shareholder of the Company that are unique to the PFIC provisions and that are not encountered in other investments. Prospective investors are advised to consult their own tax advisors with respect to the tax consequences of an investment in the common shares of the Company.

 5 

 

- Penny Stock: The Company's securities are deemed to be Penny Stocks and are therefore subject to Penny Stock rules as defined in Rule 3a(51)(1) of the 1934 Exchange Act. The Penny Stock disclosure requirements may have the effect of reducing the level of trading activity of the Company's securities in the secondary market. Penny Stocks are low-priced shares of small companies not traded on a U.S. national exchange or quoted on Nasdaq. The Company's securities were quoted for trading on the OTCQB tier of the OTC Markets Group (“OTCQB”) until June 1, 2020. Presently, the Company’s securities are quoted on the PINK Sheets on the OTC market. Penny Stocks, such as the Company's securities, can be very risky. Prices of Penny Stocks are often not available. Investors in Penny Stocks are often unable to sell stock back to the dealer that sold them the stock. Investors may lose all their investment in Penny Stocks. There is no guaranteed rate of return on Penny Stocks. Before an investor purchases any Penny Stock, U.S. Federal law requires a salesperson to tell the investor the "offer" and the "bid" on the Penny Stock, and the "compensation" the salesperson and the firm receive for the trade. The firm also must mail a confirmation of these prices to the investor after the trade. The Investor's Broker-dealer is required to obtain the investor's signature to show that the investor has received the statement titled "Important Information on Penny Stocks" before the investor first trades in a Penny Stock. This Statement is required by the U.S. Securities and Exchange Commission ("SEC") and contains important information on Penny Stocks. Furthermore, under penalty of Federal Law the Investor's brokerage firm must tell the investor at two different times - before the investor agrees to buy or sell a Penny Stock, and after the trade, by written confirmation the following: 1) the bid and offer price quotes for the Penny Stock, and the number of shares to which the quoted prices apply, 2) the brokerage firm's compensation for the trade, 3) the compensation received by the brokerage firm's salesperson for the trade. In addition, to these items listed above the investor's brokerage firm must send the investor monthly account statements and a written statement of the investor's financial situation and investment goals as required by the Securities Enforcement and Penny Stock Reform Act of 1990. 

- Disruption in Trading: Trading in the common shares of the Company may be halted or suspended or may be subject to cease trade order at any time for certain reasons, including, but not limited to, the failure by the Company to submit documents to the Regulatory Authorities within the required time periods.

- Market Price Volatility: The market price of the Company’s common shares has experienced considerable volatility and may continue to fluctuate in the future. Furthermore, there is a limited trading market for the Company’s common shares and as such, the ability of investors to sell their shares cannot be assured.

- Tax ConsiderationsPersons considering the purchase of the Company’s common shares should consult their tax advisors with regard to the application of Canadian, U.S. and other tax laws to their particular situation.

Investment in Mexican Gaming Company: The Company has determined that it will not recover its investment in the Mexican gaming company, as a result the Company has written-off its investment in the Mexican gaming company.

- The Company’s investment in its mineral exploration property: Changing conditions in the financial markets, and Canadian Income Tax legislation may have a direct adverse impact on the Company’s ability to raise funds for its Extra High mineral exploration property. A drop in the availability of equity financings will likely impede spending on mineral properties. As a result of all these significant risks, it is quite possible that the Company shall lose its investment in the Company’s Extra High mineral exploration property.

ITEM 4. INFORMATION ON THE COMPANY

Item 4.A. History and Development of the Company 

The Company was incorporated by memorandum under the Company Act of the Province of British Columbia, Canada on August 24, 1984 (Exhibit 3.1 – Incorporated by reference) and was registered extra-provincially in the Province of Ontario, Canada on October 19, 1984. On May 31, 1988, the Company adopted the French form of its name to "Ressources Armeno Inc.". On May 25, 1992, the name of the Company was changed to “Ag Armeno Mines and Minerals Inc”. in the English form, and "Les Mines et Mineraux Ag Armeno Inc." in the French form. On April 25, 2000, the name of the Company was changed from “Ag Armeno Mines and Minerals Inc”. in the English form, and "Les Mines et Mineraux Ag Armeno Inc.", in the French form, to “Golden Nugget Exploration Inc”. On May 2, 2002, the name of the Company was changed from “Golden Nugget Exploration Inc.” to “Lucky 1 Enterprises Inc.” On January 17, 2005, the name of the Company was changed to “Bronx Ventures Inc”. and the Company adopted new Articles (Exhibit 3.2 - Incorporated by reference). On March 19, 2007, the Company changed its name to “Zab Resources Inc”. On April 16, 2009, the Company changed its name to “Kokomo Enterprises Inc”. On August 31, 2012, the Company changed its name to “High 5 Ventures Inc.” (Exhibit 3.5 – Incorporated by reference). On July 7, 2014, the Company changed its name to 37 Capital Inc. (see Exhibit 3.6 – Incorporated by reference).

 6 

 

On April 4, 1985, the Company's common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed its common shares from the Montreal Exchange, and, on October 3, 1994, the Company's shares were delisted from the Nasdaq SmallCap Market. Effective October 4, 1994, the Company's shares have been listed for trading on the OTC Bulletin Board and were listed for trading on the OTCQB tier of the OTC Markets Group Inc. (“OTCQB) until June 1, 2020. Presently, the Company’s shares are listed for trading on the PINK Sheets on the OTC Markets. Effective November 29, 1999 the Vancouver Stock Exchange became known as the Canadian Venture Exchange (hereinafter referred to as the “CDNX”) as a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange. On July 5, 2001, the Company made a formal application to the CDNX requesting the voluntary delisting of the Company’s common shares from trading on the CDNX, as a result of which, the common shares of the Company were delisted from trading on the CDNX effective at the close of trading on July 31, 2001.

On July 30, 1986, the Company's share capital split on the basis of one-old-for-two-new common shares. On May 25, 1992, the Company's share capital was consolidated on the basis of ten-old-for-one-new common share. On April 25, 2000, the Company’s share capital was consolidated on the basis of fifteen-old-for-one-new common share. On May 2, 2002, the Company’s share capital was consolidated on the basis of five-old-for-one-new common share and its authorized share capital was subsequently increased to 200,000,000 common shares without par value. On January 17, 2005, the Company’s share capital was consolidated on the basis of thirty-five-old-for-one-new common share and its authorized share capital was increased to an unlimited number of common and preferred shares without par value. On March 19, 2007, the Company subdivided its capital stock on a 1 (old) share for 50 (new) shares basis. As a result, the shares of Bronx Ventures Inc. were de-listed from trading and the shares of Zab Resources Inc. (“Zab”) commenced trading on March 22, 2007 on the OTC Bulletin Board in the USA under the symbol “ZABRF”.

As of November 28, 2007, the common shares of the Company have been listed for trading on the Canadian Securities Exchange (“CSE”) (formerly known as the Canadian National Stock Exchange (CNSX)) under the trading symbol “ZABK”. On October 17, 2008, the Company’s trading symbol on the CSE was changed to “ZAB” pursuant to the CSE adopting a three character symbol format.

On April 16, 2009, the Company’s share capital was consolidated on the basis of 25 (old) shares for 1 (new) share and the Company changed its name to Kokomo Enterprises Inc. (“Kokomo”). As a result, the shares of Zab were de-listed from trading and the shares of Kokomo commenced trading in Canada on the CSE under the symbol “KKO”, and in the U.S.A. the shares of Kokomo commenced trading on the OTC Bulletin Board under the symbol “KKOEF”.

On August 31, 2012, the Company’s share capital was consolidated on the basis of 15 (old) common shares for 1 (new) common share and the Company changed its name to High 5 Ventures Inc. (“High 5”). As a result, the shares of Kokomo were de-listed from trading and the shares of High 5 commenced trading in Canada on the CSE under the symbol “HHH”, and in the U.S.A. the shares of High 5 traded on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s common shares is 42966V105.

On April 8, 2013, the Company entered into a purchase and sale agreement with a Mexican gaming company, whereby the Company agreed to purchase a royalty revenue stream of an amount the greater of 10% of the net profits or 5% of the gross revenues of the Mexican land-based casino for a purchase price of $800,000. As of December 31, 2013, the Company invested $800,000 and advanced $49,200 for working capital purposes. The Mexican gaming company repaid the $49,200 advanced and the Company recognized $4,157 in royalty revenue during the year ended December 31, 2014. As at December 31, 2014, the Company assessed the fair value of the investment and recorded impairment of $799,999 on the investment due to nominal royalty payments received. On December 31, 2021, the Company received confirmation that the purchase and sale agreement with the Mexican gaming company has been terminated and is of no further effect. Accordingly, the Company recorded an impairment loss of $1 as at December 31, 2021.

On July 7, 2014, the Company’s share capital was consolidated on the basis of 6 (old) common shares for 1 (new) common share and the Company changed its name to 37 Capital Inc. (“37 Capital”). As a result, the shares of High 5 were de-listed from trading and the shares of 37 Capital commenced trading in Canada on the CSE under the symbol “JJJ”, and in the U.S.A. the shares of 37 Capital started trading on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s common shares was 88429G102.

 7 

 

On June 21, 2019 the CSE deemed that the Company is inactive pursuant to the policies of the CSE, as a result the CSE changed the Company’s trading symbol to “JJJ.X”. The Company's common shares traded on the OTCQB tier of the OTC markets under the trading symbol “HHHEF” until June 1, 2020. Presently, the Company’s common shares are listed for trading on the PINK Sheets on the OTC market under the same trading symbol “HHHEF”.

On June 15, 2021, the Company’s share capital was consolidated on the basis of 5 (old) common shares for 1 (new) common share. As a result of the consolidation, the shares of the Company commenced trading on a consolidated basis in Canada on the CSE under the symbol “JJJ.X”, and in the U.S.A. the shares of 37 Capital are listed for trading on the PINK Sheets on the OTC market under the trading symbol “HHHEF. The Cusip number of the Company’s common shares is 88429G201.

Subsequently on February 5, 2024, the CSE has deemed the Company to meet its minimum listing requirements and, as a result, the Company is now trading under the symbol “JJJ”.

Since its incorporation, the Company has been engaged primarily in the identification, acquisition, exploration and, if warranted, the development of natural resource properties and, for a brief period of time from 1991 to 1994, the Company, through its formerly owned Ecuadorean subsidiary, Armenonic del Ecuador S.A. (“Armenonic”) operated the San Bartolome lead/zinc/silver mine in Ecuador.

37 Capital is a junior mineral exploration company. The Company has a 100% undivided interest in the Extra High Claims located in the Province of British Columbia, and the Company has a one-half percent (1/2%) gross receipts royalty interest in certain lithium mineral exploration properties located in the Province of Ontario. Furthermore, the Company had entered into a Property Option Agreement and an Amendment Agreement to the Property Option Agreement in respect to the Acacia Property in British Columbia, Canada whereby the Company had the right and option to acquire a 60% interest in the subject property on certain terms and conditions (see Item 4.D II). The Property Option Agreement and the Amendment Agreement to the Property Option Agreement in respect to the Acacia Property were mutually terminated as of November 1, 2021. The principal business of 37 Capital is in mineral exploration. The Compan’'s ability to pursue its stated primary business and to meet its obligations as they come due is dependent upon the ability of management to obtain the necessary financings either through private placements or by means of public offerings of the Compan’'s securities or through the exercise of incentive stock options or warrants or through debt financings or through the sale of its assets or through the issusance of the Company’s securities.

Arrangement Agreement

On February 26, 2015, the Company incorporated then two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns Capital Inc. (“4 Touchdowns”). On April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 – Incorporated by reference) with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”). The Company completed the Plan of Arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) on February 12, 2016 (the “Effective Date”). Shareholders of record on the Effective Date received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. As a result of the completion of the Arrangement on February 12, 2016, 27 Red and 4 Touchdowns are independent entities and are no longer subsidiaries of the Company.

A copy of the Arrangement Agreement is available on www.sedarplus.ca.

Company Information

On August 23, 2016, Mr. Neil Spellman of Carlsbad, California, joined the Board of Directors of the Company. Mr. Spellman was appointed as the CFO of the Company effective as of April 1, 2017.

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Effective as of August 1, 2021, the Company’s office is located at Suite 575, 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8. The telephone number is (604) 681-0204 (ext. 6105) and the telefax number is (604) 681-9428. The contact person is Jake H. Kalpakian.

The Company’s registered and records office is located at Suite 3200-650 West Georgia Street, Vancouver BC V6B 4P7. The telefax number is (604) 669-9385.

The Registrar and Transfer Agent of the Company is Computershare Investor Services Inc., at 510 Burrard Street, Vancouver, BC, Canada V6C 3B9. The telefax number is (604) 661-9407.

As of March 28, 2017, the Company’s auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, at 1500-1140 W. Pender Street, Vancouver, BC V6E 4G1 (the “Auditors”). The telefax number is (604) 689-2778.

 Item 4.B. Business Overview

Summary

37 Capital is a junior mineral exploration company. The Company has a 100% undivided interest in the Extra High Claims located in the Province of British Columbia, and the Company is entitled to receive a one-half percent (1/2%) gross receipts royalty interest after six months from the date of commencement of commercial production from certain lithium mineral properties located in the Province of Ontario. Furthermore, the Company had entered into a Property Option Agreement and an Amendment Agreement to the Property Option Agreement in respect to the Acacia Property in British Columbia, Canada whereby the Company had the right and option to acquire a 60% interest in the subject property on certain terms and conditions (see Item 4.D II). By mutual consent, the Property Option Agreement and the Amendment Agreement to the Property Option Agreement were terminated effective November 1, 2021. The principal business of 37 Capital is in mineral exploration. However, the Company had a minority investment in a non-mining related project located in Mexico. The Company has determined that it will not recover its investment in the non-mining related project located in Mexico, and has written-off its investment.

37 Capital is a reporting issuer in the Provinces of British Columbia, Alberta, Quebec and Ontario and files all public documents on www.sedarplus.ca. The Company is a foreign private issuer in the United States of America and in this respect files, on EDGAR, its Annual Report on Form 20-F and other reports on Form 6K at the following link:

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000825171&owner=exclude&count=40 will give you direct access to the Company’s filings.

Presently, 37 Capital is seeking opportunities of merit to get involved with. It should be noted that there are no assurances whatsoever that 37 Capital shall be successful in its attempts of seeking opportunities of merit.

