OCEANIC WIND ENERGY INC.
Audited Consolidated Financial Statements
For the years ended September 30, 2024 and 2023
MANAGEMENT'S REPORT
To the Shareholders of
Oceanic Wind Energy Inc. (the "Company")
The preparation and presentation of the Company's consolidated financial statements as at September 30, 2024 and 2023 is the responsibility of management. The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and where appropriate include managements best estimates and judgments.
Management is responsible for installing and maintaining a system of internal controls to provide reasonable assurances that the Company's assets are safeguarded, transactions are authorized and financial information is reliable.
Independent auditors are appointed by the Company's shareholders to give an opinion on the financial statements based upon their scope of examination as outlined in their Auditor's Report.
The Board of Directors is responsible for ensuring management fulfills its responsibilities for financial reporting and internal control. The Board exercises this responsibility with the assistance of the Audit Committee. The Audit Committee meets with management and the independent auditors to satisfy itself that management's responsibilities are properly discharged, to review the consolidated financial statements and recommend that the financial statements be presented to the Board of Directors for approval.
Signed: "Wilbur J. Lang"
Wilbur J. Lang - Chief Financial Officer
Suite 720 - 999 West Broadway Street, Vancouver BC, Canada V5Z 1K5
Telephone: 604.631.4483 | Fax 604.685.4215 | www.oceanicwind.ca
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Oceanic Wind Energy Inc.
Opinion
We have audited the accompanying consolidated financial statements of Oceanic Wind Energy Inc. (the "Company"), which comprise the consolidated statements of financial position as at September 30, 2024 and 2023, and the consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders' deficiency, and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 of the consolidated financial statements, which indicates that the Company has recurring operating losses, negative cash flow from operations, and as of September 30, 2024 has a working capital deficiency of $194,383 and a shareholders' deficiency of $261,916. As stated in Note 2, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year ended. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor's report.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year ended and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Michael MacLaren.
Vancouver, Canada | Chartered Professional Accountants |
January 24, 2025
OCEANIC WIND ENERGY INC.
Consolidated Statements of Financial Position
in Canadian Dollars
September 30, | September 30, | |||
2024 | 2023 | |||
Assets | ||||
Current assets | ||||
Cash | $ | 13,448 | $ | 35,111 |
Accounts receivable | 54,130 | 559 | ||
Prepaid expenses and other current assets | 1,474 | 898 | ||
69,052 | 36,568 | |||
Non-current assets | ||||
Deposit - Natural Resources Canada (note 5) | 360,000 | - | ||
Total assets | $ | 429,052 | $ | 36,568 |
Liabilities | ||||
Current Liabilities | ||||
Accounts payable and accrued liabilities | $ | 138,435 | $ | 73,542 |
Short term loan (note 8) | 125,000 | - | ||
CEBA loan (note 9) | - | 40,000 | ||
Deferred government grants (note 9) | - | 20,000 | ||
Deferred compensation payable (note 7) | - | 1,000,000 | ||
263,435 | 1,133,542 | |||
Non-Current Liabilities | ||||
Reclamation provisions (note 5) | 427,533 | - | ||
Total liabilities | 690,968 | 1,133,542 | ||
Shareholders' Deficiency | ||||
Share capital (note 4(a)) | 49,219,671 | 48,950,902 | ||
Contributed surplus | 2,650,456 | 2,688,225 | ||
Deficit | (52,132,043) | (52,736,101) | ||
Total shareholders' deficiency | (261,916) | (1,096,974) | ||
Total liabilities & shareholders' deficiency | $ | 429,052 | $ | 36,568 |
Nature of operations and going concern (notes 1 and 2)
Contingent liabilities (notes 7 and 10)
Subsequent events (note 13)
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board of Directors and authorized for issue on January 24, 2025.
