Full Press Release Details
to Financial Statements of Ceapro Inc.
FINANCIAL STATEMENTS
OF DECEMBER 31, 2023 AND 2022
TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2023
| Management's Report | A-3 |
| Report of Independent Registered Public Accounting Firm | A-4 |
| Consolidated Balance Sheets | A-6 |
| Consolidated Statements of Net (Loss) Income and Comprehensive (Loss) Income | A-7 |
| Consolidated Statements of Changes in Equity | A-8 |
| Consolidated Statements of Cash Flows | A-9 |
| Notes to the Consolidated Financial Statements | A-10 |
the Shareholders of Ceapro Inc.,
accompanying consolidated financial statements of Ceapro Inc. (the "Company"), and all information presented in this report,
are the responsibility of Management and have been approved by the Board of Directors.
consolidated financial statements have been prepared by Management in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board. The consolidated financial statements include some amounts that are based on
the best estimates and judgements of Management. Financial information used elsewhere in the report is consistent with that in the consolidated
financial statements.
further the integrity and objectivity of data in the consolidated financial statements, Management of the Company has developed and maintains
a system of internal controls, which Management believes will provide reasonable assurance that financial records are reliable and form
a proper basis for preparation of consolidated financial statements, and that assets are properly accounted for and safeguarded.
Board of Directors carries out its responsibility for the consolidated financial statements in the report principally through its Audit
Committee. The Audit Committee is appointed by the Board, and all of its members are outside and unrelated Directors. The Committee meets
periodically with Management and the external auditors to discuss internal controls over the financial reporting process and financial
reporting issues, to make certain that each party is properly discharging its responsibilities, and to review quarterly reports, the
annual report, the annual consolidated financial statements, management discussion and analysis, and the external auditor's report.
The Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance to
the shareholders. The Company's auditors have full access to the Audit Committee, with and without Management being present.
consolidated financial statements have been audited by the Company's auditors, Raymond Chabot Grant Thornton LLP.
| SIGNED "Gilles Gagnon" | SIGNED "Stacy Prefontaine" |
| President and Chief Executive Officer | Chief Financial Officer |
| April 29, 2024 |
of Independent Registered Public Accounting Firm
of Directors and Shareholders
on the financial statements
have audited the accompanying consolidated balance sheets of Ceapro Inc. (the "Company") as of December 31, 2023 and
2022, the related consolidated statements of net (loss) income and comprehensive (loss) income, changes in equity, and cash flows
for the years then ended, and the related notes (collectively referred to as the "financial
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 the results of its operations and its cash flows for the years then ended, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (hereafter
"IFRS Accounting Standards").
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.
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. 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.
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 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 that: (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 critical audit matters
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
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
described further in Note 2 to the financial statements, inventories are valued at the lower of cost and net realizable value. Costs
of inventory include costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present condition
and location. Costs of conversion include direct costs (material and labour) and indirect costs (fixed and variable production overheads).
Fixed overheads are allocated based on normal capacity. We identified the inventory costing as a critical audit matter.
principal consideration for our determination that the inventory costing is a critical audit matter is that there are significant judgments
utilized by management in their methodology for allocating indirect costs, including overhead costs to inventory. This, consequently,
necessitated considerable auditor judgment, subjectivity, and effort in conducting audit procedures and evaluating audit evidence. As
of December 31, 2023, inventory amounted to $5,308,987 of which work in progress and finished goods to which indirect costs are allocated
totalled $4,146,458.
audit procedures related to the inventory costing included the following, among others:
| - | We obtained an understanding of and tested management's process for developing the costing model and overhead allocations; |
| - | We assessed the accuracy, completeness and reasonableness of the costs included in the costing model, including the allocation of indirect costs to obtain assurance that capitalized costs were appropriate and complete; |
| - | We evaluated the appropriateness and reasonableness of the assumptions, including production times, used by management to allocate costs to specific inventory products; |
| - | We assessed the allocation of indirect costs for appropriate accounting treatment in accordance with IFRS Accounting Standards. |
have served as the Company's auditor since 2023.