Item 4. C. Organizational Structure

Arrangement Agreement

On February 26, 2015, the Company incorporated then two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns Capital Inc. (“4 Touchdowns”). On April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 – Incorporated by reference) with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”). The Company completed the Plan of Arrangement with 27 Red (Spinco 1) and 4 Touchdowns (Spinco 2) on February 12, 2016 (the “Effective Date”). Shareholders of record on the Effective Date received one new common share, one Class 1 Reorganization Share and one Class 2 Reorganization Share of the Company. As a result of the completion of the Arrangement on February 12, 2016, 27 Red and 4 Touchdowns are independent entities and are no longer subsidiaries of the Company.

A copy of the Arrangement Agreement is available on www.sedarplus.ca.

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Item 4.D. Property, Plants and Equipment

I. Extra High Claims, Kamloops Mining Division, British Columbia, Canada

Previously the Company held a 33% interest in the Extra High Claims, located in the Kamloops Mining Division of the Province of British Columbia (“Extra High Property”) (see Exhibits 10.5.1; 10.5.2; 10.11.2; 10.11.3; 10.11.4 – Incorporated by references).

On October 31, 2019, as amended on November 4, 2019, the Company entered into an agreement with Colt Resources Inc. (“Colt Resources”) to purchase the remaining 67% right, interest and title in and to the Extra High Property.

During the year ended December 31, 2021, the Company recorded an impairment loss of $25,001 relating to the Extra High Property.

Pursuant to the Company’s offer letter to Colt Resources dated July 6, 2022 which was accepted by Colt Resources, the Company has made a cash payment of $15,000 and, has issued 50,000 common shares in the capital of the Company to Colt Resources as consideration for the full and final settlement of all matters between the Company and Colt Resources in respect to the Extra High Property. The 50,000 common shares in the capital of the Company were subject to a hold period from trading which expired on December 10, 2022.

During 2023 the Company hired the services of Discovery Consultants of Vernon, British Columbia (“Discovery “) to plan, conduct, and complete the Company’s exploration work program on the Extra High Property (the “Company’s 2023 Exploration Work Program”). The Company’s 2023 Exploration Work Program consisted of 2 Phases. The Company incurred $20,000 of exploration related expenditures for Phase 1, and the Company incurred $24,991 of exploration related expenditures for Phase 2, for a total amount of $44,991. The mineral claims covering the Extra High Property are valid until December 28, 2028.

As at December 31, 2023, the Company owns a 100% undivided right, interest and title in and to the Extra High Property.

The Extra High Property is subject to a 1.5% Net Smelter Returns Royalty (“NSR”) payable to a third party, 50% of which, or 0.75%, can be purchased by the Company at any time by paying $500,000.

 As of the date of this Annual Report, the Company holds a 100% undivided interest in the Extra High Claims.

The Extra High Claims are located on Samatosum Mountain, immediately south of the formerly producing Samatosum Mine, 60 km northeast of Kamloops, British Columbia.

Legal Description

The Extra High Mineral Claims tenures are as follows:

TENURE NUMBER   NAME OF CLAIM   Property Size (in hectares)   CONVERSION DATE OR DATE STAKED   BC MAP #   EXPIRY DATE
  509949     Extra High     60.829       2005/MAR/31     082M       2028/DEC/28
  509961     Extra High     121.664       2005/MAR/31     082M       2028/DEC/28
  509969     Extra High     344.834       2005/MAR/31     082M       2028/DEC/28
  510214     Extra High     40.557       2005/APR/05     082M       2028/DEC/28
  510215     Extra High     81.124       2005/APR/05     082M       2028/DEC/28
  Total:           650                      

 

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II. Acacia Property, Adams Plateau, British Columbia

On September 30, 2019, the Company entered into a property option agreement (the “Option Agreement”) with Eagle Plains Resources ltd. (“Eagle Plains”) to acquire a 60% interest in the Acacia Property (“Acacia Property”) in Adams Plateau Area of the Province of British Columbia.

On October 15, 2020, the Company entered into an amendment agreement to the Option Agreement with Eagle Plains as the Company was not able to incur the required amount of $100,000 in property related expenditure during the 1st Anniversary.

During November 2021, by mutual consent, the Company and Eagle Plains terminated the Option Agreement dated September 30, 2019 and the Amendment Agreement to the Option Agreement dated October 15, 2020. Accordingly, the Company recorded an impairment loss of $15,000 during the year ended December 31, 2021.

III. Ontario, Canada Lithium Properties (Mineral Leases)

These Mineral Leases were previously written off at the end of fiscal 2000. During the year ended December 31, 2008, the Company sold all of its Mineral Leases for gross proceeds of $54,500. However, in the event that at a future date the Mineral Leases are placed into commercial production, then the Company is entitled to receive a 0.50% gross receipts royalty after six months from the date of commencement of commercial production.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Item. 5.A. Results of Operations

The following table contains selected annual information for the three years ended December 31, 2023, 2022 and 2021 which are in accordance with IFRS:

  

Year Ended December 31, 2023

  Year Ended December 31, 2022  Year Ended December 31, 2021
Revenue  $0   $0    0 
Interest income   0    0    0 
Expenses   48,820    125,036    1,044,863 
Basic and diluted loss per common share before other items        (0.03)   (0.24)
 Comprehensive loss   (48,820)   (125,036)   (1,044,863)
Total assets   121,374    55,683    2,113 
Long-term financial obligations   0    0    0 
Cash dividends   0    0    0 

All financial figures presented herein are expressed in Canadian Dollars (CDN$) unless otherwise specified.

 In Canada, the common shares of the Company trade on the Canadian Securities Exchange (CSE) under the symbol “JJJ”, and in the USA, the Company's common shares traded on the OTCQB tier of the OTC markets under the trading symbol “HHHEF” until June 1, 2020. Presently, the Company’s common shares are listed for trading in the USA on the PINK Sheets on the OTC market. The Cusip number of the Company’s common shares is 88429G201. The Company’s office is located at Suite 575 – 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A8 and its registered office is located at Suite 3200-650 West Georgia Street, Vancouver BC V6B 4P7. The Company’s registrar and transfer agent is Computershare Investor Services Inc. located at 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9.

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 For the year ended December 31, 2023:

The Company’s operating expenses were $48,820 as compared to $125,036 for the corresponding period in 2022 and as compared to $1,044,863 for the corresponding period in 2021.
The Company recorded a comprehensive loss of $48,820 as compared to a comprehensive loss of $125,036 for the corresponding period in 2022 and as compared to a comprehensive loss of $1,044,863 for the corresponding period in 2021.
The Company’s basic and diluted loss per common share was $0.00 as compared to a basic and diluted loss per common share of $0.03 and as compared to a basic and diluted loss of $0.24 during the corresponding period in 2021.
The Company’s total assets were $121,374 as compared to $55,683 during the corresponding period in 2022 and as compared to $2,113 during the corresponding period in 2021.
The Company’s total liabilities were $741,436 as compared to $826,925 during the corresponding period in 2022 and as compared to $697,319 during the corresponding period in 2021.
The Company had a working capital deficiency of $719,054 as compared to a working capital deficiency of $825,243 during the corresponding period of 2022 and as compared to a working capital deficiency of $695,206 during the corresponding period of 2021.

On April 1, 2017, Mr. Bedo H. Kalpakian stepped down as the Company’s President, CEO & CFO. In replacement to Mr. Bedo H. Kalpakian, effective as of April 1, 2017 Mr. Jacob H. Kalpakian became the President & CEO of the Company, and Mr. Neil Spellman became the CFO of the Company.

The Company’s Board of Directors decided to change the Company’s auditors. Effective as of March 28, 2017, the Company’s Auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, 1500-1140 W. Pender St., Vancouver, BC V6E 4G1. The telefax number is (604) 689-2778.

Pursuant to debt settlement agreements dated December 11, 2020 totaling the sum of $739,351.50 between the Company and certain creditors, including Jackpot Digital Inc. (“Jackpot’) and the Company’s President and CEO, on January 25, 2021 the Company issued a total of 2,957,406 common shares of the Company at a deemed price of $0.25 per common share (the “Debt Settlement Shares of the Company”), of which Jackpot acquired 597,380 Debt Settlement Shares of the Company and the Company’s President and CEO acquired 615,395 Debt Settlement Shares of the Company. As of the date of this Annual Report, Jackpot owns 607,377 common shares of the Company representing approximately 4.42% of the issued and outstanding common shares of the Company.

Effective as of May 1, 2021, Fred A.C. Tejada resigned from the Board of Directors of the Company, and effective as of May 25, 2021, Bedo H. Kalpakian was appointed as a director of the Company.

At the Company’s Annual General Meeting, which was held on December 3, 2021, the Company’s shareholders passed all the resolutions presented including the re-election of Jake H. Kalpakian, Gregory T. McFarlane, Neil Spellman and Bedo H. Kalpakian as Directors of the Company; re-appointed the Company’s Auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants for the ensuing year and authorized the Directors to fix the remuneration to be paid to the Auditor; and re-approved the Company’s Stock Option Plan.

At the Company’s Annual General Meeting, which was held on November 14, 2022, the Company’s shareholders passed all the resolutions presented including the re-election of Jake H. Kalpakian, Gregory T. McFarlane, Neil Spellman and Bedo H. Kalpakian as Directors of the Company; re-appointed the Company’s Auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants for the ensuing year and authorized the Directors to fix the remuneration to be paid to the Auditor; and re-approved the Company’s Stock Option Plan.

At the Company’s Annual General Meeting, which was held on December 12, 2023 (see Exhibit 13.7* - Attached), the Company’s shareholders passed all the resolutions presented including the re-election of Jake H. Kalpakian, Gregory T. McFarlane, Neil Spellman and Bedo H. Kalpakian as Directors of the Company; re-appointed the Company’s Auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants for the ensuing year and authorized the Directors to fix the remuneration to be paid to the Auditor; and re-approved the Company’s Stock Option Plan.

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During December 2019, the Company had intended to issue up to 800,000 flow-through units of the Company at a price of $0.25 per unit for gross proceeds to the Company of $200,000 in order to use the proceeds of this financing towards mineral exploration work expenditures located in the Province of British Columbia. However, due to the Covid-19 pandemic the Company was only able to raise the amount of $20,000 which the Company intended to incur towards mineral exploration work expenditures during the Company’s 2021 fiscal year. As such, the Company issued 80,000 flow-through units. Each flow-through unit consisted of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.50 for a period of two years. All securities issued in connection with this financing were subject to a hold period which expired on May 16, 2021. As the Company was not able to utilize the $20,000 towards mineral exploration expenditures, during the year-ended December 31, 2022, the Company made a formal application to Canada Revenue Agency (the “CRA”) and cancelled the Company’s flow-through share application which was submitted to the CRA during the year ended December 31, 2020 (see Exhibit 10.21* - Attached). Subsequent to the year-ended December 31, 2022, the non-flow share purchase warrants expired unexercised.

The Company is presently not a party to any legal proceedings whatsoever.

 Summary of Quarterly Results

For the Quarterly Periods ended:  December 31, 2023  September 30, 2023 

June 30, 2023

  March 31, 2023
Total Revenues   0    0    0    0 
Net income/(loss) and Comprehensive income/(loss)   (35,061)   (21,948)   27,072    (18,883)
Income/(loss) per share   (0.00)   (0.00)   0.00    (0.00)
                     
                     
For the Quarterly Periods ended:   December 31, 2022    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

 
Total Revenues   0    0    0    0 
Net loss and comprehensive loss   (57,456)   (20,694)   (24,768)   (22,118)
Loss per share   (0.01)   (0.00)   (0.01)   (0.01)

The Company’s business is not of a seasonal nature.

Item 5.B. Liquidity and Capital Resources

Liquidity and Capital Resources

The Company has incurred significant operating losses over the past three fiscal years, has limited resources, and no sources of operating cash flow.

During 2024, the Company shall require at least $400,000 so as to conduct its operations uninterruptedly. In order to meet this requirement, the Company intends to seek equity and/or debt financings through private placements and/or public offerings and/or loans. In the past, the Company has been successful in securing equity and debt financings in order to conduct its operations uninterruptedly. While the Company does not give any assurances whatsoever that in the future it will continue being successful in securing equity and/or debt financings in order to conduct its operations uninterruptedly, it is the Company’s intention to pursue these methods for future funding of the Company.

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As at December 31, 2023:

the Company’s total assets were $121,374 as compared to $55,683 for the year ended December 31, 2022 and as compared to $2,113 for the year ended December 31, 2021.
the Company’s total liabilities were $741,436 as compared to $826,925 for the year ended December 31, 2022 and as compared to $697,319 for the year ended December 31, 2021.
the Company had $18,304 in cash as compared to $122 in cash for the year ended December 31, 2022 and as compared to $1,611 in cash for the year ended December 31, 2021.
the Company had GST receivable in the amount of $4,078 as compared to $1,560 for the year ended December 31, 2023 and as compared to $502 for the year ended December 31, 2021.

 

Shares for Debt Financing

Pursuant to debt settlement agreements dated December 11, 2020 totaling the amount of $739,351.50 between the Company and certain creditors, on January 25, 2021, the Company issued 2,957,406 common shares of the Company (the “Debt Settlement Shares of the Company”) at a price of $0.25 per common share in settlement of debts totaling the amount of $739,351.50 to certain creditors, including to a related party and a director and officer of the Company. The Debt Settlement Shares of the Company were subject to a hold period which expired on May 26, 2021. The fair value of the 2,957,406 common shares was $1,626,573. As a result, the Company recorded a loss on debt settlement of $887,222.

Private Placement Financings

During the year ended December 31, 2023, the following transactions have occurred:

On July 24, 2023, the Company closed a non-brokered private placement financing which was announced on June 5, 2023 for gross proceeds of $50,000 through the issuance of 2,000,000 flow-through units of the Company at $0.025 per unit. Each unit consists of one flow-through common share in the capital of the Company and non-flow-through share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.05 per common share for a period of 5 years. All securities issued in connection with this financing include a hold period in accordance with applicable securities laws. Based on the residual method the warrants were valued at $nil. The units were issued below the then market price of the Company shares, therefore a flow-through premium was recorded.
On May 15, 2023, the Company closed the non-brokered private placement financing which was announced in December 2022 for gross proceeds of $150,000 through the issuance of 6,000,000 units of the Company at $0.025 per unit. Each unit consists of one common share in the capital of the Company and one share purchase warrant to purchase an additional common share in the capital of the Company at the price of $0.05 per common share for a period of 5 years. All securities issued in connection with this financing included a hold period in accordance with applicable securities laws. Based on the residual value the warrants were valued at $nil.

