CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars)
Novra Technologies Inc. | Page 1 |
Table of Contents | |
Independent Auditor's Report | 3 |
Consolidated Statements of Financial Position | 6 |
Consolidated Statements of Operations and Comprehensive Income (Loss) | 7 |
Consolidated Statements of Changes in Shareholders' Equity | 8 |
Consolidated Statements of Cash Flows | 9 |
Notes to Consolidated Financial Statements: | |
Note 1 - General Information | 10 |
Note 2 - Material Accounting Policies | 10 |
Note 3 - Critical Accounting Estimates and Judgments | 19 |
Note 4 - Business Acquisitions | 20 |
Note 5 - Financial Risk Management | 20 |
Note 6 - Capital Management | 22 |
Note 7 - Inventories | 23 |
Note 8 - Financial Instruments | 24 |
Note 9 - Equipment | 26 |
Note 10 - Intangible Assets | 27 |
Note 11 - Borrowings | 28 |
Note 12 - Warranty Provision | 29 |
Note 13 - Shareholders' Equity | 30 |
Note 14 - Income Taxes | 32 |
Note 15 - Revenue | 33 |
Note 16 - Related Party Transactions | 34 |
Note 17 - Depreciation and Amortization | 36 |
Note 18 - Commitments and Contingent Liabilities | 36 |
Note 19 - Finance Income and Finance Costs | 37 |
Note 20 - Right-of-use Assets | 37 |
Note 21 - Employee Benefits | 37 |
Novra Technologies Inc. | Page 2 |
Baker Tilly HMA LLP | |
701 - 330 Portage Avenue | |
INDEPENDENT AUDITOR'S REPORT | Winnipeg, MB R3C 0C4 |
T: 204.989.2229 | |
To the Shareholders of Novra Technologies Inc. | TF: 1.866.730.4777 |
F: 204.944.9923 | |
Opinion | winnipeg@bakertilly.ca |
www.bakertilly.ca | |
We have audited the consolidated financial statements of the Company, which comprise the consolidated statements of financial position as at December 31, 2023 and December 31, 2022, and the consolidated statements of operations and comprehensive income, changes in shareholders' equity and cash flows for the years December 31, 2023 and 2022, and notes to the financial statements, including a summary of material accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023 and December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards
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 financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to the key audit matters to be communicated in our auditor's report.
Valuation of inventory
The provision for obsolescence of inventory requires the application of significant judgement by the Company, particularly in the identification of slow moving and obsolete inventory and the quantification of the provision to apply to the inventory applied. The discussion on the assessment of the estimate and the underlying assumptions is included in Note 3 of the consolidated financial statements
To address this key audit matter, we analyzed inventory trends including turnover rates, completed substantive procedures on net realizable value, reviewed the reasonableness of assumptions used in the Company's inventory valuation process and completed an examination for any unexpected transactions or changes in inventory levels.
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AUDIT • TAX • ADVISORY
Baker Tilly HMA LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly International Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities.
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Valuation of Intangible Assets
The valuation of intangible assets requires the application of significant judgment by the Company, particularly in the identification of intangibles, valuation, and impairment testing. The discussion on the assessment, estimate and the underlying assumptions that form the valuation of intangible assets is included in Note 2 and 3 of the consolidated financial statements.
To address this key audit matter, we reviewed the Company's asset development policy, analyzed the changes in the carrying amounts of intangible assets and ensured that the calculation methodology was consistently applied. We evaluated the Company's impairment assessment including a review of the reasonableness of assumptions applied, considered possible changes in the business environment and market conditions that could impact the fair value of the intangible assets and performed procedures to identify potential impairment including a multi-year margin analysis and examination of subsequent sales and forecasts.
Other Information
Management is responsible for other information. The other information comprises of the information contained in the Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.
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 the information included in the Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, 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 Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the 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 Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
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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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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 period 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 P. Angers.