Director: "Dave Rehn" | Director: "Michael O'Connor" |
OCEANIC WIND ENERGY INC.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For the years ended September 30, 2024 and 2023
in Canadian Dollars
September 30, | September 30, | |||
2024 | 2023 | |||
Expenses | ||||
Accretion (note 5) | $ | 14,869 | $ | - |
Compensation (note 7) | 142,524 | 212,691 | ||
Consultant | 950 | - | ||
Interest and borrowing costs | 2,930 | - | ||
Office and administration | 62,541 | 83,903 | ||
Public and community relations | 39,579 | 1,980 | ||
Professional fees | 90,287 | 36,866 | ||
Travel | 11,529 | 4,533 | ||
(365,209) | (339,973) | |||
Provision reversal (note 7) | 1,000,000 | - | ||
Other income (note 9) | 20,000 | - | ||
Interest income | 1,932 | 2,045 | ||
Transaction costs (note 5) | (40,760) | - | ||
Reclamation provision adjustment (note 5) | (11,905) | - | ||
969,267 | 2,045 | |||
Income (loss) and comprehensive income (loss) for the year | $ | 604,058 | $ | (337,928) |
Income (loss) per share, basic and diluted | $ | 0.01 | $ | (0.00) |
Weighted average number of shares outstanding basic and diluted | 86,841,011 | 83,274,345 |
The accompanying notes are an integral part of these consolidated financial statements.
OCEANIC WIND ENERGY INC.
Consolidated Statements of Changes in Shareholders' Deficiency For the years ended September 30, 2024 and 2023
in Canadian Dollars
Number of | Share | Contributed | Total | ||||
Common Shares | Capital | Surplus | Deficit | Shareholders' | |||
(Note 4) | (Note 4) | Deficiency | |||||
Balance, September 30, 2022 | 79,027,056 | $ 48,769,326 | $ | 2,560,990 | $ (52,398,173) | $ | (1,067,857) |
Total comprehensive income (loss) for the year | - | - | - | (337,928) | (337,928) | ||
Share based compensation expense - options | - | - | 70,000 | - | 70,000 | ||
Private placement | 5,000,840 | 181,576 | 57,235 | - | 238,811 | ||
Balance, September 30, 2023 | 84,027,896 | $ 48,950,902 | $ | 2,688,225 | $ (52,736,101) | $ | (1,096,974) |
Total comprehensive income for the year | - | - | - | 604,058 | 604,058 | ||
Exercise of warrants | 3,300,000 | 268,769 | (37,769) | - | 231,000 | ||
Balance, September 30, 2024 | 87,327,896 | $ 49,219,671 | $ | 2,650,456 | $ (52,132,043) | $ | (261,916) |
The accompanying notes are an integral part of these consolidated financial statements.
OCEANIC WIND ENERGY INC.
Consolidated Statements of Cash Flows
For the years ended September 30, 2024 and 2023 in Canadian Dollars
September 30, | September 30, | |||
2024 | 2023 | |||
Cash flows provided by (used in) | ||||
OPERATING ACTIVITIES | ||||
Income (loss) for the year | $ | 604,058 | $ | (337,928) |
Items not affecting cash | ||||
Accretion | 14,869 | - | ||
Share based compensation expense | - | 70,000 | ||
Forgiveness on portion of CEBA loan | (20,000) | - | ||
Transaction costs | 40,760 | - | ||
Reclamation provision adjustment | 11,905 | - | ||
Reversal of provision | (1,000,000) | - | ||
Changes in non-cash working capital | ||||
Accounts receivables | (53,571) | 218 | ||
Prepaid expenses and other | (576) | 15,920 | ||
Accounts payable and accrued liabilities | 64,892 | (1,836) | ||
Net cash used in operating activities | (337,663) | (253,626) | ||
FINANCING ACTIVITIES | ||||
Proceeds from private placement | - | 238,811 | ||
Proceeds from exercise of warrants | 231,000 | - | ||
Proceeds of shareholder loans | 125,000 | - | ||
Repayment of CEBA loan | (40,000) | - | ||
Net cash from financing activities | 316,000 | 238,811 | ||
Decrease in cash | (21,663) | (14,815) | ||
Cash, beginning of year | 35,111 | 49,926 | ||
Cash, end of year | $ | 13,448 | $ | 35,111 |
Cash paid for interest and taxes | $ | 2,930 | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
OCEANIC WIND ENERGY INC.