During the year ended December 31, 2022, the following share transactions occurred:

i) During August and October 2022, the Company issued in aggregate 1,200,000 non flow-through units of the Company. Each non flow-through unit consists of one common share and one share purchase warrant to acquire one common share of the Company at a price of $0.05 for a period of five years. All securities issued in connection with this financing were subject to four-months and one day hold period.

ii) On January 15, 2021, the Company issued 80,000 flow-through units of the Company. Each flow-through unit consists of one flow-through common share of the Company and one non-flow-through share purchase warrant to acquire one non-flow-through common share of the Company at a price of $0.50 for a period of two years. All securities issued in connection with this financing were subject to a hold period which expired on May 16, 2021.

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Loan Payable

The Company had borrowed the sum of $103,924 from a party to pay certain amounts that were owed by the Company to some of its creditors. The borrowed amount of $103,924 was non-interest bearing, unsecured and was payable on demand. Pursuant to a debt settlement agreement dated December 11, 2020 with the Company and the party, on January 25, 2021 the Company issued a total of 415,697 common shares of the Company with a fair value of $0.55 per shares in full settlement of the debt (the “Debt Settlement Shares of the Company”). The Company recognized a loss of $124,709 during the year ended December 31, 2021. The Debt Settlement Shares of the Company were subject to a hold period which expired on May 26, 2021.

During May 2021, an arm’s length party has lent the Issuer the amount of $50,000. As of December 31, 2023, the loan is outstanding and has accrued interest in the amount of $12,973.

Convertible Debentures Financing 2015

On January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000. The convertible debentures matured on January 6, 2016, and bear interest at the rate of 12% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company at a conversion price of $1.50 per share. The liability component of the convertible debentures was recognized initially at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a market interest rate of 25%. On the initial recognition of the convertible debentures, the amount of $222,006 was recorded under convertible debentures and the amount of $27,994 has been recorded under the equity portion of convertible debenture reserve.

On October 29, 2021, the Company entered into an Addendum to the convertible debentures whereby the maturity date of the principal amount totaling $250,000 of the convertible debentures together with the accrued interest has been extended indefinitely, until mutual consent of the Company and Lender has been reached.

As at December 31, 2023, the Company recorded interest expense of $30,000 (December 31, 2022 - $30,000). As of December 31, 2023, $250,000 of the convertible debentures are outstanding plus the accrued interest of $269,589 (December 31, 2022 - $239,589).

Convertible Debentures Financing 2013

Pursuant to debt settlement agreements dated December 11, 2020 in respect to the convertible debentures 2013, on January 25, 2021 the Company issued an aggregate of 833,409 common shares of the Company with a fair value of $0.55 per share in settlement of the outstanding convertible debentures 2013 totaling $100,000 plus accrued interest. The Company recognized a loss of $250,023 during the year ended December 31, 2021.

Warrants

As at December 31, 2023, a total of 9,200,000 warrants exercisable at the price of $0.05 per warrant share were outstanding. As of the date of this MD&A, there are 9,200,000 share purchase warrants outstanding.

While there are no assurances whatsoever that any warrants may be exercised, however if any warrants are exercised in the future, then any funds received by the Company from the exercising of warrants shall be used for general working capital purposes.

Stock Options

As at December 31,2023, there were no outstanding stock options (December 31, 2022 – Nil).

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Item 5.C. Research and development, patents and licences

The Company does not have a research and development department nor does it have any patents or licenses. 

Item 5.D. Trend Information

During the last several years commodity prices have fluctuated significantly, and should this trend continue or should commodity prices remain at current levels, then companies such as 37 Capital will have difficulty in raising funds and/or acquiring mineral properties of merit at reasonable prices.

Item 5.E. Off balance sheets arrangements.

The Company has no off balance sheets arrangements and the Company’s financial information including its balance sheets and statements of comprehensive loss have been fairly represented in accordance with IFRS.

Item 5.F. Tabular disclosure of contractual obligations

The Company has two convertible debentures totalling $250,000 plus accrued interest, which have been extended indefinitely (see Exhibit 10.15. 1 - Incorporated by reference). The Company has no Capital Lease Obligations or Purchase Lease Obligations reflected on the Company’s Balance Sheets, however the Company has Obligations pursuant to the 2015 Convertible Debentures Financing (see Exhibit 10.15 – Incorporated by reference). During the year ended December 31, 2021, the Company entered into Debt Settlements Agreements to settle certain outstanding debts and loans (see Exhibit 10.20 – Incorporated by reference).

Furthermore, pursuant to the Property Purchase Agreement with Colt, the Company was obligated to pay $75,000 to Colt within eighteen months from the closing date of the Property Option Agreement (see Exhibit 10.11.5 – Incorporated by reference). Pursuant to the Company’s offer letter to Colt dated July 6, 2022 which was accepted by Colt (see Exhibit 10.11.6* - Attached), the Company has made a cash payment of $15,000 and, has issued 50,000 common shares in the capital of the Company to Colt as consideration for the full and final settlement of all matters between the Company and Colt in respect to the Extra High Property located in the Province of British Columbia. The 50,000 common shares in the capital of the Company were subject to a hold period from trading which expired on December 10, 2022.

In respect to information covered by Items 5.E. and 5.F., all financial information and statements have been fairly represented in accordance with IFRS.

Item 5.G. Safe Harbour

Special Note regarding Forward-Looking Statements

We make certain forward looking-statements in this Form 20-F within the meaning of Section 27A of the Securities Act 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, proposed acquisitions, market forces, corporate strategies, contractual commitments, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbour for forward-looking statements. To comply with the terms of the safe harbour, we note that a variety of factors could cause our actual results and experience to differ substantially from the anticipated results or other expectations expressed in our forward-looking statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable” or similar words or expressions are used in this Form 20-F, as well as statements containing phrases such as “in our view,” “there can be no assurances,” “although no assurances can be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made. These forward-looking statements speak as of the date of this Form 20-F.

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The forward-looking statements are not guarantees of future performance and involve risk and uncertainties. These risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to differ materially from those set forth in our forward-looking statements. These statements are based on our current beliefs as to the outcome projected or implied in the forward-looking statements. Furthermore, some forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements involve risks and uncertainties including, but not limited to, the risks and uncertainties referred to in “Item 3.D. RISK FACTORS,” and elsewhere within the document and in other of our filings with the Securities and Exchange Commission.

New risk factors emerge from time to time and it is not possible for us to predict all such risk factors which can cause actual results to differ significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, investors should not overly rely or attach undue weight to forward-looking statements as an indication of our actual future results.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

As of December 31, 2023, the name, municipality of residence and the principal occupation of the directors and officers of the Company are the following:

Name and municipality of residence Position with the Registrant Date of Birth Principal occupation Term of Office with the Registrant

Jacob H. Kalpakian(1)

Vancouver, B.C. Canada

President, CEO and Director

October 18, 1968

President & CEO

April 2017 to Present

      Vice President of Registrant 1991 to April 2017
      President of Jackpot Digital Inc. (“Jackpot”) 1991 to Present
      CEO of Jackpot 2004 to Present
      President of Yo Eleven Gaming Inc. June 2021 to Present
         

Neil Spellman*(2)

Carlsbad, CA, USA

CFO & Director

January 24, 1953

Director of the Registrant CFO of the Registrant

Aug 2016 to Present

  

      Director of Jackpot April 2017 to Present
      Senior Vice President of DB Financial 2002 to July 2020
      CFO of Yo Eleven Gaming Inc. June 2021 to Present

Gregory T. McFarlane*

Washington, Utah, USA

Director November 13, 1968

Director of the Registrant Director of Jackpot

1992 to Present

      Principal of McFarlane Media, LLC (2005) 2005 to Present
      Director of Yo Eleven Gaming Inc. June 2021 to Present

Bedo H. Kalpakian* (2)

Delta, B.C. Canada

Director May 14, 1946

Director of the Registrant

2021 to Present

1984 to 2017

Maria P. Arenas

Surrey, B.C. Canada

Corporate Secretary September 29, 1969

Corporate Secretary of the Registrant

2008 to Present

      Corporate Secretary of Jackpot 2008 to Present
      Corporate Secretary of Yo Eleven Gaming Inc. June 2021 to Present

 

*Members of the Company’s audit committee.

(1) Upon Bedo H. Kalpakian stepping down as President & CEO, as of April 1, 2017, Mr. Jacob H. Kalpakian was appointed as President & CEO.

(2) Upon Bedo H. Kalpakian stepping down as CFO, as of April 1, 2017, Mr. Neil Spellman has been appointed as CFO. As of May 25, 2021, Bedo H. Kalpakian was appointed to the Board of Directors.

All directors serve for a term of one year until the next annual general meeting or until the date of their resignation, whichever occurs first.

There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person referred to above was selected as a director or member of senior management.

Item 6.B. Compensation

On August 1, 2016, the Management Services Agreement with Kalpakian Bros. of B.C. Ltd. (“Kalpakian Bros.”) was terminated by mutual consent (see Exhibits 10.4, 10.4.1, 10.4.2, 10.4.3, 10.4.4, 10.4.5, 10.4.5.6 - Incorporated by reference). The principal of Kalpakian Bros. is Jacob H. Kalpakian, the President, CEO and director of the Company. Bedo H. Kalpakian, former President, CEO, CFO and director of the Company was a principal of Kalpakian Bros. until December 31, 2019.

Pursuant to indemnity agreements dated April 1, 1993, January 7, 2008, August 2 2016, and May 25, 2021 between the Company and each of Bedo H. Kalpakian, Jacob H. Kalpakian, Gregory T. McFarlane, Maria P. Arenas, and Neil Spellman (collectively “the directors and officers”), the Company agreed to indemnify and save the directors and officers, their heirs and personal representatives harmless from and against all costs, charges and expenses arising out of their association with the Registrant. These costs, charges and expenses include any amounts paid to settle an action or to satisfy a judgement brought or found against the directors and/or officers and any amounts paid to settle an administrative action or proceeding provided that the indemnified party has acted in good faith and in the best interests of the Company. The Company Act requires a Court Order to be obtained prior to the Company making payment under the indemnity agreements. To date, the Company has not made any payments under the indemnity agreements.

During 2023, 2022 and 2021, there were no stock options granted to Directors, Officers and Employees.

The Company has no long-term incentive plans in place and, has not granted any stock appreciation rights.

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Item 6.C. Board Practices

6.C.1. Directors’ Terms of service.

All directors are elected annually by the Company’s shareholders to serve for a term of one year until the next annual general meeting of the shareholders. All directors may be annually re-elected by the Company’s shareholders at the annual general meeting of the shareholders for additional one year terms. Jacob H. Kalpakian has served as a director since 1991; Gregory T. McFarlane has served as a director since 1992; Neil Spellman has served as a director since August 2016 and Bedo H. Kalpakian served as director from 1984 until 2017 and again since May 25, 2021.

6.C.2. Details of Directors’ Service Contracts.

On August 1, 2016, the Management Services Agreement with Kalpakian Bros. of B.C. Ltd. (“Kalpakian Bros.”) was terminated by mutual consent (Exhibits 10.4, 10.4.1, 10.4.2, 10.4.3, 10.4.4, 10.4.5, 10.4.5.6 - Incorporated by reference). The principal of Kalpakian Bros. is Jacob H. Kalpakian, the President, CEO and director of the Company. Bedo H. Kalpakian, former President, CEO, CFO and director of the Company was a principal of Kalpakian Bros. until December 31, 2019.

6.C.3. Details relating to the Company’s audit committee and remuneration committee.

All directors are elected annually by the Company’s shareholders to act as directors of the Company for a term of one year. The Company’s audit committee is appointed on an annual basis by the Company’s directors. Presently, the Company’s audit committee consists of the following directors; Neil Spellman, Gregory T. McFarlane and Bedo H. Kalpakian. The majority of the members of the audit committee must be made up of directors who are not officers of the Company. The audit committee is also responsible to monitor compliance of the Company’s Code of Ethics (see Exhibit 14.1 – Incorporated by reference).

Pursuant to Canadian National Policy (52-110) with respect to Audit Committee Disclosure, the charter of the Company’s Audit Committee and other information required to be disclosed have been disclosed in the Company’s Annual Information Circular with respect to the Company’s Annual General Shareholder’s meeting which was held on December 12, 2023. The Company’s 2023 Annual Information Circular (see Exhibit 13.7* - Attached) includes the Company’s Audit Committee Disclosure under Form 52-110F2.

The Company does not have a remuneration committee or an executive committee largely due to its size.

Item 6.D. Employees

The Company’s employees are not represented by a union or other collective bargaining organization and the Company has not experienced any work stoppage by its employees. The Company believes that its employee relations are good.

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Item 6.E. Share Ownership

The number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December 31, 2023 are as follows: 

Name of Director/Officer and Municipality  Number of Issued Shares  Percentage of the total Issued Share Capital*
Jacob H. Kalpakian Vancouver, BC, Canada   5,403,039(1)   39.31%
Gregory T. McFarlane, Washington, UT, USA   25    0.00%
Bedo Kalpakian, Delta, BC, Canada   140,786    1.02%
Neil Spellman Carlsbad, CA, USA   0    0.00%
Maria P. Arenas Surrey, BC, Canada   114    0.00%

Notes: *Based on 13,745,947 issued and outstanding common shares as of December 31, 2023.

(1) Of these common shares, 126,264 are held by 30 Rock Management Inc., 2,217,656 are held by Kalpakian Bros.and 302,831 are held by a family member.

(2) Kalpakian Bros. and 30 Rock Management Inc. are private companies controlled by Jacob H. Kalpakian.

The number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December 31, 2022 are as follows: 

Name of Director/Officer and Municipality  Number of Issued Shares  Percentage of the total Issued Share Capital*
Jacob H. Kalpakian Vancouver, BC, Canada   1,802,039(1)   31.36%
Gregory T. McFarlane, Washington, UT, USA   25    0.00%
Bedo Kalpakian, Delta, BC, Canada   140,786    2.45%
Neil Spellman Carlsbad, CA, USA   0    0.00%
Maria P. Arenas Surrey, BC, Canada   114    0.002%

Notes: *Based on 5,745,947 issued and outstanding common shares as of December 31, 2022.

(1) Of these common shares, 126,264 are held by 30 Rock Management Inc., 1,416,656 are held by Kalpakian Bros.and 2,831 are held by a family member.