Chartered Professional Accountants
Winnipeg, Manitoba
April 27, 2024
NOVRA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Canadian dollars)
NOTES | December 31, 2023 | December 31, 2022 | |||
ASSETS | |||||
Current Assets | |||||
Cash | $ | 2,448,436 | $ | 1,965,537 | |
Restricted non-redeemable GIC's | - | 1,354,400 | |||
Trade and other receivables | 5(c) | 755,982 | 698,435 | ||
Sub-lease receivable - current portion | 2 | 59,013 | 61,896 | ||
Inventories | 7 | 1,338,035 | 2,031,288 | ||
Prepayments and other | 2 | 36,608 | 90,845 | ||
Total Current Assets | 4,638,074 | 6,202,401 | |||
Non-Current Assets | |||||
Sub-lease receivable | 2 | 47,627 | 111,907 | ||
Equipment | 9 | 9,062 | 21,915 | ||
Right-of-use assets | 2, 20 | 1,317,292 | 1,453,962 | ||
Intangible assets | 10 | 1,299,830 | 1,022,912 | ||
Total Non-Current Assets | 2,673,811 | 2,610,696 | |||
TOTAL ASSETS | $ | 7,311,885 | $ | 8,813,097 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current Liabilities | |||||
Trade and other payables | $ | 1,618,232 | $ | 1,710,834 | |
Borrowings | 11 | 170,195 | 217,610 | ||
Lease liabilities | 2, 18(a) | 268,847 | 240,472 | ||
Customer deposits | 62,898 | 1,142,541 | |||
Deferred revenue - current portion | 15 | 947,539 | 795,936 | ||
Advances from related parties | 16(c) | 1,673,037 | 1,589,701 | ||
Total Current Liabilities | 4,740,748 | 5,697,094 | |||
Non-Current Liabilities | |||||
Borrowings | 11 | 2,268,989 | 2,397,621 | ||
Lease liabilities | 2, 18(a) | 1,448,864 | 1,660,221 | ||
Deferred revenue | 15 | 198,083 | 699,047 | ||
Promissory notes from related party | 16(d) | 1,272,197 | 1,200,000 | ||
Total Non-Current Liabilities | 5,188,133 | 5,956,889 | |||
TOTAL LIABILITIES | $ | 9,928,881 | $ | 11,653,983 | |
Equity | |||||
Share capital | 13(a) | $ | 7,372,749 | $ | 7,372,749 |
Contributed surplus | 500,576 | 500,576 | |||
Accumulated other comprehensive gain (loss) | 13,900 | (73,753) | |||
Accumulated deficit | (10,713,049) | (10,613,436) | |||
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF NOVRA | (2,825,824) | (2,813,864) | |||
Non-Controlling Interests | 208,828 | (27,022) | |||
TOTAL EQUITY | (2,616,996) | (2,840,886) | |||
TOTAL LIABILITIES AND EQUITY | $ | 7,311,885 | $ | 8,813,097 |
The accompanying notes are an integral part of these Consolidated Financial Statements
Novra Technologies Inc. | Page 6 |
NOVRA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Canadian dollars, except share data)
Year Ended December 31,
NOTES | 2023 | 2022 | ||||||
REVENUE | 15 | $ | 7,445,587 | $ | 7,603,077 | |||
COST OF REVENUE | 7 | 3,363,378 | 3,468,002 | |||||
GROSS PROFIT | 4,082,209 | 4,135,075 | ||||||
OPERATING EXPENSES | ||||||||
General and administrative | 1,459,808 | 1,346,993 | ||||||
Sales and marketing | 831,842 | 946,572 | ||||||
Research and development | 1,457,102 | 2,260,045 | ||||||
Total operating expenses | 3,748,752 | 4,553,610 | ||||||
OPERATING INCOME (LOSS) | 333,457 | (418,535) | ||||||
Other Income (Expenses) | ||||||||
Foreign exchange gain (loss) | (52,508) | 97,957 | ||||||
Finance income | 19(a) | 55,796 | 12,766 | |||||
Finance costs | 19(b) | (200,508) | (166,157) | |||||
INCOME (LOSS) BEFORE INCOME TAXES | 136,237 | (473,969) | ||||||
Income tax recovery (expense) | 14 | - | - | |||||
NET INCOME (LOSS) | $ | 136,237 | $ | (473,969) | ||||
OTHER COMPREHENSIVE INCOME, NET OF TAXES | ||||||||
Foreign Currency Translation Adjustments on Wegener Consolidation | 87,653 | (180,028) | ||||||
Total other comprehensive income (loss), net of taxes | 87,653 | (180,028) | ||||||
COMPREHENSIVE INCOME (LOSS) | $ | 223,890 | $ | (653,997) | ||||
EARNINGS (LOSS) PER SHARE: | ||||||||
Basic | $ | (0.0030) | $ | (0.0271) | ||||
Diluted | $ | (0.0030) | $ | (0.0271) | ||||
Weighted average number of shares outstanding - basic | 33,420,293 | 33,420,293 | ||||||
Weighted average number of shares outstanding - diluted | 33,420,293 | 33,420,293 | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO : | ||||||||
Shareholders of Novra | $ | (99,613) | $ | (907,170) | ||||
Non-controlling interest | $ | 235,850 | $ | 433,201 | ||||
136,237 | (473,969) | |||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: | ||||||||
Shareholders of Novra | $ | (11,960) | $ | (1,087,198) | ||||
Non-controlling interest | $ | 235,850 | $ | 433,201 | ||||
223,890 | (653,997) | |||||||
