Condensed consolidated interim financial statements of
Biorem Inc.
Periods ended September 30, 2024 and 2023
(Unaudited)
Biorem Inc. | |
September 30, 2024 and 2023 | |
(Unaudited) | |
Table of contents | |
Condensed consolidated interim statements of financial position | 3 |
Condensed consolidated interim statements of operations | 4 |
Condensed consolidated interim statements of comprehensive income (loss) | 5 |
Condensed consolidated interim statements of changes in shareholders' equity | 6 |
Condensed consolidated interim statements of cash flows | 7 |
Notes to the condensed consolidated interim financial statements | 8-11 |
The accompanying condensed consolidated interim financial statements of Biorem Inc. have been prepared by and are the responsibility of the Company's Management. The Company's independent auditor has not performed a review of these financial statements in accordance with standards adopted by the Canadian Institute of Chartered Accountants ("CICA") for a review of interim financial statements by an entity's auditor.
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Biorem Inc.
Condensed consolidated interim statements of financial position September 30, 2024 and December 31, 2023
September 30, | December 31, | ||
(In Canadian dollars, unaudited) | Notes | 2024 | 2023 |
$ | $ | ||
Assets | |||
Current assets | 2,291,799 | ||
Cash and cash equivalents | 7,274,633 | ||
Accounts receivable | 7,702,868 | 12,042,368 | |
Unbilled revenue | 2,157,241 | 3,037,440 | |
Inventories | 2,955,278 | 901,139 | |
Prepaid expenses and deposits | 1,771,204 | 2,331,651 | |
Non-current assets | 21,861,224 | 20,604,397 | |
Equipment and leasehold improvements | 2,053,524 | 1,991,074 | |
Deferred tax assets | 462,487 | 1,480,541 | |
Total assets | 24,377,235 | 24,076,012 | |
Liabilities | |||
Current liabilities | 6,136,127 | ||
Accounts payable | 9 | 4,631,165 | |
Accrued liabilities | 1,909,541 | 2,132,986 | |
Lease liabilities | 161,983 | 175,685 | |
Income taxes payable | 192,930 | 169,806 | |
Provisions | 8 | 498,870 | 425,758 |
Unearned revenue | 3,459,548 | 4,306,371 | |
Interest bearing loans | 7 | 565,970 | 547,478 |
11,420,007 | 13,894,211 | ||
Non-current liabilities | |||
Interrest bearing loans | 7 | 2,002,061 | 2,428,659 |
Lease liabilities | 1,000,153 | 1,033,357 | |
3,002,214 | 3,462,016 | ||
Shareholders' equity | 4,997,423 | ||
Common shares | 5,008,424 | ||
Contributed surplus | 2,457,196 | 2,368,921 | |
Accumulated other comprehensive loss | 1,532,989 | 1,270,033 | |
Deficit | 956,405 | (1,916,592) | |
Total shareholders' equity | 9,955,014 | 6,719,785 | |
Total liabilities and shareholders' equity | 24,377,235 | 24,076,012 |
See accompanying notes to consolidated financial statements.
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Biorem Inc.
Condensed consolidated interim statements of operations
Three and nine months ended September 30, 2024 and 2023
Three months ended | Nine months ended | |||||||||
(In Canadian dollars, unaudited) | Notes | 2024 | 2023 | 2024 | 2023 | |||||
$ | $ | $ | $ | |||||||
Revenue | 14,885,540 | 5,509,308 | 28,103,943 | 12,958,643 | ||||||
Cost of goods sold | 9,864,074 | 3,965,018 | 19,645,471 | 10,343,796 | ||||||
Gross profit | 5,021,466 | 1,544,290 | 8,458,472 | 2,614,847 | ||||||
Expenses (income) | ||||||||||
Sales and marketing | 1,157,399 | 531,504 | 2,593,842 | 1,611,322 | ||||||
Research and development | 7,944 | 4,845 | 36,721 | 9,465 | ||||||
General and administration | 830,456 | 258,045 | 1,729,168 | 935,966 | ||||||
Other expense (income) | 5 | (4,185) | 11,552 | 41,355 | 73,279 | |||||
Total operating expenses | 1,991,614 | 805,946 | 4,401,086 | 2,630,032 | ||||||
Earnings from operations | 3,029,852 | 738,344 | 4,057,386 | (15,185) | ||||||
Finance costs | 47,429 | 53,864 | 148,546 | 184,983 | ||||||
Net earnings (loss) before tax | 2,982,423 | 684,480 | 3,908,840 | (200,168) | ||||||
Income tax expense | 790,342 | 181,387 | 1,035,843 | (53,045) | ||||||
Net earnings (loss) | 2,192,081 | 503,093 | 2,872,997 | (147,123) | ||||||
Earnings per share, basic | 10 | $ | 0.139 | $ | 0.030 | $ | 0.183 | $ | (0.010) | |
Earning per share, diluted | 10 | $ | 0.118 | $ | 0.030 | $ | 0.155 | $ | (0.010) |
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Biorem Inc.