(2) Kalpakian Bros. and 30 Rock Management Inc. are private companies controlled by Jacob H. Kalpakian.

The number of common shares beneficially owned (directly and indirectly) by officers and directors of the Company as of December 31, 2021 were as follows: 

Name of Director/Officer and Municipality  Number of Issued Shares  Percentage of the total Issued Share Capital*
Jacob H. Kalpakian Vancouver, BC, Canada   439,039(1)   9.77%
Gregory T. McFarlane, Washington, UT, USA   25    0.00%
Bedo Kalpakian, Delta, BC, Canada   140,786    3.13%
Neil Spellman Carlsbad, CA, USA   0    0.00%
Maria P. Arenas Surrey, BC, Canada   114    0.002%

Notes: *Based on 4,495,947 issued and outstanding common shares as of December 31, 2021.

(1) Of these common shares, 126,264 were held by 30 Rock Management Inc., 303,656 were held by Kalpakian Bros.and 2,831 were held by a family member.

(2) Kalpakian Bros. and 30 Rock Management Inc. are private companies controlled by Jacob H. Kalpakian.

Item 6.E.2. Stock Options for Employees

From time to time the Company grants Incentive Stock Options to its directors, officers, employees and consultants. The incentive stock options entitle the holders to acquire common shares of the Company from treasury. The incentive stock options are a means of rewarding future services provided to the Company and are not intended as a substitute for salaries or wages, or as a means of compensation for past services rendered.

At the Company’s Annual General Meeting of shareholders held on April 30, 2004, the shareholders of the Company approved the Company’s 2004 Stock Option Plan (Exhibit 10.7 – Incorporated by reference). Shareholders of the Company adopted and approved the 2015 Stock Option Plan at the Company’s Annual and Special General Meeting of Shareholders which took place on June 4, 2015 (see Exhibit 12 – Incorporated by reference) and was re-approved by the Shareholders of the Company at the Annual General Meeting of Shareholders which took place on Wednesday, November 18, 2019 see Exhibit 13.3 – Incorporated by reference), at the Annual General Meeting of Shareholders which took place on Friday, November 20, 2020 (see Exhibit 13.4 - Incorporated by reference), at the Annual General Meeting of Shareholders which took place on Friday, December 3, 2021 (see Exhibit 13.5 – Incorporated by reference), at the Annual General Meeting of Shareholders which took place on Monday, November 14, 2022 (see Exhibit 13.6 – Incorporated by reference) and at the last Annual General Meeting of Shareholders which took place on Tuesday, December 12, 2023 (see Exhibit 13.7* - Attached).

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The Company’s 2015 Stock Option Plan reserves for granting to directors, officers, employees and consultants up to 20% of the issued and outstanding common shares of the Company calculated from time to time on a rolling basis. The terms of the options are determined at the date of grant.

During 2023, 2022 and 2021 there were no stock options granted to Directors, Officers, Employees and Consultants.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A.1. The Company is a publicly-owned corporation, the common shares of which are owned by Canadian residents, U.S. residents, and residents of other countries. The Company is not directly or indirectly controlled by any foreign government. However, Jackpot owned 48.64% of the Company’s issued and outstanding common shares as at December 31, 2018. During the twelve months ended December 31, 2019, Jackpot sold a total of 680,000 of the Company’s common shares. As at December 31, 2019 and 2020, Jackpot owned 9,997 common shares of the Company. In addition, Jackpot owned 689,997 share purchase warrants of the Company exercisable at $0.60 per share which expired unexercised on November 2, 2022. Subsequent to the year-ended December 31, 2020, Jackpot acquired 597,380 (post-consolidated) additional shares pursuant to a debt settlement agreement (see Exhibit 10.20 - Incorporated by reference).

As of the date of this Annual Report, Jackpot owns 607,377 common shares of the Company representing 4.42% of the issued and outstanding common shares of the Company. The Debt Settlement Shares of the Company were subject to a hold period which expired on May 26, 2021.

As at December 31, 2023, the following persons or corporations beneficially own, directly or indirectly, or exercise control over shares carrying more than 5% of the issued and outstanding shares of the Company:

Name of Shareholder and Municipality  Number of Issued Capital  Percentage of the Total Issued Share Capital*
Bedo H. Kalpakian, Delta, BC and
Jacob H. Kalpakian Vancouver, BC
   5,543,825(1)   40.33%
Roberto Fia, Toronto, ON   4,040,000    29.39%

(1) Of these shares, 140,786 common shares are held by Bedo H. Kalpakian directly, 2,756,288 common shares are held by Jacob H. Kalpakian directly, 2,343,920 common shares are held by private companies which are controlled by Jacob H. Kalpakian, and 302,831 common shares are held by a family member of Jacob H. Kalpakian.

* Based on 13,745,947 issued and outstanding common shares as of December 31, 2023

As at December 31, 2022, the following persons or corporations beneficially own, directly or indirectly, or exercise control over shares carrying more than 5% of the issued and outstanding shares of the Company:

Name of Shareholder and Municipality  Number of Issued Capital  Percentage of the Total Issued Share Capital*
Bedo H. Kalpakian, Delta, BC and
Jacob H. Kalpakian Vancouver, BC
   1,942,825(1)   33.81%
           

Jackpot Digital Inc., Vancouver, BC 607,377 10.5%

(1) Of these shares, 140,786 common shares are held by Bedo H. Kalpakian directly, 256,288 common shares are held by Jacob H. Kalpakian directly, 1,542,920 common shares are held by private companies which are controlled by Jacob H. Kalpakian, and 2,831 common shares are held by a family member of Jacob H. Kalpakian.

* Based on 5,745,947 issued and outstanding common shares as of December 31, 2022

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As at December 31, 2021, the following persons or corporations beneficially own, directly or indirectly, or exercise control over shares carrying more than 5% of the issued and outstanding shares of the Company:

Name of Shareholder and Municipality  Number of Issued Capital  Percentage of the Total Issued Share Capital*
Bedo H. Kalpakian, Delta, BC and Jacob H. Kalpakian Vancouver, BC and Isabel Kalpakian Vancouver, BC   1,317,249(1)   29.30%
           

Jackpot Digital Inc., Vancouver, BC 607,377 13.51%

(1) Of these shares, 140,786 common shares are held by Bedo H. Kalpakian directly, 6,288 common shares are held by Jacob H. Kalpakian directly, 737,424 common shares are held by Isabel Kalpakian, 429,920 common shares are held by private companies which are controlled by Jacob H. Kalpakian, and 2,831 common shares are held by a family member of Jacob H. Kalpakian.

* Based on 4,495,947 issued and outstanding common shares as of December 31, 2021

 7.A.1.(c) All shareholders of the Company have equal voting rights. Holders of common shares of the Company are entitled to one vote per share at all meetings of shareholders, to receive dividends as and when declared by the Directors, and to receive a pro-rata share of the assets of the Company available for distribution to common shareholders in the event of the liquidation, dissolution or winding up of the Company. There are no pre-emptive, conversion or surrender rights attached to the common shares of the Company.

7.A.2. As of December 31, 2023, the Company had 13,745,947 issued and outstanding common shares. The number of outstanding common shares of the Company held in the United States and the number of registered holders thereof were 919 outstanding common shares and 2 registered shareholders (which include depository trusts which hold shares on behalf of non-registered shareholders).

7.A.3. To the best of the Company’s knowledge the Company is not controlled directly or indirectly by any foreign government or by any natural or legal person severally or jointly other than as disclosed in 7.A.1. in this Annual Report.

7.A.4. To the best of the Company’s knowledge, there are no known arrangements which may at a subsequent date result in a change of control of the Company.

Item 7.B. Related Party Transactions

The Company shares office space and certain employees with Jackpot, a company related by certain common key management personnel.

The Company has an office lease agreement with Jackpot. Under the agreement, the Company is entitled to have office space from Jackpot at a monthly rate of $1,000 plus applicable taxes. Furthermore, Jackpot or the Company may terminate this agreement by giving each other a three months’ notice in writing.

Effective as of May 1, 2018, the Company entered into an agreement for office support services with Jackpot for a term of one year. On May 1, 2019 the agreement was extended for a period of one year and has subsequently been extended up to September 30, 2024. Under the agreement, the Company is entitled to receive office support services from Jackpot at a monthly rate of $1,000 plus applicable taxes. Either Jackpot or the Company may terminate this agreement by giving each other a three months’ notice in writing.

During the year ended December 31, 2023 the Company settled accounts payable and recognized a gain of $53,371 (December 31, 2022 and 2021 - $nil).

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The amounts due to related parties are unsecured, payable on demand which consist of the following:

   December 31, 2023  December 31, 2022
Advances from directors (interest at prime plus 1%)  $—     $40,372 
Entities controlled by directors (non-interest-bearing)   82,328    62,828 
    82,328   $103,200 

 

The convertible debentures and accrued interest of $519,589 (December 31, 2022 - $489,589) is owed to the Chief Executive Officer, and to a director of the Company.

During the years ended December 31, the following amounts were charged by related parties.

   2023  2022  2021
Interest charged on amounts due to related parties  $1,100   $1,158   $275 
Interest on convertible debentures   30,000    30,000    30,000 
Rent charged by entities with   common directors   12,000    12,000    12,000 
Office expenses charged by, and other
expenses paid on behalf of the Company by a company with common directors
   15,081    19,272    13,901 
   $58,181   $62,430   $56,176 

The Company, together with Jackpot a related company with certain common directors, have entered into an office lease agreement, and an office support services agreement.

On January 6, 2015, the Company closed a convertible debenture financing with two directors of the Company for the amount of $250,000. The convertible debentures matured on January 6, 2016, and bear interest at the rate of 12% per annum payable on a quarterly basis. The convertible debentures are convertible into common shares of the Company at a conversion price of $1.50 per share. The liability component of the convertible debentures was recognized initially at the fair value of a similar liability with no equity conversion option, which was calculated based on the application of a market interest rate of 25%. On the initial recognition of the convertible debentures, the amount of $222,006 was recorded under convertible debentures and the amount of $27,994 has been recorded under the equity portion of convertible debenture reserve.

On October 29, 2021 the Company entered into an Addendum (see Exhibit 10.15.1 – Incorporated by reference) to the convertible debentures whereby the maturity date of the principal amount totaling $250,000 of the convertible debentures together with the accrued interest has been extended indefinitely, until mutual consent of the Company and Lender has been reached.

At December 31, 2023, the Company recorded interest expense of $30,000 (2022 - $30,000). As of December 31, 2023, $250,000 of the convertible debentures are outstanding plus the accrued interest of $269,589 (2022 - $239,589).

Pursuant to debt settlement agreements dated December 11, 2020 totaling the sum of $739,351.50 between the Company and certain creditors, including Jackpot Digital Inc. (“Jackpot’) and the Company’s President and CEO, on January 25, 2021 the Company issued a total of 2,957,406 common shares of the Company at a deemed price of $0.25 per common share (the “Debt Settlement Shares of the Company”), of which Jackpot acquired 597,380 Debt Settlement Shares of the Company and the Company’s President and CEO acquired 615,395 Debt Settlement Shares of the Company. As of the date of this Annual Report, Jackpot owns 607,377 common shares of the Company representing approximately 4.42% of the issued and outstanding common shares of the Company. The Debt Settlement Shares of the Company were subject to a hold period which expired on May 26, 2021.

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Jackpot is related to the Company by virtue of the fact that Jackpot’s CEO and President, namely Jacob H. Kalpakian, is the President & CEO of the Company. Furthermore, Gregory T. McFarlane and Neil Spellman are directors of both the Company and Jackpot.

Previously, the Company hired the services of J.W. Murton & Associates to provide geological services. J.W. Murton & Associates is a private company owned by J.W. Murton, a former director of the Company.

Colt was previously related to the Company by virtue of the fact that Bedo H. Kalpakian was the President and CEO of Colt and was the former President, CEO and CFO of the Company, and Jacob H. Kalpakian was the Vice President and Director of Colt and is the President, CEO and Director of the Company. Furthermore, J. Wayne Murton was a former Director of the Company and was a director of Colt.

The Company is or was related to the following companies by common management and/or directors and/or officers:

-Jackpot Digital Inc. (“Jackpot”), a public company listed on the TSX Venture Exchange, also quoted in the U.S.A. on the OTCQB of the OTC Markets Group and on the Frankfurt Stock Exchange. Jacob H. Kalpakian is an officer, director and shareholders of Jackpot and Gregory T. McFarlane and Neil Spellman are directors of Jackpot. Bedo H. Kalpakian was a director and officer of the Company and was an officer and director of Jackpot. As of May 25, 2021, Bedo Kalpakian was appointed to the Board of Directors of the Company.
-Kalpakian Bros. of B.C. Ltd., a private company incorporated under the laws of the Province of British Columbia, the principal shareholder is Jacob H. Kalpakian, director of the Company; - Yo Eleven Gaming Inc. (“Yo Eleven”), a reporting issuer incorporated under the laws of the Province of British Columbia. Jacob Kalpakian, Neil Spellman and Greg McFarlane are directors of Yo Eleven and Maria Arenas is the Corporate Secretary of Yo Eleven;
-BHK Management Inc., was a private company incorporated under the laws of the Province of British Columbia, the principal shareholder of which was Bedo H. Kalpakian, who is currently a director of the Company;
-30 Rock Management Inc., a private company incorporated under the laws of the Province of British Columbia, the principal shareholder of which is Jacob H. Kalpakian, a director of the Company;
-Colt Resources Inc. (“Colt”), is a public company. Colt was formerly related to the Company by certain directors and officers as more particularly described in this Annual Report;
-J.W. Murton & Associates, a private company incorporated under the laws of the Province of British Columbia, the principal shareholder of which is J. Wayne Murton, a former director of the Company;
-Green Arrow Resources Inc. (“Green Arrow”) is a public company listed on the TSX Venture Exchange. Jacob H. Kalpakian was a former President and director of Green Arrow from April 2012 until November 2017. Neil Spellman and Bedo Kalpakian were also former directors of Green Arrow until March 14, 2017 and November 30, 2017, respectively.
-27 Red Capital Inc., a reporting issuer incorporated under the laws of the Province of British Columbia. Jacob Kalpakian was a former officer and director. Bedo H. Kalpakian and Neil Spellman were former directors of 27 Red Capital Inc.
-4 Touchdowns Capital Inc., a reporting issuer incorporated under the laws of the Province of British Columbia. Jacob Kalpakian was a former officer and director. Bedo H. Kalpakian and Neil Spellman were former directors of 4 Touchdowns Capital Inc.