The accompanying notes are an integral part of these Consolidated Financial Statements | ||||||||
Novra Technologies Inc. | Page 7 |
NOVRA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Canadian dollars, except share data)
Accumulated | ||||||||||||||
Number of | Other | Non- | Total | |||||||||||
Common | Common | Contributed | Comprehensive | Accumulated | Controlling | Shareholders' | ||||||||
NOTES | Shares | Shares | Surplus | Loss | Deficit | Interest | Equity | |||||||
At January 1, 2023 | ||||||||||||||
Total | 35,420,293 | $ | 7,632,749 | $ | 500,576 | $ | (73,753) | $ | (10,613,436) | $ | (27,022) | $ | (2,580,886) | |
Less: common shares held by subsidiary | (2,000,000) | $ | (260,000) | (260,000) | ||||||||||
33,420,293 | 7,372,749 | 500,576 | (73,753) | (10,613,436) | (27,022) | (2,840,886) | ||||||||
Net income (loss) | - | - | - | - | (99,613) | 235,850 | 136,237 | |||||||
Change in foreign currency translation | - | - | - | 87,653 | - | - | 87,653 | |||||||
Share based compensation | 13(b) | - | - | - | - | - | - | - | ||||||
Options Exercised | 13(b) | - | - | - | - | - | - | - | ||||||
Cancellation of common shares | 13(b) | - | - | - | - | - | - | - | ||||||
At December 31, 2023 | 33,420,293 | $ | 7,372,749 | $ | 500,576 | $ | 13,900 | $ | (10,713,049) | $ | 208,828 | $ | (2,616,996) |
Accumulated | |||||||||||||
Number of | Other | Non- | Total | ||||||||||
Common | Common | Contributed | Comprehensive | Accumulated | Controlling | Shareholders' | |||||||
NOTES | Shares | Shares | Surplus | Loss | Deficit | Interest | Equity | ||||||
At January 1, 2022 | |||||||||||||
Total | 35,420,293 | $ | 7,632,749 | $ | 500,576 | $ | 106,275 | $ | (9,706,266) | $ | (460,223) | $ | (1,926,889) |
Less: common shares held by subsidiary | (2,000,000) | $ | (260,000) | $ | - | $ | - | $ | - | $ | - | (260,000) | |
33,420,293 | 7,372,749 | 500,576 | 106,275 | (9,706,266) | (460,223) | (2,186,889) | |||||||
Net income (loss) | - | - | - | - | (907,170) | 433,201 | (473,969) | ||||||
Change in foreign currency translation | - | - | - | (180,028) | - | - | (180,028) | ||||||
Share based compensation | - | - | - | - | - | - | - | ||||||
Options exercised | - | - | - | - | - | - | - | ||||||
Cancellation of common shares | - | - | - | - | - | - | - | ||||||
At December 31, 2022 | 33,420,293 | $ | 7,372,749 | $ | 500,576 | $ | (73,753) | $ | (10,613,436) | $ | (27,022) | $ | (2,840,886) |
The accompanying notes are an integral part of these Consolidated Financial Statements
Novra Technologies Inc. | Page 8 |
NOVRA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Canadian dollars)
Year Ended December 31, | ||||||
NOTES | 2023 | 2022 | ||||
OPERATING ACTIVITIES | ||||||
Net income (loss) | $ | 136,237 | $ | (473,969) | ||
Add items not affecting cash: | ||||||
Depreciation and amortization | 17 | 455,431 | 1,289,602 | |||
Share based compensation | 13(b) | - | - | |||
Interest expense | 19(b) | 200,508 | 166,157 | |||
Changes in non-cash working capital items | ||||||
Trade and other receivables | 108,154 | 476,215 | ||||
Provision for trade and other receivables | (165,701) | (50,474) | ||||
Sub-lease receivable | 67,163 | - | ||||
Inventories | 693,253 | (354,731) | ||||
Other assets | 54,237 | 652,105 | ||||
Additions to right-of-use asset | 20 | (73,023) | - | |||
Trade and other payables and accrued liabilities | (92,602) | 154,065 | ||||
Customer deposits | (1,079,643) | (949,287) | ||||
Deferred revenue | 15 | (349,361) | 179,247 | |||
Advances from Related Party | 16(c) | 83,336 | 253,290 | |||
Changes in promissory notes | 16(d) | 72,197 | - | |||
Interest paid | - | (4,757) | ||||
Net cash provided by (applied to) operating activities | 110,186 | 1,337,463 | ||||
INVESTING ACTIVITIES | ||||||
Purchase of restricted non-redeemable GIC's | - | (1,354,400) | ||||
Redemption of restricted non-redeemable GIC's | 1,354,400 | |||||
Purchase of capital assets | 9 | (5,617) | - | |||
Intangible assets | 10 | (615,009) | (521,515) | |||
Net cash provided by (applied to) investing activities | 733,774 | (1,875,915) | ||||
FINANCING ACTIVITIES | ||||||
Payments on lease liabilities | 18(a) | (353,301) | (593,574) | |||
Payments on WEDC repayable contribution | 11(c) | (51,480) | (51,480) | |||
Payments on Chymiak loan | 11(b) | (80,046) | - | |||
Payments on disaster assistance funding | 11(d) | (12,826) | - | |||
