HEADWATER EXPLORATION INC.
Interim Condensed Statements of Financial Position
(unaudited)
March 31 | December 31 | |
2021 | 2020 | |
(thousands) | $ | $ |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 81,643 | 76,772 |
Restricted cash (notes 13 & 15) | 590 | 1,827 |
Accounts receivable (note 13) | 13,210 | 5,475 |
Financial derivatives receivable (note 13) | - | 74 |
Inventories | 554 | 571 |
Prepaids and deposits | 487 | 448 |
Total current assets | 96,484 | 85,167 |
Exploration and evaluation assets (note 3) | 27,379 | 27,101 |
Property, plant and equipment (note 4) | 219,030 | 187,664 |
Right-of-use assets (note 5) | 385 | 418 |
Other assets | 335 | 335 |
Total assets | 343,613 | 300,685 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current liabilities | ||
Accounts payable and accrued liabilities (note 13) | 37,828 | 4,105 |
Financial derivatives liability (note 13) | 180 | - |
Deferred share units liability (note 9) | 149 | 91 |
Current portion of lease liability (note 5) | 140 | 138 |
Warrant liability (note 7) | 29,500 | 10,305 |
Total current liabilities | 67,797 | 14,639 |
Lease liability (note 5) | 263 | 298 |
Decommissioning liability (note 6) | 18,092 | 16,718 |
Total liabilities | 86,152 | 31,655 |
Shareholders' Equity | ||
Capital stock (note 8) | 387,950 | 387,393 |
Warrants (note 8) | 7,512 | 7,659 |
Contributed surplus | 12,473 | 11,659 |
Deficit | (150,474) | (137,681) |
Total shareholders' equity | 257,461 | 269,030 |
Total liabilities and shareholders' equity | 343,613 | 300,685 |
Commitments (note 15) | ||
Subsequent events (note 16) |
See accompanying notes to the interim condensed financial statements
Approved on behalf of the Board of Directors:
(signed) "Chandra Henry" | (signed) "Neil Roszell" |
Chandra Henry, CPA, CA | Neil Roszell |
Director | Chairman |
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HEADWATER EXPLORATION INC.
Interim Condensed Statements of Loss and Comprehensive Loss
(unaudited)
Three months ended March 31, | ||
2021 | 2020 | |
(thousands, except per share data) | $ | $ |
REVENUE | ||
Sales (note 10) | 25,492 | 2,308 |
Royalties | (2,355) | (57) |
Revenue, net of royalties | 23,137 | 2,251 |
Gains (losses) on financial derivatives (note 13) | (805) | 2,456 |
22,332 | 4,707 | |
EXPENSES | ||
Blending and transportation | 4,959 | - |
Production | 2,413 | 647 |
General and administrative | 847 | 683 |
Transaction costs | - | 4,382 |
Remeasurement loss on warrant liability (note 7) | 19,195 | - |
Stock-based compensation expense (recovery) (note 9) | 520 | (19) |
Depletion and depreciation (notes 4 & 5) | 7,250 | 2,505 |
Exploration and evaluation expense (note 3) | - | 3,821 |
35,184 | 12,019 | |
Interest income and other (note 11) | (59) | (502) |
Loss before income taxes | (12,793) | (6,810) |
Net loss and comprehensive loss | (12,793) | (6,810) |
Net loss per share (note 8) | ||
Basic | (0.07) | (0.06) |
Diluted | (0.07) | (0.06) |
See accompanying notes to the interim condensed financial statements
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HEADWATER EXPLORATION INC.