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Item 7.C. Interests of Experts and Counsel

Not Applicable.

ITEM 8. FINANCIAL INFORMATION

Item 8.A. Financial Statements and Other Information

The Company’s Audited Financial Statements together with the Management’s Discussion & Analysis for the year ended December 31, 2023, are included in Item 17 of this Annual Report.

Item 8.A.7. Legal Proceedings

On January 17, 2017 a Notice of Civil Claim was filed in the Supreme Court of British Columbia by 310047 B.C. Ltd. against the Company for the sum of $53,024.40 being monies due by the Company to 310047 B.C. Ltd. pursuant to an assignment by the Company’s solicitor Clark Wilson LLP.

On February 21, 2017 an Assignment of Debt Agreement was entered into between Clark Wilson LLP, and 310047 B.C. Ltd., and Jamco Capital Inc. (formerly Kape Holdings Inc.) (“Jamco”) whereby the outstanding debt in the amount of $53,024.40 was assigned to Jamco. The Company had acknowledged this assignment to Jamco and agreed to adjust the Company’s financial accounts and records to reflect this assignment. Jamco is an arm’s length party to the Company. As a result of this Assignment of Debt Agreement, a Notice of Discontinuance was filed in the Supreme Court of British Columbia on March 21, 2017 by 310047 B.C. Ltd. and Clark Wilson LLP whereby the Civil Claim that was filed by 310047 B.C. Ltd. against the Company was discontinued. On January 25, 2021, the Company issued 212,098 common shares to Jamco in settlement of the $53,023.40 pursuant to a debt settlement agreement (see Exhibit 10.20 - Incorporated by reference).

The Company’s corporate legal counsel is Harper Grey LLP, (Attention: Michael Kennedy), Suite 3200-650 West Georgia Street, Vancouver BC V6B 4P7. The telefax number is (604) 669-9385.

Item 8.A.8. Dividends

The Company entered into an Arrangement Agreement. For further particulars, please see Item 4. C. Organizational Structure.

Item 8. B. Significant Changes

As a result of the completion of the Arrangement, 27 Red and 4 Touchdowns are independent entities and are no longer subsidiaries of the Company.

During 2018, Jackpot owned 689,997 common shares of the Company which represented 48.64% of the Company’s then issued and outstanding common shares as at December 31, 2018. As such, Jackpot had direct control of the Company. During the year ended December 31, 2019, Jackpot sold 680,000 common shares of the Company. As at December 31, 2020, Jackpot owned 49,985 common shares in the capital of the Company representing approximately 0.69% of the then Company’s issued and outstanding common shares. In addition, Jackpot owned 689,997 share purchase warrants of the Company exercisable at $0.60 per share which expired unexercised on November 2, 2022. On January 25, 2021, Jackpot acquired additional 597,380 common shares pursuant to a debt settlement agreement (see Exhibit 10.20 - Incorporated by reference). As of the date of this Report, Jackpot owns 607,377 common shares of the Company representing approximately 4.42% of the issued and outstanding common shares of the Company.

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ITEM 9. THE OFFER & LISTING

Item 9.A. (4) Listing Details

On April 4, 1985, the Company’s common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed its common shares from the Montreal Exchange, and, on October 3, 1994, the Company’s shares were delisted from the Nasdaq SmallCap Market. Effective October 4, 1994, the Company’s shares have been listed for trading on the OTC Bulletin Board, and were listed on the OTCQB tier of the OTC Markets Group (“OTCQB”) until June 1, 2020. Presently, the Company’s common shares are listed for trading on the PINK Sheets on the OTC market. Effective on November 29, 1999 the Vancouver Stock Exchange became known as the CDNX as a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange. On July 5, 2001, the Company made a formal application to the CDNX requesting the voluntary delisting of the Company’s common shares from trading on the CDNX, as a result of which, the common shares of the Company were de-listed from trading on the CDNX effective at the close of trading on July 31, 2001. The trading symbol of the Company’s common shares when they were listed on the CDNX was “GGG”.

 On July 30, 1986, the Company’s share capital split on the basis of one-old-for-two-new common shares. On May 25, 1992, the Company’s share capital was consolidated on the basis of ten-old-for-one-new common share. On April 25, 2000, the Company’s share capital was consolidated on the basis of fifteen-old-for-one-new common share. On May 2, 2002, the Company’s name was changed to Lucky 1 Enterprises Inc. and its share capital was consolidated on the basis of five-old-for-one-new common share and its authorized share capital was subsequently increased to 200,000,000 common shares without par value. On January 17, 2005, the Company’s name was changed to Bronx Ventures Inc. and its share capital was consolidated on the basis of thirty-five-old-for-one-new-common share, and its authorized share capital was subsequently increased to an unlimited number of common and preferred shares without par value. Effective at the opening of business on January 24, 2005, the common shares of Lucky 1 Enterprises Inc. were de-listed, and the common shares of Bronx Ventures Inc. commenced trading on the OTC Bulletin Board and were listed on the OTC Bulletin Board in the U.S.A. under the trading symbol “BRXVF”. On March 19, 2007, the Company changed its name to Zab Resources Inc. and subdivided its stock on a one (1) old for 50 (new) shares basis. As a result, the shares of Bronx Ventures Inc. were de-listed from trading and the shares of Zab Resources Inc. commenced trading on the OTC Bulletin Board and were listed on the OTC Bulletin Board in the USA under the symbol “ZABRF” on March 22, 2007.

Effective November 28, 2007, the common shares of the Company have been listed for trading on the Canadian Securities Exchange (“CSE”) (formerly Canadian National Stock Exchange) under the trading symbol “ZABK”. On October 17, 2008, the Company’s CSE symbol was changed to “ZAB” pursuant to the CSE adopting a three character symbol format.

On April 16, 2009, the Company changed its name from Zab Resources Inc. (“Zab”) to Kokomo Enterprises Inc. (“Kokomo”) and the Company’s share capital was consolidated on the basis of 25 (old) shares of Zab for 1 (new) share of Kokomo. As a result, the shares of Zab were de-listed from trading and the shares of Kokomo commenced trading in Canada on the CSE under the symbol “KKO”, and in the U.S.A. the shares of Kokomo commenced trading on the OTCQB under the symbol “KKOEF”. The Cusip number of the Company’s common shares was 500323100.

On August 31, 2012, the Company changed its name from Kokomo Enterprises Inc. (“Kokomo”) to High 5 Ventures Inc. (“High 5”) and the Company’s share capital was consolidated on the basis of 15 (old) shares of Kokomo for 1 (new) share of High 5. As a result, the shares of Kokomo were de-listed from trading and the shares of High 5 commenced trading in Canada on the CSE under the symbol “HHH” and in the USA, the shares of High 5 commenced trading on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s common shares was 42966V105.

On July 7, 2014, the Company’s share capital was consolidated on the basis of 6 (old) common shares for 1 (new) common share and the Company changed its name to 37 Capital Inc. (“37 Capital”). As a result, the shares of High 5 were de-listed from trading and the shares of 37 Capital commenced trading in Canada on the CSE under the symbol “JJJ”, and in the U.S.A. the trading symbol of the Company’s shares remained unchanged on the OTCQB under the trading symbol “HHHEF”. The Cusip number of the Company’s common shares was 88429G102.

 25 

 

On June 21, 2019 the CSE deemed that the Company is inactive pursuant to the policies of the CSE, as a result the CSE changed the Company’s trading symbol to “JJJ.X”. The Company's common shares traded on the OTCQB tier of the OTC markets under the trading symbol “HHHEF” until June 1, 2020. Presently, the Company’s common shares are listed for trading on the PINK Sheets on the OTC market under the trading symbol “HHHEF”.

Effective June 15, 2021, the Company consolidated its capital stock on the basis of 5 pre-consolidation common shares to 1 post-consolidation common share. The Cusip number of the Company’s common shares is 88429G201. All the figures as to the number of common shares, stock options, warrants, prices of issued shares, exercise prices of stock options and warrants, as well as loss per share, in this Report are post-consolidation amounts and the prior year comparatives have been retroactively restated to present the post-consolidation amounts.

 The following tables set forth the market price range and trading volumes of the common shares of the Company on the OTC Pink Sheets and on the CSE for the periods indicated.

OTC Pink Sheets – OTC Markets Group

Trading Range

Five Most Recent Financial Years  U.S.$ High  U.S.$ Low  Volume
2019   0.76    0.25    2,184 
2020   0.2805    0.1205    1,605 
2021   0.8415    0.03    43,621 
2022   0.132    0.089    5,321 
2023   N/A    N/A    N/A 
                
Two Most Recent Financial Years               
Year 2022               
Jan 1 – Mar 31   0.132    0.089    5,321 
Apr 1 – Jun 30   N/A    N/A    0 
Jul 1 – Sept 30   N/A    N/A    0 
Oct 1 – Dec 31   N/A    N/A    0 
                
Year 2023               
Jan 1 – Mar 31   N/A    N/A    0 
Apr 1 – Jun 30   N/A    N/A    0 
Jul 1 – Sept 30   N/A    N/A    0 
Oct 1 – Dec 31   N/A    N/A    0 

CSE

Canadian Stock Exchange

Trading Range

   Cdn $ High  Cdn $ Low  Volume
Five Most Recent Financial Years         
2019   1.45    0.05    892,666 
2020   0.30    0.05    286,344 
2021   1.15    0.25    1,306,227 
2022   0.17    0.015    556,306 
2023   0.075    0.025    235,555 
Two Most Recent Financial Years               
Year 2022               
Jan 1 – Mar 31   0.17    0.12    69,450 
Apr 1 – Jun 30   0.095    0.05    130,799 
Jul 1 – Sep 30   0.04    0.02    27,931 
Oct 1 – Dec 31   0.04    0.015    328,126 
                
Year 2023               
Jan 1 – Mar 31   0.05    0.05    1,360 
Apr 1 – Jun 30   0.05    0.025    7,004 
Jul 1 – Sep 30   0.06    0.06    2,500 
Oct 1 – Dec 31   0.075    0.06    224,691 

 26 

 

Item 9.C. Markets

On April 4, 1985, the Company’s common shares were listed and posted for trading on the Vancouver Stock Exchange, on the Montreal Exchange on January 15, 1988 and, on the Nasdaq SmallCap Market on May 11, 1988. On July 12, 1991, the Company voluntarily de-listed its common shares from the Montreal Exchange, and, on October 3, 1994, the Company’s shares were de-listed from the Nasdaq SmallCap Market. On October 4, 1994, the Company’s shares were listed for trading on the OTC Bulletin Board. On November 29, 1999 the Vancouver Stock Exchange became known as the CDNX as a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange. On July 5, 2001, the Company made a formal application to the CDNX requesting the voluntary delisting of the Company’s common shares from trading on the CDNX, as a result of which, the common shares of the Company were de-listed from trading on the CDNX effective at the close of trading on July 31, 2001.

On November 28, 2007, the common shares of the Company were listed for trading on the Canadian Stock Exchange (“CSE”) (formerly Canadian National Stock Exchange) under the trading symbol “ZABK”. On October 17, 2008, the Company’s CSE symbol was changed to “ZAB” pursuant to the CSE adopting a three-character symbol format.

On April 16, 2009, the Company changed its name from Zab Resources Inc. (“Zab”) to Kokomo Enterprises Inc. (“Kokomo”), and the Company consolidated its capital stock on the basis of 25 (old) shares of Zab for 1 (new) share of Kokomo. As a result, the shares of Zab were de-listed from trading and the shares of Kokomo commenced trading in Canada on the CSE under the symbol “KKO”, and in the U.S.A. the shares of Kokomo commenced trading on the OTCQB under the symbol “KKOEF”. The Cusip number of the Company’s common shares was 500323100.

On August 31, 2012, the Company changed its name from Kokomo Enterprises Inc. (“Kokomo”) to High 5 Ventures Inc. (“High 5”) and the Company’s share capital was consolidated on the basis of 15 (old) shares of Kokomo for 1 (new) share of High 5. As a result, the shares of Kokomo were de-listed from trading and the shares of High 5 commenced trading in Canada on the CSE under the symbol “HHH” and in the USA, the shares of High 5 commenced trading on the OTCQB under the symbol “HHHEF”. The Cusip number of the Company’s common shares was 42966V105.

On July 7, 2014, the Company changed its name from High 5 Ventures Inc. (“High 5”) to 37 Capital Inc. (“37 Capital”) and consolidated its share capital on the basis of one new 37 Capital common share for every six old High 5 common shares (1:6). As a result, the Company’s trading symbol on the CSE is “JJJ” and in the USA, the trading symbol of the Company’s shares remains unchanged on the OTCQB and trade under the symbol “HHHEF”. The Cusip number of the Company’s common shares was 88429G102.

On June 21, 2019 the CSE deemed the Company inactive pursuant to the policies of the CSE, as a result the CSE changed the Company’s trading symbol to “JJJ.X”. Effective February 5, 2024, the Company has satisfied the continuous listing requirements of the CSE and is an active issuer trading under the trading symbol “JJJ”. The Company's common shares traded on the OTCQB tier of the OTC markets under the trading symbol “HHHEF” until June 1, 2020.

Effective June 15, 2021, the Company consolidated its capital stock on the basis of 5 pre-consolidation common shares to 1 post-consolidation common share. The Cusip number of the Company’s common shares is 88429G201. Presently, the Company’s common shares are listed for trading on the CSE under the trading symbol to “JJJ”, and on the the PINK Sheets on the OTC market under the trading symbol “HHHEF”.

On February 5, 2024, the CSE has deemed the Company to meet its minimum listing requirements and, as a result, the Company is now trading under the symbol “JJJ”.

 27 

 

ITEM 10. ADDITIONAL INFORMATION

Item 10. A. Share Capital

Effective June 15, 2021, the Company consolidated its capital stock on the basis of 5 pre-consolidation common shares to 1 post-consolidation common share.

On July 7, 2014, the Company’s name was changed to 37 Capital Inc. (“37 Capital”), its share capital was consolidated on the basis of 6 (old) shares of High 5 for 1 (new) share of 37 Capital.

At the Company’s 2005 Special General Meeting held on January 10, 2005, the shareholders approved the deletion of the Pre-Existing Company Provisions in the notice of Articles of the Company and approved the alteration of the Company’s Notice of Articles. The shareholders approved the increase of the Company’s authorized capital to an unlimited number of Common and Preferred Shares, both without par value, approved the adoption of new articles in substitution for the old articles of the Company (Exhibit 3.2 – Incorporated by reference).