Payments on IMT promissory notes | 16(d) | - | (57,132) | |||
Net cash provided by (applied to) financing activities | (497,653) | (702,186) | ||||
Effect of exchange rates on cash and cash equivalents | 136,592 | 240,875 | ||||
Net increase/(decrease) in cash | 482,899 | (999,763) | ||||
Cash, | beginning of year | 1,965,537 | 2,965,300 | |||
CASH, | end of year | $ | 2,448,436 | $ | 1,965,537 | |
The accompanying notes are an intergral part of these Consolidated Financial Statements |
Novra Technologies Inc. | Page 9 |
NOVRA TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2023 and 2022
(Tabular amounts are in 000's, except share data)
-
General Information
Novra Technologies Inc. ("Novra" or the "Company") is incorporated under the Canada Business Corporations Act and its corporate office and principal place of business is 210-100 Innovation Drive, Winnipeg, Manitoba, Canada R3T 6G2. Novra is a publicly traded company on the TSX Venture Exchange ("TSX-V") under the symbol NVI.
Novra has a diverse group composition resulting from strategic acquisitions. Notably, in 2016, Novra expanded its operations significantly through the acquisition of International Datacasting Corporation ("IDC") and its wholly- owned U.S. subsidiary, consolidating their expertise in satellite data distribution. Furthermore, on December 29, 2017, Novra acquired a 51.6% controlling interest in Wegener Corporation ("Wegener"), enhancing its capabilities in digital media management and distribution technologies, including applications in digital signage, radio, and television (refer to Note 4 for further details).
The consolidated financial statements reflect Novra's comprehensive product portfolio, which encompasses hardware, software, and services, augmented by the combined strengths of its subsidiaries. Notably, Novra's areas of specialization extend beyond core video, radio, and data products to include encryption, next-generation hybrid networks (combining satellite, terrestrial, and cloud technologies), and efficient bandwidth utilization.
In accordance with IFRS 12, Novra provides disclosure aimed at enabling users of its consolidated financial statements to understand both the composition of the group and the interests held by non-controlling entities within the group. Throughout these Consolidated Financial Statements, terms such as "Novra," "Company," "we," "us," or "our" refer collectively to Novra Technologies Inc. and its subsidiaries.
The Consolidated Financial Statements were authorized for issue by the Board of Directors on April 27th, 2024. - Material Accounting Policies
The material accounting policies used in the preparation of these Consolidated Financial Statements are summarized below. These policies have been consistently applied to all years presented, unless otherwise noted.
Basis of Presentation
The Consolidated Financial Statements of Novra are expressed in Canadian dollars and have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS, as issued by the International Accounting Standards Board ("IASB"). We have prepared the Consolidated Financial Statements under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The tabular disclosures herein are presented in thousands, except for share data. Use of Estimates
In preparing these Consolidated Financial Statements, management has made judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. For areas involving a higher degree of management judgment or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements, refer to Note 3.
Consolidation
These Consolidated Financial Statements consolidate the accounts of Novra Technologies Inc. and its subsidiaries. Subsidiaries are all entities over which we have control. We control an entity when we are exposed, or have rights, to variable returns from our involvement with the entity and have the ability to affect those returns through our power over the entity. We have power over an entity when we have existing rights that give us the current ability to direct the activities that most significantly affect the entity's returns (relevant activities). Power may be determined on the basis
Novra Technologies Inc. | Page 10 |
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Novra Technologies Inc. published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 11:49:07 UTC.