Condensed consolidated interim statements of comprehensive income (loss) Three and nine months ended September 30, 2024 and 2023
Three months ended | Nine months ended | ||||
(In Canadian dollars, unaudited) | 2024 | 2023 | 2024 | 2023 | |
$ | $ | $ | $ | ||
Net earnings (loss) | 2,192,081 | 503,093 | 2,872,997 | (147,123) | |
Other comprehensive income | |||||
Item which may be reclassified into profit and loss: | |||||
Foreign currency translation loss on foreign operations | (168,281) | 175,986 | 262,956 | 42,054 | |
Total comprehensive income (loss) for the period | 2,023,800 | 679,079 | 3,135,953 | (105,069) |
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Biorem Inc.
Condensed Consolidated interim statements of shareholders' equity
Nine months ended September 30, 2024 and 2023
Accum ulated | |||||
other | |||||
(In Canadian dollars, unaudited) | Share | Contributed | com prehens ive | ||
capital | surplus | incom e | Deficit | Total |
Balance, as at January 1, 2023 | 4,909,423 | 2,260,271 | 1,446,837 | (4,095,978) | 4,520,553 | |
Earnings for the period | - | - | - | (147,123) | (147,123) | |
Foreign currency translation differences on | ||||||
foreign operations | - | - | (42,054) | - | (42,054) | |
Total comprehensive earnings for the period | - | - | (42,054) | (147,123) | (189,177) | |
Stock options exercised | 88,000 | (19,000) | - | - | 88,000 | |
Stock-based compensation | - | 91,800 | - | - | 91,800 | |
88,000 | 72,800 | - | - | 179,800 | ||
Balance, as at September 30, 2023 | 4,997,423 | 2,333,071 | 1,404,783 | (4,243,101) | 4,511,176 | |
Balance, as at January 1, 2024 | 4,997,423 | 2,368,921 | 1,270,033 | (1,916,592) | 6,719,785 | |
Earnings for the period | - | - | - | 2,872,997 | 2,872,997 | |
Foreign currency translation differences on | ||||||
foreign operations | - | - | 262,956 | - | 262,956 | |
Total comprehensive earnings for the period | - | - | 262,956 | 2,872,997 | 3,135,953 | |
Stock options exercised | 11,400 | (11,400) | - | - | 11,400 | |
Stock-based compensation | - | 99,675 | - | - | 99,675 | |
11,400 | 88,275 | - | - | 111,075 | ||
Balance, as at September 30, 2024 | 5,008,823 | 2,457,196 | 1,532,989 | 956,405 | 9,966,813 |
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Biorem Inc.
Condensed consolidated interim statements of cash flows
Nine months ended September 30, 2024 and 2023
(In Canadian dollars, unaudited) | Notes | 2024 | 2023 |
Operating activities | $ | $ | |
Net earnings (loss) | 2,872,997 | (147,123) | |
Items not involving cash: | |||
Deferred tax expense (recovery) | 1,035,843 | (53,045) | |
Depreciation | 333,160 | 185,850 | |
Accretion lease interest | 61,563 | 22,364 | |
Stock option compensation | 99,675 | 91,800 | |
4,403,238 | 99,846 | ||
Change in non-cash operating working capital | |||
Accounts receivable | 4,240,447 | 3,032,239 | |
Unbilled revenue | 903,864 | 391,472 | |
Inventories | (1,983,359) | (413,613) | |
Prepaid expenses and deposits | 498,706 | (862,351) | |
Accounts payable | (1,582,224) | (1,294,672) | |
Accrued liabilities | (275,695) | (477,753) | |
Income taxes payable | 19,157 | (645,528) | |
Provisions | 54,936 | (122,259) | |
Unearned revenue | (904,158) | 744,224 | |
Cash provided by (used in) operations | 5,374,912 | 451,605 | |
Investing activities | |||
Purchase of equipment,leasehold improvements | (366,811) | (673,541) | |
(366,811) | (673,541) | ||
Financing activities | |||
Repayments of operating loan | - | (775,001) | |
Term loan repayments | (408,369) | (391,250) | |
Payment of lease liabilities | (191,021) | (134,427) | |
Proceeds from issuance of common shares on exercise of stock options | 69,000 | ||
(599,390) | (1,231,678) | ||
Foreign exchange gain(loss) on foreign denominated cash and cash equivalents | 574,123 | 61,718 | |
Increase(decrease) in cash and cash equivalents | 4,982,834 | (1,391,896) | |
Cash and cash equivalents, beginning of year | 2,291,799 | 3,775,018 | |
Cash and cash equivalents, end of period | 7,274,633 | 2,383,122 |
See accompanying notes to consolidated financial statements.
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Biorem Inc.
Notes to the condensed consolidated interim financial statements September 30, 2024 and 2023
(Unaudited)
-
General information
BIOREM Inc. ("BIOREM") is a company with its head office domiciled in Canada.
The address of BIOREM's registered office is 7496 Wellington Road 34, Puslinch, Ontario. The Company's common shares are listed on the Toronto Stock Exchange and trade under the symbol BRM.V. The condensed consolidated interim financial statements of BIOREM comprise BIOREM and its subsidiaries (together referred to as "the Company"). The Company is primarily involved in the manufacturing of a comprehensive line of high efficiency air pollution control systems that are used to eliminate odorous and harmful contaminants. - Basis of preparation
- Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.