Interim Condensed Statements of Cash Flows
(unaudited)
Three months ended March 31, | ||
Cash flow related to the following activities: | 2021 | 2020 |
(thousands) | $ | $ |
OPERATING | ||
Net loss | (12,793) | (6,810) |
Items not involving cash: | ||
Unrealized losses on financial derivatives (note 13) | 254 | 1,481 |
Remeasurement loss on warrant liability | 19,195 | - |
Stock-based compensation expense (recovery) | 520 | (19) |
Depletion and depreciation | 7,250 | 2,505 |
Exploration and evaluation expense | - | 3,821 |
Accretion and finance charges (note 11) | 53 | 53 |
Change in non-cash operating working capital (note 12) | (1,696) | 151 |
Cash flows provided by operating activities | 12,783 | 1,182 |
FINANCING | ||
Issue of common shares, net of costs (note 8) | - | 48,096 |
Payment of lease liability (note 5) | (36) | (37) |
Proceeds from exercise of stock options & Warrants (note 8) | 384 | 1,670 |
Cash flows provided by financing activities | 348 | 49,729 |
INVESTING | ||
Capital expenditures - property, plant and equipment (note 4) | (36,994) | (65) |
Capital expenditures - exploration and evaluation (note 3) | (278) | (5) |
Change in restricted cash | 1,237 | - |
Change in non-cash investing working capital (note 12) | 27,775 | (164) |
Cash flows used in investing activities | (8,260) | (234) |
Change in cash and cash equivalents | 4,871 | 50,677 |
Cash and cash equivalents, beginning of period | 76,772 | 60,957 |
Cash and cash equivalents, end of period | 81,643 | 111,634 |
Cash and cash equivalents consist of: | ||
Cash | 66,643 | 95,007 |
Cash equivalents | 15,000 | 16,627 |
Cash and cash equivalents, end of period | 81,643 | 111,634 |
See accompanying notes to the interim condensed financial statements
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HEADWATER EXPLORATION INC.
Interim Condensed Statements of Changes in Shareholders' Equity
(unaudited)
Total | ||||||
Capital | Contributed | Shareholders' | ||||
Notes | stock | Warrants | surplus | Deficit | equity | |
(thousands) | $ | $ | $ | $ | $ | |
Balance at January 1, 2020 | 247,332 | - | 11,366 | (144,388) | 114,310 | |
Issued on Recapitalization Transaction | 8 | 50,000 | - | - | - | 50,000 |
Allocation to Warrants | 8 | (7,680) | 7,680 | - | - | - |
Issue costs | 8 | (1,905) | - | - | - | (1,905) |
Exercise of stock options | 8 | 2,581 | - | (911) | - | 1,670 |
Stock-based compensation | 9 | - | - | (30) | - | (30) |
Net loss | - | - | - | (6,810) | (6,810) | |
Balance at March 31, 2020 | 290,328 | 7,680 | 10,425 | (151,198) | 157,235 | |
Balance at January 1, 2021 | 387,393 | 7,659 | 11,659 | (137,681) | 269,030 | |
Exercise of stock options | 8 | 26 | - | (26) | - | - |
Exercise of Warrants | 8 | 531 | (147) | - | - | 384 |
Stock-based compensation | 9 | - | - | 840 | - | 840 |
Net loss | - | - | - | (12,793) | (12,793) | |
Balance at March 31, 2021 | 387,950 | 7,512 | 12,473 | (150,474) | 257,461 | |
See accompanying notes to the interim condensed financial statements
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HEADWATER EXPLORATION INC.
Notes to the Interim Condensed Financial Statements
(unaudited)
As at and for the three months ended March 31, 2021 and 2020
(All tabular amounts in thousands, unless otherwise stated)
1. NATURE OF OPERATIONS
Headwater Exploration Inc. ("Headwater" or the "Company") is a Canadian junior resource company engaged in the exploration for and development and production of petroleum and natural gas in Canada. Headwater is a public company existing under the Alberta Business Corporations Act with common shares listed on the Toronto Stock Exchange ("TSX") under the symbol "HWX".
Headwater's principal place of business is located at 1200, 500 - 4TH Avenue S.W., Calgary, Alberta, T2P 2V6 and its registered office is located at 2400, 525 - 8th Avenue S.W., Calgary Alberta, T2P 1G1.
2. BASIS OF PREPARATION Statement of compliance
These unaudited interim condensed financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and in accordance with IAS 34 - Interim Financial Reporting. The unaudited interim condensed financial statements do not include all information required for annual financial statements and should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2020. These unaudited interim condensed financial statements have been prepared following the same accounting policies as the Company's audited financial statements for the year ended December 31, 2020.
These unaudited interim condensed financial statements were approved and authorized for issue by the Company's Board of Directors on May 12, 2021.
Basis of measurement, functional and presentation currency
The financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value through profit or loss and inventories which are measured at the lower of cost and net realizable value.
The financial statements are presented in Canadian dollars, which is the Company's functional currency.
Significant judgments and estimates
The timely preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ materially from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Significant judgments, estimates and assumptions made by management in these financial statements are outlined in note 2 of the December 31, 2020 annual financial statements. There have been no significant changes in the Company's judgments and estimates applied during the interim period ended March 31, 2021, relative to those described in the most recent annual financial statements as at and for the year ended December 31, 2020.
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Headwater Exploration Inc. published this content on 12 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2021 22:01:05 UTC.