The authorized share capital of the Company consists of an unlimited number of common and preferred shares without par value of which 13,745,947 common shares are issued and outstanding as of December 31, 2023. No preferred shares have been issued.

Holders of common shares of the Company are entitled to one vote per share at all meetings of shareholders of the Company, to receive dividends as and when declared by the Directors, and to receive a pro-rata share of the assets of the Company available for distribution to common shareholders in the event of the liquidation, dissolution or winding up of the Company. There are no pre-emptive, conversion or surrender rights attached to the common shares of the Company.

All shares have been issued pursuant to resolutions of the Board of Directors of the Company.

Outstanding Share Data   No. of Common Shares No. of Preferred Shares Exercise Price per Share Expiry Date

Issued and Outstanding as at April 29, 2024

 13,745,947 Nil N/A     N/A

Warrants

  250,000

750,000

200,000

6,000,000

2,000,000

9,200,000

Nil

$0.05

$0.05

$0.05

$0.05

$0.05

 August 31, 2027

October 7, 2027

October 31, 2027

May 15, 2028

July 24, 2028

Stock Options

1,750,000

Nil

$0.10

January 29, 2027

Fully Diluted as at April 29, 2024

 24,695,947

Nil    

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Item 10.A.4. Warrants

All warrants have been issued pursuant to resolutions of the Board of Directors of the Company.

The following summarizes the warrants that have been granted, exercised, cancelled or expired during the years ended December 31,2023, 2022 and 2021:

Warrants activity for the years ended December 31, 2023, 2022 and 2021 are as follows:

   Number of Warrants  Weighted Average Exercise Price
Balance, December 31, 2021    944,997   $0.59 
Issued    1,200,000   $0.05 
Expired    (864,997)  $0.12 
Balance, December 31, 2022    1,280,000   $0.08 
Expired    (80,000)  $0.5 
Issued    8,000,000   $0.05 
Balance, December 31, 2023    9,200,000   $0.05 

As of December 31, 2023, the following warrants were outstanding:

Expiry Date  Exercise Price  Number of Warrants Outstanding
August 31, 2027  $0.05    250,000 
October 7, 2027  $0.05    750,000 
October 31, 2027  $0.05    200,000 
May 15, 2028  $0.05    6,000,000 
July 24, 2028  $0.05    2,000,000 
         9,200,000 

The weighted average remaining contractual life for warrants outstanding at December 31, 2023 is 4.34 years (2022 – 4.46 years).

Item 10.A.5. Stock Options

From time to time, the Company grants stock options to its directors, employees and consultants on terms and conditions acceptable to the Regulatory Authorities. The stock options entitle the holders to acquire common shares of the Company from treasury (see Exhibit 13.3 – Incorporated by reference).

The 2015 Stock Option Plan was re-approved by the Shareholders at the Company’s Annual General Meeting held on November 14, 2022. The Company’s 2015 Stock Option Plan provides that the Board of Directors of the Company may grant to directors, officers, employees and consultants of the Company options to acquire up to 20% of the issued and outstanding common shares of the Company calculated from time to time on a rolling basis. The terms of the options are determined at the date of grant (see Exhibit 13.6 – Incorporated by reference).

As of December 31, 2023, there were no stock options outstanding (December 31, 2022: Nil) (December 31, 2021: Nil).

Item 10. A.6. History of Share Capital

There are no special voting rights attached to any of the Company’s issued and outstanding shares. All shares which were issued from the Company’s Treasury were issued for cash or in the case of Finder’s Fees for services rendered or shares for debt in the case of outstanding debts.

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CAPITAL STOCK

Authorized: Unlimited number of Common and Preferred shares without par value. No preferred shares have been issued.

Reserves

         Reserves
   Common Shares  Amount  Equity Portion of Convertible Debentures Reserve  Warrants  Deficit  Total Stockholders' Equity (Deficiency)
Balance, December 31, 2020   1,458,542   $25,864,950   $33,706   $—     $(27,195,318)  $(1,296,662)
Net loss for the year   —      —      —      —      (1,044,863)   (1,044,863)
Private placement, net of issuance of
costs
   80,000    20,000    —      —      —      20,000 
Shares issued for debt, net of issuance of costs   2,957,406    1,626,319    —      —      —      1,626,319 
Fractional share adjustment   (1)   —      —      —      —      —   
Balance, December 31, 2021   4,495,947    27,511,269    33,706    —      (28,240,181)   (695,206)
Net loss for the year   —      —      —      —      (125,036)   (125,036)
Shares issued for mineral property interest   50,000    1,000    —           —      1,000 
Private placement, net of issuance of
costs
   1,200,000    24,000    —      24,000    —      48,000 
Balance, December 31, 2022   5,745,947    27,536,269    33,706    24,000    (28,365,217)  $(771,242)
Net loss for the year   —      —      —      —      (48,820)   (48,820)
Private placement, net of issuance of costs   8,000,000    200,000    —      —      —      200,000 
Balance, December 31, 2023  13,745,947    $27,736,269    $33,706    24,000     $(28,414,037  $(620,062

Item 10.B. Articles of Association

The Company’s shareholders considered and approved a special resolution to adopt new Articles for the Company at the Company’s Special Meeting which was held on January 10, 2005, (Exhibit 3.2 – Incorporated by reference). On September 18, 2014, the Company’s shareholders considered and approved a resolution to adopt an Amendment to the Articles for the implementation of the Advance Notice Provisions (see Exhibit 3 – Incorporated by reference).

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Item 10. C. Material Contracts

Previously the Company entered into an Option Agreement, as amended , with Colt on the Extta High Claims, (see Exhibits 10.5; 10.11; 10.5.1; 10.5.2; 10.11.2; 10.11.3; 10.11.5)

Pursuant to the Company’s offer letter to Colt dated July 6, 2022 which was accepted by Colt (see Exhibit 10.11.6* - Attached), the Company has made a cash payment of $15,000 and, has issued 50,000 common shares in the capital of the Company to Colt as consideration for the full and final settlement of all matters between the Company and Colt in respect to the Extra High Property located in the Province of British Columbia. The 50,000 common shares in the capital of the Company were subject to a hold period from trading which expired on December 10, 2022.

During the year ended December 31, 2008, the Company sold all of its Ontario Lithium Properties to an arm’s length party for gross proceeds of $54,500 consisting of $50,000 cash payment and marketable securities of $4,500 valued at the quoted market price at receipt (see Exhibit 10.12 – Incorporated by reference). Furthermore, the arm’s length party is obligated to pay to the Company one-half percent (1/2%) gross receipts royalty after six months from the date of commencement of commercial production from the Ontario Lithium Properties. These properties were previously written-off at the end of fiscal year 2000.

On September 30, 2019, the Company entered into and executed a Property Option Agreement with Eagle Plains Resources Inc. of Cranbrook, BC (“Eagle Plains”) in respect to the Acacia Property whereby the Company had the right and option to acquire a 60% interest in the Acacia Property by issuing to Eagle Plains in stages a total of 60,000 common shares in the capital of the Company and by incurring a total amount of $2,500,000 in property related expenditures over a period of five years (see Exhibit 10.19 – Incorporated by reference).

On October 15, 2020, the Company entered into an Amendment Agreement to the Acacia Property Option Agreement with Eagle Plains Resources Inc. (“Eagle Plains”) whereby the Company a) was required to issue to Eagle Plains 10,000 common shares (issued) in lieu of not having incurred the required $100,000 in property related expenditures during the 1st Anniversary of the Acacia Property Option Agreement, b) was required to issue to Eagle Plains an additional 10,000 common shares in order to continue with the 2nd Period of the Acacia Property Option Agreement and c) made a firm commitment to incur a total amount of $200,000 in property related expenditures during the 2nd Period of the Acacia Property Option Agreement. Consequently, on October 16, 2020, the Company issued 20,000 common shares in the capital of the Company to Eagle Plains at the deemed price of $0.375 per share which were subject to a hold period which expired on February 17, 2021. The Company did not incur the required property related expenditures. During November 2021, by mutual consent, the Company and Eagle Plains terminated the Option Agreement dated September 30, 2019 and the Amendment Agreement to the Option Agreement dated October 15, 2020. Accordingly, the Company recorded an impairment loss of $15,000.

On August 1, 2016, the Management Services Agreement with Kalpakian Bros. of B.C. Ltd. (“Kalpakian Bros.”) was terminated by mutual consent (Exhibits 10.4, 10.4.1, 10.4.2, 10.4.3, 10.4.4, 10.4.5, 10.4.5.6 - Incorporated by reference). The principal of Kalpakian Bros. is Jacob H. Kalpakian, the President, CEO and director of the Company. Bedo H. Kalpakian, former President, CEO, CFO and director of the Company was a principal of Kalpakian Bros. until December 31, 2019.

The Company has entered into debt settlement agreements with Jackpot, and with Kalpakian Bros., companies related to 37 Capital by certain common directors (see Exhibit 10.18 - Incorporated by reference). The Company issued 849,997 units of the Company to Jackpot at the price of $0.45 per unit in settlement of the Company’s outstanding debt to Jackpot for the total amount of $382,498.65 for shared office rent, office support services and miscellaneous office expenses provided by Jackpot to the Company from August 1, 2014 up to September 30, 2017. In respect to the Company’s outstanding debt to Kalpakian Bros. for the total amount of $15,750, the Company issued 35,000 units of the Company at the price of $0.45 per unit in settlement of the Company’s outstanding debt owed to Kalpakian Bros. for unpaid management fees from May 1, 2016 up to July 30, 2016. Each unit consisted of one common share and one share purchase warrant. Each warrant was exercisable at the price of $0.60 per share until November 2, 2022. The securities issued were subject to a hold period in accordance with applicable securities laws. During September 2018, Jackpot sold 160,000 units of 37 Capital to an arm’s length party, and during the year ended December 31, 2019, Jackpot sold 680,000 common shares of the Company. In addition, Jackpot owned 689,997 share purchase warrants of the Company exercisable at $0.60 which expired unexercised on November 2, 2022.

 31 

 

On December 11, 2020, the Company entered into debt settlement agreements with certain creditors (the “Company’s Creditors”) whereby the Company’s Creditors agreed to accept common shares in the capital of the Company as full and final settlement of amounts owing to the Company’s Creditors. Pursuant to the debt settlement agreements, on January 25, 2021, the Company issued 2,957,406 common shares of the Company (the “Debt Settlement”) with a fair value of $0.55 per common share to certain creditors, including to a related party and a director and officer of the Company (the “Creditors”) (see Exhibit 10.20 – Incorported by reference), of which Jackpot acquired 597,380 Debt Settlement Shares of the Company and the Company’s President and CEO acquired 615,395 Debt Settlement Shares of the Company. As of the date of this Annual Report, Jackpot owns 607,377 common shares of the Company representing approximately 10.5% of the issued and outstanding common shares of the Company. The Debt Settlement Shares of the Company were subject to a hold period which expired on May 26, 2021.

On June 6, 2023 and September 29, 2023, the Company entered into a Geological and Exploration Consulting Contracts (the “Agreements”) (with Discovery Consultants, to provide geological and exploration related services in respect to the Company’s Extra High property in British Columba (see Exhibits 21 & 21.2* - Attached).

 Item 10. D. Exchange Controls

(a)No governmental laws, decrees or regulations in the Province of British Columbia, Canada, restrict export or import of capital, including, but not limited to, foreign exchange controls, or affect the remittance of dividends, interest or other payments to non-resident holders of the Registrant’s securities.
(b)There are no limitations on the right of non-resident or foreign owners to hold or vote such securities imposed by foreign law or by the charter or other constituent document of the Registrant.

Item 10.E. Taxation

General

The following comments summarize the material Canadian and U.S. Federal Income Tax consequences for a shareholder of the Registrant who is a non-resident of Canada and who is a resident of the United States subject to taxation under the laws of the United States. 

The following is based upon the current provisions of the Income Tax Act (Canada) (the “Tax Act”) and regulations thereunder, the U.S. Internal Revenue Code of 1986 (the “Code”) and regulations thereunder, the Canada-United States Income Tax Convention, 1980 (the “Convention”), the current administrative policies and practices published by Canada Revenue Agency or by the U.S. Internal Revenue Service and all specific proposals to amend the Tax Act and regulations thereunder that have been publicly announced by the Minister of Finance (Canada) prior to the date hereof, and judicial decisions, all of which are subject to change. The following does not take into account the tax laws of the various provinces or territories of Canada or the tax laws of the various state and local jurisdictions of the United States or foreign jurisdictions.

The following is intended to be a general description of the Canadian and U.S. Federal income tax considerations material to a purchase of the common shares and is not intended to be, nor should it be construed to be, legal or tax advice to any prospective holders. The following does not address consequences peculiar to any holder subject to special provision of Canadian or U.S. income tax law. Therefore, prospective holders are urged to consult their own tax advisors with respect to the tax consequences of an investment in the common shares of 37 Capital Inc.

 32 

 

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

Dividends on Common Stock

Under the Tax Act, a non-resident of Canada is subject to withholding tax at the rate of 25% on dividends from a corporation resident in Canada. The Convention reduces this rate to 15% for a shareholder resident in the United States. Withholding tax is further reduced to 5% if the United States resident shareholder is a corporation that beneficially owns at least 10% of the voting stock of the corporation paying the dividend.

Exemptions from Withholding Tax

The Convention provides exemption from Canadian income tax on dividends paid to religious, scientific, literary, educational or charitable organizations or to an organization constituted and operated exclusively to administer or provide benefits under one or more pension, retirement or employee benefit funds or plans. To qualify for exemption such organizations must be resident in the United States and be exempt from income tax under the laws of the United States.

Dispositions of Common Stock

The following comments apply only to a shareholder whose Common stock constitutes capital property to him/her for purposes of the Income Tax Act.

Common stock will generally constitute capital property unless the holder is a trader or dealer in securities or is engaged in a venture in the nature of trade in respect of Common Stock.

Common stock of a resident public corporation will constitute taxable Canadian property of a shareholder at a particular time if at any time in the preceding five (5) years, 25% or more of the issued shares of any class of the capital stock of the Registrant belonged to the non-resident shareholder, persons with whom the non-resident did not deal at arm’s length, or to the non-resident shareholder and persons with whom the non-resident shareholder did not deal at arm’s length.