These condensed consolidated interim financial statements have been prepared following the same accounting principles and methods of computation as the Company's 2022 annual consolidated financial statements and should be read in conjunction with those audited consolidated financial statements which are available on the System for Electronic Document Analysis and Retrieval ("SEDAR").
These condensed consolidated interim financial statements were approved by the Board of Directors and authorized for issuance on November 6, 2024.
- Basis of measurement
These condensed consolidated interim financial statements have been prepared on the historical cost basis of accounting, with the exception of financial instruments classified as fair value through profit and loss, which are recorded at fair value.
- Functional and presentation currency
The functional currency of BIOREM and its subsidiaries is the currency of their primary economic environment. These condensed consolidated interim financial statements are presented in Canadian dollars, which is BIOREM's functional currency. The functional currency of BIOREM's subsidiary located in the United States is the U.S. dollar and the functional currency of BIOREM's subsidiary located in China is the Chinese renminbi.
- Basis of consolidation
Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control commences until the date that control ceases. Accordingly, the consolidated interim financial statements include the accounts of Biorem Technologies Inc., Biorem Environmental Inc., Biorem Environmental (US) Ltd., Biorem Hong Kong, Biorem (Beijing) Technologies Company Limited and Biorem Wuhu Environmental Technology Ltd., Ltd in addition to those of BIOREM. All significant inter-company transactions and balances have been eliminated.
3. Significant accounting policies
The significant accounting policies used in preparing these condensed consolidated interim financial statements are unchanged from those disclosed in the Company's 2023 annual consolidated financial statements except as set out below, and have been applied consistently to all periods presented in these condensed consolidated interim financial statements. The accounting policies have been applied consistently by the Company's subsidiaries.
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Biorem Inc.
Notes to the condensed consolidated interim financial statements September 30, 2024 and 2023
(Unaudited)
4. Segmented information
Management has determined that the Company operates in one reportable segment, which involves the manufacture and sale of pollution control systems.
The Company's revenue and capital assets breaks down geographically as follows:
Revenue | Three months ending | Nine months ending | ||
Sept 2024 | Sept 2023 | Sept 2024 | Sept 2023 | |
$ | $ | $ | $ | |
Canada | 3,423,019 | 3,141,128 | 7,952,360 | 5,756,003 |
United States | 10,965,946 | 2,309,346 | 19,633,049 | 6,503,929 |
China | - | - | - | 149,972 |
Other | 496,575 | 58,834 | 518,534 | 548,740 |
Total | 14,885,540 | 5,509,308 | 28,103,943 | 12,958,644 |
Capital assets (1) | Period ending | |||
Sept 2024 | Sept 2023 | |||
$ | $ | |||
Canada | 448,833 | 603,827 | ||
United States | 1,604,691 | 884,581 | ||
Total | 2,053,524 | 1,488,408 |
- Includes plant, equipment, leasehold improvements and right of use assets
5. Other income
The composition of other income is as follows:
Three months ended | Nine months ended | |||
Sept 2024 | Sept 2023 | Sept 2024 | Sept 2023 | |
$ | $ | |||
Foreign exchange gain( loss) | 11,552 | 73,279 | ||
Total | - | 11,552 | - | 73,279 |
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Biorem Inc.
Notes to the condensed consolidated interim financial statements September 30, 2024 and 2023
(Unaudited)
-
Contingency
From time to time, the Company is subject to legal proceedings and claims arising in the ordinary course of business. Management is of the opinion, based upon information presently available, that it is unlikely that any such liability, to the extent not provided for by insurance or otherwise, would have a material adverse effect in relation to the Company's consolidated financial position, liquidity or results of operations. - Interest-bearingloans
September 30 | December 31 | ||||
Current | Interest rate | Maturity | 2024 | 2023 | |
% | $ | $ | |||
Working capital loan | Prime +.075 | On demand | - | - | |
Current portion term loan | 4.07 | 564,762 | 547,478 | ||
2025 | |||||
564,762 | 547,478 | ||||
Non-current | |||||
Term loan | 4.07 | 12/01/28 | 2,566,823 | 2,975,192 | |
Current portion | 4.07 | 2025 | (564,762) | (547,478) | |
2,002,061 | 2,427,714 |
On December 1, 2021 the Company secured a $4,000,000 term loan and a $3,000,000 operating line of credit from a Canadian chartered bank. Both the working capital loan and the term loan are secured by a general security agreement and first charge over all the assets of The Company The term loan is repayable over 84 months in blended payments of $54,893 due on the 15thof each month.
8. | Provisions | |||
Warranty | 2024 | |||
2023 | ||||
$ | $ | |||
At December 31 | 425,758 | 621,987 | ||
Provisions used during the period | - | (208,901) | ||
Provisions made during the period | 73,112 | 12,672 | ||
At September 30 | $ 498,870 | $ | 425,758 |
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