Notes to the Consolidated Financial Statements For the years ended September 30, 2024 and 2023 in Canadian Dollars
-
Corporate Information
Oceanic Wind Energy Inc. ("Oceanic" or the "Company"), is incorporated under the Business Corporations Act (British Columbia) and is listed on the TSX Venture Exchange-NEX (TSXV-NEX : NKW.H). The Company's registered office is at Suite 720 - 999 West Broadway Street, Vancouver, BC, V5Z 1K5. The Company's primary business is the development of renewable energy projects. The Company has been developing an offshore wind project on the north coast of British Columbia in Hecate Strait. As the Company has been in the development phase, it has not generated any revenue from the sale of wind energy.
During the year ended September 30, 2020, the Company signed and formally closed a definitive agreement related to the sale of the development rights in its offshore wind project in Hecate Strait to Northland Power Inc. ("Northland") (the "Agreement"). Pursuant to the terms of the Agreement, the Company sold 100% of its interest in its wholly owned subsidiary NaiKun Wind Development Inc. ("Devco") which held the certain intellectual information and property, permits, a deposit with Natural Resources Canada ("NRCan") with respect to certain asset retirement obligations, an asset retirement obligation associated with fully depreciated Metmast wind-monitoring equipment, and Canadian tax losses.
Under terms in the Agreement between Oceanic and Northland, the control and ownership of the Hecate Strait project have now been returned to Oceanic in fiscal 2024. The agreements for this return, between Oceanic and two of Northland Power wholly owned subsidiaries, closed on November 13, 2023, and reinstates Oceanic's interest in the project as further disclosed in note 5. - Basis of presentation and going concern
(a) Going concern
These consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to realize, in the foreseeable future, its assets and discharge its liabilities in the normal course of business as they come due. The Company has recurring operating losses, negative cash flow from operations, and as of September 30, 2024 has a working capital deficiency of $194,383 and a shareholders' deficiency of $261,916 which includes an accumulated deficit of $52,132,043 (2023 - $52,736,101). The Company also expects to incur losses in future years until it secures a relationship with a major offshore wind company to progress the wind project.
The Company's ability to continue as a going concern is dependent on its ability to obtain additional financing in order to meet its planned business objectives. The Company will need to raise additional funds through grants, strategic collaborations, public or private equity, debt financing, or other funding sources. Additional funding will be required and may not be available on acceptable terms, or at all, and may be dilutive to shareholder interests. If the Company is unable to generate positive cash flows or obtain adequate financing, the Company would need to curtail operations. These factors indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. If the going concern assumption is not appropriate for these consolidated financial statements, adjustments affecting the carrying values of assets, liabilities, reported net losses and statement of financial position classifications may be required and such adjustments could be material.
(b) Statement of compliance
These financial statement have been prepared in accordance with IFRS Accounting Standards ("IFRS") and were authorized for issue by the Board of Directors on January 24, 2025.
(c) Use of estimates and judgments
The preparation of the consolidated financial statements, in conformity with IFRS, requires management to make judgements, estimates, and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which estimates are revised and in any future period affected.
Areas requiring the use of management estimates relate to the amount of the determination of share compensation expense associated with stock options and valuation of warrants. A discussion of these estimates is provided in the relevant accounting policy notes and in note 4. Management estimates are required to calculate the reclamation provisions as discussed in note 5. Significant judgment is applied in the determination of the Company's ability to continue as a going concern as discussed in note 2(a). Management assesses its ability to continue as a going concern taking into account its forecast cash requirements, its budgeted non-discretionary expenditures, its available cash, and expected sources of financing.