Under the Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains from dispositions of taxable Canadian property and may deduct allowable capital losses from dispositions of taxable Canadian property. If the shares are considered taxable Canadian property, the vendor may be required to withhold tax pursuant to section 116 of the Tax Act.

Upon disposal of capital property the amount, if any, by which a taxpayer’s proceeds of disposition exceed or are exceeded by the adjusted cost base of the capital property (including expenses of disposition) represent the capital gain (or loss) on disposition of the capital property. One half of the gain (the “taxable capital gain”) is brought into income and taxed at normal rates. One half of the loss (the “allowable capital loss”) can be deducted from taxable capital gains realized in the same year. Pursuant to the Federal Budget which was announced on February 28, 2000, the taxable capital gain and allowable capital loss inclusion rate was reduced from three-fourths to two-thirds for dispositions after February 27, 2000. On October 18, 2000, the Federal Budget further reduced the inclusion rate from two-thirds to one-half for dispositions after October 17, 2000. For dispositions of taxable Canadian property any excess of allowable capital losses over taxable capital gains becomes a “net capital loss” which can be carried to other years to reduce taxable capital gains from the disposition of such property.

The Convention gives protection to United States residents from Canadian tax on certain gains derived from the alienation of property. There is no protection for a gain on a disposition of shares the value of which is derived principally from real property in Canada. Protection under the Convention will be available as long as the Registrant remains a Canadian public corporation or its shares continue to be listed on a prescribed stock exchange.

Canada Revenue Agency has indicated that it considers the protection of the Convention with respect to capital gains extend to a “deemed disposition” under the Tax Act, including the “deemed disposition” arising upon the death of a taxpayer.

 33 

 

U.S. FEDERAL INCOME TAX CONSIDERATIONS

37 CAPITAL INC. (“37 Capital”) is classified as a Passive Foreign Investment company (“PFIC”) for U.S. federal income tax purposes since the following conditions have applied for at least one taxable year since 1986:

1) 75% or more of its gross income has been passive;

2) The average percentage of its assets producing passive income is at least 50%.

The following is intended to be a general description of the U.S. Federal income tax considerations material to a purchase of the common shares and is not intended to be, nor should it be construed to be, legal or tax advice to any prospective holders. Prospective holders are urged to consult their own tax advisors with respect to the tax consequences of an investment in the common shares of 37 Capital.

Since 37 Capital has satisfied the PFIC criteria for at least one taxable year since 1986, while a shareholder holds shares in 37 Capital, it remains a PFIC as to that shareholder even if it no longer meets the income or asset test. Classification as a PFIC will create U.S. tax consequences to a U.S. Shareholder that are unique to the PFIC provisions and that are not encountered in other investments.

Generally, a U.S. shareholder will realize ordinary income on the receipt of cash dividends or property distributions from an investment in the shares of a foreign corporation to the extent such dividends are paid out of the foreign company’s current accumulated earnings and profits. To the extent of any withholding taxes, both individual and corporate investors must include such taxes in income and, in turn, claim a foreign tax credit. Certain corporate investors are also entitled to gross up the underlying foreign corporate income taxes and claim a foreign tax credit.

Thus, under the general rule, no U.S. federal income tax consequences occur until an actual dividend is paid. Although this general rule can apply in a PFIC investment, there are significant deviations from this general rule and many elections available to a U.S. shareholder that can alter the U.S. federal income tax consequences. Such consequences will be unique to each U.S. shareholder.

In the absence of any PFIC elections, a U.S. shareholder of a PFIC, will be taxed under the excess distribution method. Under this method, where a current year dividend exceeds 125% of the average of dividends during the preceding three taxable years, the excess must be allocated rateably to each day in the taxpayer’s holding period.  

The amount of the excess allocated to the current year and to years when the corporation was not a PFIC is included in the shareholder’s gross income for the year of the distribution. The remainder of the excess is not included in gross income, but the U.S. shareholder must pay a deferred tax amount by allocating the remaining excess to all PFIC years, re-computing the tax for each PFIC year and computing and paying the resultant interest on the recomputed tax for each PFIC year. As indicated above, foreign tax credit relief is available for withholding taxes for both individual and corporate investors. Relief for underlying corporate tax is only available for certain corporate investors.

Under the excess distribution method, gain on the disposition of PFIC shares results in the same allocation process; gross income inclusion; tax re-computation; and interest charges as an excess distribution.

In lieu of the excess distribution method, a U.S. shareholder may elect to treat a PFIC as a Qualified Electing Fund (“QEF”) and be taxed under the QEF method. If that election is made, the U.S. shareholder will be taxed currently on its pro-rata share of the earnings of the QEF. The current income inclusion eliminates the interest charge under the excess distribution method. Thus, unlike the excess distribution method that requires the receipt of cash from an actual dividend or sale, the QEF method invokes taxation without the receipt of cash.

Shareholders, who make a QEF election may, or may not, remain subject to tax under the excess distribution method. If the U.S. shareholder makes the QEF election for the foreign corporation’s first tax year as a PFIC that is included in the shareholder’s holding period, the excess distribution will not apply to the shareholder. Thus, this type of shareholder will include its pro-rata share of PFIC earnings as a dividend, claim the appropriate foreign tax credit, and not face any interest charge.

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If the shareholder makes the QEF election at a later time, in the absence of any other PFIC election, current taxation under the QEF method will apply prospectively. However, the excess distribution method continues to apply prior to the effective date of the QEF election.

If the shareholder makes the QEF election at a later time, the shareholder has an additional option to make a purging election. If a purging election is made, the PFIC stock would be treated as if it were sold and the gain treated as an excess distribution requiring: a gross income inclusion; allocation to PFIC years in the shareholder’s holding period, a tax re-computation for PFIC years in the shareholder’s holding period; and an interest charge payment. As a result of the purging election, thereafter the excess distribution method would not apply to that shareholder.

Under the QEF method, the U.S. shareholder has another option. In lieu of paying the tax on its pro-rata share of PFIC earnings, the U.S. shareholder in a QEF on the last day of the QEF’s tax year may elect to extend the time for payment of any of its undistributed PFIC earnings tax liability for the tax year. If the election is made, the election is treated as an extension of time to pay tax and, thus, the U.S. shareholder is liable for interest.

In lieu of any of the above-described methods, since 37 Capital is regularly traded on a national securities exchange, U.S. shareholders may wish to make an election to mark to market.

A U.S. shareholder of a PFIC may make a mark to market election for marketable PFIC stock. If the election is made, the shareholder includes in income each year an amount equal to the excess, if any, of the fair market value of the PFIC stock as of the close of the tax year over the shareholder’s adjusted basis in the stock. Decreases in market value are allowed as deductions, within certain prescribed limits.

Generally, under the mark to market election, the general PFIC rules under the excess distribution method and QEF method do not apply. However, if the mark to market election is made after a U.S. shareholder has maintained its investment, there are provisions that ensure that the interest charge on amounts attributable to periods before the election is not avoided.

PERSONS CONSIDERING THE PURCHASE OF THE COMPANY’S COMMON SHARES SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION OF CANADIAN, U.S. AND OTHER TAX LAWS TO THEIR PARTICULAR SITUATION.

Item 10. F. Dividends and Paying Agents.

The Company’s registrar and transfer agent is Computershare Investor Services Inc. located at 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9. The telefax number is (604) 661-9407.

Item 10. G. Statement by Experts

Not Applicable.

Item 10. H. Documents on Display.

We have filed this 2023 Annual Report on Form 20-F with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Statements made in this Annual Report as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to this Annual Report, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.

We are subject to the informational requirements of the Securities Exchange Act and file reports and other information with the Securities and Exchange Commission. Reports and other information which we file with the Securities and Exchange Commission, including this Annual Report on Form 20-F, may be inspected at the public reference facilities of the Securities and Exchange Commission at: 450 Fifth Street N.W., Room 1024, Washington, D.C. 20549. Additionally, copies of this material may also be obtained from the Securities and Exchange Commission’s Investor Site at http://www.sec.gov . The Commission’s telephone number is 1-800-SEC-0330.

 35 

 

Item 10. I Subsidiary Information

On February 26, 2015, the Company incorporated two wholly-owned subsidiaries, 27 Red Capital Inc. (“27 Red”) and 4 Touchdowns Capital Inc. (“4 Touchdowns”).

On April 30, 2015, the Company entered into an arrangement agreement (the “Arrangement Agreement”) (see Exhibit 12 – Incorporated by reference) with 27 Red (“Spinco1”) and 4 Touchdowns (“Spinco2”).

At the Company’s annual and special meeting which was held on June 4, 2015 (see Exhibit 12 - Incorporated by reference), the Company’s shareholders passed all the resolutions presented including the re-election of the board of directors, re-appointment of the Company’s auditor, approval of the Company’s stock option plan, and the proposed Plan of Arrangement with 27 Red and 4 Touchdowns.

In respect to the Plan of Arrangement, the Company applied for an Interim Order which was granted on May 6, 2015 by the Supreme Court of British Columbia, and on June 12, 2015 the Company received the final court approval for the Plan of Arrangement (see Exhibit 12 - Incorporated by reference),.

A copy of the Arrangement Agreement is available on www.sedarplus.ca.

As a result of the completion of the Arrangement, 27 Red and 4 Touchdowns are independent entities and are no longer subsidiaries of the Company.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(a)  Risk management overview

The Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market 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, and the Company's management of capital. The Company employs risk management strategies and policies to ensure that any exposure to risk is in compliance with the Company's business objectives and risk tolerance levels. While the Board of Directors has the overall responsibility for the Company's risk management framework, the Company's management has the responsibility to administer and monitor these risks.

(b) Fair value of financial instruments

The fair values of cash, accounts payable and accrued liabilities, due to related parties, refundable subscription, loan payable and convertible debentures approximate their carrying values due to the short-term maturity of these instruments.

IFRS establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

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).

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(c)   Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The Company mitigates its exposure to credit loss associated with cash by placing its cash with a major financial institution.

(d) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due.

At December 31, 2023, the Company had cash of $18,304 (December 31, 2022 - $122) available to apply against short-term business requirements and current liabilities of $741,436 (December 31, 2022 - $826,925). All of the current liabilities are due within 90 days. Amounts due to related parties are due on demand. As of December 31, 2023, two convertible debentures together with the accrued interest for a total amount of $519,589 are outstanding, and the loan payable in the amount of $50,000 plus accrued interest in the amount of $12,973 are due. Liquidity risk is assessed as high.

(e) Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Company's net earnings or the value of financial instruments. As at December 31, 2023, the Company is not exposed to significant interest rate risk, currency risk or other price risk on its financial assets and liabilities due to the short-term maturity of its financial liabilities and the fixed interest rate on the outstanding convertible debentures.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

As at the date of this Annual Report, the Company has two Convertible Debentures totalling the principal amount of $250,000 plus accrued interest outstanding (see Exhibits 10.15 & 10.15.1 – Incorporated by reference).

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Except for outstanding loans, accounts payable, accrued liabilities and two convertible debentures totalling the principal amount of $250,000 plus accrued interest, the Company is not in default in the payment of principal, interest, sinking fund instalment or any other default with respect to any other indebtedness of the Company.

 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There have been no changes in the constituent instruments defining the rights of holders of common stock and no issuance of any other securities that has modified the rights of holders of common stock.

Use of Proceeds from Offering

Not Applicable.

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ITEM 15. CONTROLS AND PROCEDURES

a)EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures [(as defined in Rules 13a-15(d) and 15d -15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)] as of the end of the period covered by this Annual Report on Form 20-F. Based on such evaluation, they have concluded that as of such date, our disclosure controls and procedures are effective and designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms.
b)MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our financial statements for external purposes in accordance with generally accepted accounting principles. Our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.  Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  As a result of this assessment, it was found that the internal controls cannot be relied upon due to lack of segregation of duties.  All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this Annual Report.

c)CHANGES IN INTERNAL CONTROLS. There were no changes in our internal controls or in other factors that could affect these controls subsequent to the date of evaluation by our Chief Executive Officer and Chief Financial Officer.

[Exhibit 31.1* – Attached herewith]

ITEM 16. AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES.

16.A. Audit Committee Financial Expert

The financial experience of Neil Spellman (Chairman of the Audit Committee), including his experience as a member of the audit committee of another public company determines that he is an audit committee financial expert within the meaning of the U.S. Sarbanes-Oxley Act of 2002. (See Item 6.C.3. in this Annual Report for further details on the Audit Committee.)

16.B. Code of Ethics

On May 31, 2004, the Company’s Board of Directors adopted a Code of Ethics (the “Code”) for the Company’s Chief Executive Officer and Chief Financial Officer and its principal accounting officer or controller, or persons performing similar function (the “Senior Financial Officers”) to deter wrongdoing and promote honest and ethical conduct in the practice of financial management, full, fair, accurate, timely and understandable disclosure; and compliance with all applicable laws and regulations. These Senior Financial Officers are expected to abide by this Code as well as by all of the Company’s other applicable business policies, standards and guidelines. (Exhibit 14.1 –Incorporated by reference).

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The Code of Ethics can be accessed electronically at http://www.37capitalinc.com.

Item 16.C. Auditor’s Fees & Services

(a)Audit Fees: The aggregate fees billed for each of the last three fiscal years by the Company’s Auditors were (2023:  $21,000) (2022: $21,000) and (2021: $17,000)
(b)Audit Related Fees were (2023: $Nil) (2022: $Nil) and (2021: $Nil)
(c)Tax Fees: Tax fees were (2023: $1,700) (2022:  $1,700)  and (2021:$1,050)
(d)All other Fees were (2023: $Nil) (2022: $Nil) and (2021: $Nil).

Further details with respect to the Audit Committee’s Charter is included in the Company’s Management Information Circulars dated October 20, 2021, October 7, 2022 and November 6, 2023 (see Exhibits 13.5 and 13.6 – Incorporated by reference) and Exhibit 13.7*– Attached).

The Audit Committee’s pre-approval policies and procedures: The Audit Committee has adopted procedures to pre-approve audit services and all non-audit related services to be rendered by the Company’s external auditors. The Chairman of the Audit Committee has been delegated authority to pre-approve audit services up to a maximum cost of $30,000 and individual assignments up to a maximum cost of $5,000. All other assignments must be pre-approved by the Audit Committee. All amounts which exceed the authorized amounts require further approval from the Audit Committee.

ITEM 17. FINANCIAL STATEMENTS

The Company’s Audited Financial Statements for the year ended December 31, 2023 and 2022, together with the report of the auditors, Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, are filed as part of this Annual Report. The Company’s financial statements are stated in Canadian dollars (Cdn $).

A) Index to Financial Statements Page
i) Financial Statements 45
Report of Independent Registered Public Accounting Firm to the Shareholders 46-47
Balance Sheets as at December 31, 2023 and 2022 48
Statements of Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021 49
Statements of Changes in Stockholders’ Deficiency for the years ended December 31, 2023, 2022 and 2021 50
Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 51
Notes to the Financial Statements 52-67
ii) Management’s Discussion & Analysis for the year ended December 31, 2023  

ITEM 18. FINANCIAL STATEMENTS

The Company's financial statements which are required to be filed hereunder are listed in Item 17 and are specifically incorporated herein by this reference. The Company's financial statements are stated in Canadian dollars (Cdn $) and are prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

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ITEM 19. LIST OF EXHIBITS

3.1 Certificate of Incorporation and Memorandum and Articles (Incorporated by reference – Previously filed on Registration Statement on Form 20-F, May 1988)
3.2 New Articles (Incorporated by reference) –Static Copy of British Columbia Business Corporations Act (BCBCA). Previously filed on Form 20-F 2004 (SEC Accession No. 0000945234-05-000483)
3 Amendment to the Articles for the implementation of Advance Notice Provisions. SEC Accession No. 0001607062-15-000191
3.4 Certificate of Name Change to Kokomo Enterprises Inc. SEC Accession No. 0001137171-09-000478
3.5 Certificate of Name Change to High 5 Ventures Inc. SECAccessionNo.0001137171-13-000179
3.6 Certificate of Name Change to 37 Capital Inc
10.1 2003 Stock Option Plan (Incorporated by reference previously filed on Form 20-F/A, June 2003)
10.4 Management Services Agreement, (Incorporated by reference - previously filed on Form 20-F, 2001 as amended on August 14, 2003 and July 1, 2005)
10.4.1  Addendum to the Management Services Agreement dated July 31, 2005 – Previously filed on Form 20F 2005)(US Sec Accession No. 0001137171-06-001515)
10.4.2    Addendum to the Management Services Agreement dated November 1, 2010. SEC Accession No. 0001137171-11-000333
10.4.3    Addendum to the Management Services Agreement dated February 16, 2012. SEC Accession No. 0001137171-12-000177
10.4.4    Addendum to the Management Services Agreement dated March 28, 2012. SEC Accession No. 0001137171-12-000177
10.4.5 Addendum to the Management Services Agreement dated September 14, 2012. SEC Accession No. 0001137171-13-000179
10.4.6   Addendum to the Management Services Agreement dated July 17, 2014. SEC Accession No.0001607062-14-000048
10.5 Property Option Agreement – Previously filed on Form 20-F 2003. (SEC Accession No. 0001137171-04-000850)
10.5.1 Amendment to the Property Option Agreement dated September 12, 2006 – (SEC Accession No. 0001137171-07-000906)
10.5.2 Amendment to the Property Option Agreement dated April 17, 2007 – (SEC Accession No. 0001137171-07-000906)
10.7 2004 Stock Option Plan - Previously filed on Form 20-F 2003. (SEC Accession No. 0001137171-04-000850)
10.9.1  Debt Settlement Agreements dated July 12, 2007 – (SEC Accession No. 0001137171-08-000659)
10.11 Property Option Agreement with Colt Capital Corp. dated September 8, 2006 – (SEC Accession No. 0001137171-07-000906)
10.11.1  First Amendment dated September 22, 2006 to the Property Option Agreement(SEC Accession No. 0001137171-07-000906)
10.11.2  Second Amendment dated October 31, 2006 to the Property Option Agreement(SEC Accession No. 0001137171-07-000906)
10.11.3 Option Agreement with Colt Resources Inc. dated January 21, 2008 – (SEC Accession No. 0001137171-08-000659)
10.11.4  Amending Agreement dated March 30, 2016 with Colt Resources Inc. – (SEC Accession No. 0001607062-16-000823)

10.11.5

Property Purchase Agreement with Colt Resources Inc. dated October 31, 2019, as amended on November 29, 2019 - SEC Accession No. 0001607062-20-000146
10.11.6* Offer Letter to Colt Inc. dated July 6, 2022.
10.12 Property Purchase Agreement with James Bay Midarctic Developments Inc. dated July 31, 2008 –(SEC Accession No. 0001137171-09-000478)
10.13 Purchase and Sale Agreement with Grand Odyssey Casino, S.A. De C.V. dated April 8, 2013. SECAccessionNo.0001607062-14-000003
10.14 2013 Convertible Debenture Financing SEC Accession No .0001607062-14-000003
10.15 2015 Convertible Debenture Financing
10.15.1 Addendum to Convertible Debentures dated October 29, 2021
10.16 Consulting Agreement entered into with 27 Red Capital Inc
10.17 Consulting Agreement entered into with 4 Touchdowns Capital Inc
10.18 Debt settlement agreements entered into with Jackpot Digital Inc. and Kalpakian Bros. of BC Ltd
10.19 Property Option Agreement with Eagle Plains Resources Inc. dated September 30, 2019 SEC Accession No. 0001607062-20-000146
10.19.1  Amendment to the Property Option Agreement with Eagle Plains Resources Inc. dated October 15, 2020
10.20 Debt Settlement Agreements dated December 11, 2020 with various Creditors
10.21* Letter of cancellation to Canada Revenue Agency dated December 21, 2022.
11.1* Statement explaining in reasonable detail how earnings/loss per share is calculated
12 Notice of Annual General and Special Meeting 2015 and Management Proxy Materials
13 Notice of Annual General Meeting 2016 and Management Proxy Materials
13.1 Notice of Annual General Meeting 2017 and Management Proxy Materials
13.2 Notice of Annual General Meeting 2018 and Management Proxy Materials
13.3 Notice of Annual General Meeting 2019 and Management Proxy Materials
13.4 Notice of Annual General Meeting 2020 and Management Proxy Materials
13.5 Notice of Annual General Meeting 2021 and Management Proxy Materials
13.6 Notice of Annual General Meeting 2022 and Management Proxy Materials
13.7* Notice of Annual General Meeting 2023 and Management Proxy Material
14 Notice of Annual General Meeting 2014 and Management Proxy Materials
14.1 Code of Ethics - Previously filed on Form 20-F 2003
15 Notice of Annual General Meeting 2013 and Management Proxy Materials. SECAccessionNo.0001607062-14-000003
16 Notice of Annual General Meeting 2012 and Management Proxy Materials. (SEC Accession No. 0001137171-12-000249)
17 Notice of Annual General Meeting 2011 and Management Proxy Materials. (SEC Accession No. 0001137171-11-000333)
18 Notice of Annual General Meeting, 2010 and Management Proxy Materials (Incorporated by reference- SEC Accession No. 0001137171-10-000418)
19 Notice of Annual General Meeting, 2009 and Management Proxy Materials (Incorporated by reference – previously filed on Form 6K for the month of May, 2009 (SEC Accession No. 0001137171-09-000424)
20 Notice of Annual General Meeting, 2008 and Management Proxy Materials (Incorporated by reference – previously filed on Form 6K June 16, 2008 (SEC Accession No. 0001137171-08-000573)
20.1 Notice of Annual General Meeting, 2007 and Management Proxy Materials (Incorporated by reference – previously filed on Form 6K May 31, 2007 (Accession Number 0001137171-07-000842)
20.4 Notice of Special General Meeting, 2005 and Management Proxy Materials (Incorporated by reference - previously filed on Form 6-K December 3, 2004)
21* Geological and Exploration Consulting Contract with Discovery Consultants dated June 6, 2023.
21.2* Geological and Exploration Consulting Contract with Discovery Consultants dated September 29, 2023.
31.1* Sarbanes Oxley Act Section 302, Certified by Jacob H. Kalpakian, President & C.E.O. (Attached)
32.2* Sarbanes Oxley Act Section 906, Certified by Neil Spellman, C.F.O. (Attached)
99. * Financial Exhibits: – (unaudited)
99.1* Schedules I - Marketable Securities - Other Investments
99.2* Schedules II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees other than Related Parties
99.3* Schedules III & IV - Property, Plant and Equipment and Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
   
* Filed Herewith

  

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37 CAPITAL INC.

Audited Financial Statements

December 31, 2023 and 2022

(Expressed in Canadian Dollars)

 

Report of Independent Registered Public Accounting Firm F-2
Financial Statements  
Balance Sheets F-3
Statements of Comprehensive Loss F-4
Statements of Changes in Stockholders’ Deficiency F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-23

 

 F-1 

 

 

Report of Independent Registered Public Accounting Firm

To the stockholders and the board of directors of 37 Capital Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of 37 Capital Inc. (the "Company") as of December 31, 2023 and 2022, the related statements of comprehensive loss, changes in stockholders’ deficiency, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit and has a working capital deficiency. The Company has limited resources and no sources of cash from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

CRITICAL AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT

Assessment of Mineral property interests for potential impairment indicators

As described in Notes 4 and 5 to the financial statements, management reviews and evaluates the net carrying value of mineral property interests for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. If deemed necessary based on this review and evaluation, management performs a test for impairment.

In its review and evaluation, management determined that there were no indicators that the carrying amount of mineral property interests, which has a carrying value of $98,992 as of December 31, 2023, may not be recoverable.

We identified the assessment of unproved mineral properties for potential impairment indicators as a critical audit matter due to the materiality of the balance, the high degree of auditor judgment and an increased level of effort when performing audit procedures to evaluate the reasonableness of management’s assumptions in determining whether indicators of impairment are present.

The primary procedures we performed to address this critical audit matter included:

• Evaluation of the Company’s identification of significant events or changes in circumstances that have occurred indicating the underlying mineral property interests may not be recoverable by performing an independent assessment.

• Discussion with management of future business plans for the mineral property interests.

• Ensuring key assumptions were consistent with evidence obtained in other areas of the audit.

 

/s/ DMCL LLP

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

PCAOB # 1173

We have served as the Company’s auditor since 2016

Vancouver, Canada

April 29, 2024

 F-2 

 

37 CAPITAL INC.

Balance Sheets December 31,

(Expressed in Canadian Dollars)

 

       
As at  2023  2022
Assets      
Current      
Cash  $18,304   $122 
GST receivable   4,078    1,560 
    22,382    1,682 
Mineral Property Interests (note 5)   98,992    54,001 
Total Assets  $121,374   $55,683 
Liabilities and Stockholders’ Deficiency          
Current          
Accounts payable and accrued liabilities (notes 6 and 13)  $76,546   $176,163 
Due to related parties (note 7)   82,328    103,200 
Loan payable (note 8)   62,973    57,973 
Convertible debentures (note 9)   519,589    489,589 
Total Liabilities   741,436    826,925 
Stockholders’ Deficiency          
Capital stock (note 10)   27,736,269    27,536,269 
Equity portion of convertible debentures (note 9)   33,706    33,706 
Reserves   24,000    24,000 
Deficit   (28,414,037)   (28,365,217)
Total Stockholders’ Deficiency   (620,062)   (771,242)
Total Liabilities and Stockholders’ Deficiency  $121,374   $55,683 

 

On behalf of the Board:

”Jake H. Kalpakian” (signed)

Jake H. Kalpakian, Director

 

“Gregory T. McFarlane” (signed)

Gregory T. McFarlane, Director

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

 F-3 

 

37 CAPITAL INC. 

Statements of Comprehensive Loss

Years Ended December 31,

(Expressed in Canadian Dollars)

 

          
   2023  2022  2021
Expenses         
Finance and interest (notes 7, 8 and 9)  $36,109   $40,598   $36,227 
Foreign exchange loss               318 
Legal, accounting and audit   19,566    21,488    21,545 
Office, rent and miscellaneous (note 7)   26,013    38,311    26,133 
Regulatory and transfer fees   20,503    24,298    30,992 
Travel, meals and entertainment               12 
Loss (gain) on debt settlement (note 6 and 10)   (53,371)         887,222 
Impairment loss (notes 5)               40,002 
Shareholder communications         341    2,412 
    48,820    125,036    1,044,863 
Net and Comprehensive Loss for the Year  $(48,820)  $(125,036)  $(1,044,863)
Basic and Diluted Loss per Common Share  $(0.00)  $(0.03)  $(0.24)
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted
   10,403,481    4,807,317    4,287,906 

 

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

 F-4 

 

37 CAPITAL INC.

Statements of Changes in Stockholders’ Deficiency

(Expressed in Canadian Dollars)

 

                                                
   Reserves
   Common Shares  Amount  Equity Portion of Convertible Debentures
Reserve
  Warrants  Deficit  Total Stockholders' Equity
(Deficiency)
Balance, December 31, 2020   1,458,542   $25,864,950   $33,706   $     $(27,195,318)  $(1,296,662)
Net loss for the year   —                        (1,044,863)   (1,044,863)
Private placement, net of issuance of costs   80,000    20,000                      20,000 
Shares issued for debt, net of issuance of costs   2,957,406    1,626,319                      1,626,319 
Fractional share adjustment   (1)                              
Balance, December 31, 2021   4,495,947    27,511,269    33,706          (28,240,181)   (695,206)
Net loss for the year   —                        (125,036)   (125,036)
Shares issued for mineral property interest   50,000    1,000                     1,000 
Private placement, net of issuance of costs   1,200,000    24,000          24,000          48,000 
Balance, December 31, 2022   5,745,947    27,536,269    33,706    24,000    (28,365,217)  $(771,242)
Net loss for the year   —                        (48,820)   (48,820)
Private placement, net of issuance of costs   8,000,000    200,000                      200,000 
Balance, December 31, 2023   13,749,947   $27,736,269   $33,706   $24,000   $(28,414,037)  $(620,062)

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

 F-5 

 

37 CAPITAL INC.

Statements of Cash Flows

Years Ended December 31,

(Expressed in Canadian Dollars)

 

          
   2023  2022  2021
Operating Activities               
Net loss for the year  $(48,820)  $(125,036)  $(1,044,863)
Items not involving cash:               
Interest expense on loan and convertible debentures   36,109    36,158    31,723 
Impairment loss of investment               1 
Impairment loss of mineral property (note 5)               40,001 
Loss/(Gain) on debt settlement   (53,371)         887,222 
    (66,082)   (88,878)   (85,916)
Changes in non-cash working capital (note 11)   (29,263)   53,176    37,489 
Cash used in operating activities   (95,345)   (