Raymond Chabot Grant Thornton LLP
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| C$ | C$ | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | 8,843,742 | 13,810,998 | ||||||
| Trade receivables | 167,295 | 2,820,300 | ||||||
| Other receivables | 216,763 | 64,808 | ||||||
| Inventories (note 3) | 5,308,987 | 3,757,040 | ||||||
| Prepaid expenses and deposits | 310,191 | 135,133 | ||||||
| Total Current Assets | 14,846,978 | 20,588,279 | ||||||
| Non-Current Assets | ||||||||
| Restricted cash | 10,000 | - | ||||||
| Investment tax credits receivable | 984,200 | 854,895 | ||||||
| Deposits | 74,369 | 76,954 | ||||||
| Licences (note 4) | 9,625 | 12,588 | ||||||
| Property and equipment (note 5) | 15,421,884 | 16,201,755 | ||||||
| Deferred tax assets (note 12 (b)) | 98,778 | - | ||||||
| Total Non-Current Assets | 16,598,856 | 17,146,192 | ||||||
| TOTAL ASSETS | 31,445,834 | 37,734,471 | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | 1,342,156 | 1,730,377 | ||||||
| Current portion of lease liabilities (note 6) | 396,232 | 370,460 | ||||||
| Total Current Liabilities | 1,738,388 | 2,100,837 | ||||||
| Non-Current Liabilities | ||||||||
| Long-term lease liabilities (note 6) | 1,852,345 | 2,248,577 | ||||||
| Deferred tax liabilities (note 12 (b)) | - | 1,095,968 | ||||||
| Total Non-Current Liabilities | 1,852,345 | 3,344,545 | ||||||
| TOTAL LIABILITIES | 3,590,733 | 5,445,382 | ||||||
| Equity | ||||||||
| Share capital (note 7(b)) | 16,721,867 | 16,694,625 | ||||||
| Contributed surplus | 4,963,067 | 4,714,404 | ||||||
| Retained earnings | 6,170,167 | 10,880,060 | ||||||
| Total Equity | 27,855,101 | 32,289,089 | ||||||
| TOTAL LIABILITIES AND EQUITY | 31,445,834 | 37,734,471 |
and contingencies (note 13)
on Behalf of the Board
| SIGNED: "Genevi ve Foster" | SIGNED: "Dr. Ulrich Kosciessa" | |
| Director | Director |
Statements of Net (Loss) Income and Comprehensive (Loss) Income
| 2023 | 2022 | |||||||
| Years Ended December 31, | C$ | C$ | ||||||
| Revenue (note 14) | 9,633,400 | 18,839,607 | ||||||
| Cost of goods sold | 5,677,211 | 7,821,908 | ||||||
| Gross margin | 3,956,189 | 11,017,699 | ||||||
| Research and product development | 2,751,473 | 1,788,666 | ||||||
| General and administration | 7,419,593 | 3,700,498 | ||||||
| Sales and marketing | 40,484 | 29,558 | ||||||
| Finance costs (note 9) | 183,130 | 184,967 | ||||||
| (Loss) Income from operations | (6,438,491 | ) | 5,314,010 | |||||
| Other income (note 10) | (533,852 | ) | (462,905 | ) | ||||
| (Loss) income before income taxes | (5,904,639 | ) | 5,776,915 | |||||
| Deferred tax (benefit) expense (note 12(a)) | (1,194,746 | ) | 1,378,817 | |||||
| Net (loss) income and comprehensive (loss) income for the year | (4,709,893 | ) | 4,398,098 | |||||
| Net (loss) income per common share (note 19): | ||||||||
| Basic | (0.06 | ) | 0.06 | |||||
| Diluted | (0.06 | ) | 0.06 | |||||
| Weighted average number of common shares outstanding (note 19): | ||||||||
| Basic | 78,272,574 | 77,961,714 | ||||||
| Diluted | 78,272,574 | 78,582,083 |
Statements of Changes in Equity
| Share capital | Contributed surplus | Retained earnings | Total equity | |||||||||||||
| C$ | C$ | C$ | C$ | |||||||||||||
| Balance December 31, 2022 | 16,694,625 | 4,714,404 | 10,880,060 | 32,289,089 | ||||||||||||
| Share-based payments (note 7 (c)) | - | 259,005 | - | 259,005 | ||||||||||||
| Stock options exercised | 27,242 | (10,342 | ) | - | 16,900 | |||||||||||
| Total net loss and comprehensive loss for the year | - | - | (4,709,893 | ) | (4,709,893 | ) | ||||||||||
| Balance December 31, 2023 | 16,721,867 | 4,963,067 | 6,170,167 | 27,855,101 | ||||||||||||
| Balance December 31, 2021 | 16,557,401 | 4,680,690 | 6,481,962 | 27,720,053 | ||||||||||||
| Share-based payments (note 7 (c)) | - | 89,648 | - | 89,648 | ||||||||||||
| Stock options exercised | 137,224 | (55,934 | ) | - | 81,290 | |||||||||||
| Total net income and comprehensive income for the year | - | - | 4,398,098 | 4,398,098 | ||||||||||||
| Balance December 31, 2022 | 16,694,625 | 4,714,404 | 10,880,060 | 32,289,089 |
Statements of Cash Flows
| 2023 | 2022 | |||||||
| Years Ended December 31, | C$ | C$ | ||||||
| OPERATING ACTIVITIES | ||||||||
| Net (loss) income for the year | (4,709,893 | ) | 4,398,098 | |||||
| Adjustments for items not involving cash | ||||||||
| Finance costs | 128,130 | 129,967 | ||||||
| Depreciation and amortization | 1,946,776 | 1,911,278 | ||||||
| Deferred income tax (benefit) expense | (1,194,746 | ) | 1,378,817 | |||||
| Share-based payments | 259,005 | 89,648 | ||||||
| (3,570,728 | ) | 7,907,808 | ||||||
| CHANGES IN NON-CASH WORKING CAPITAL ITEMS | ||||||||
| Trade receivables | 2,653,005 | (727,458 | ) | |||||
| Other receivables | (151,955 | ) | (18,958 | ) | ||||
| Investment tax credits receivable | (129,305 | ) | (88,266 | ) | ||||
| Inventories | (1,551,947 | ) | (1,432,955 | ) | ||||
| Prepaid expenses and deposits | (172,473 | ) | 30,371 | |||||
| Accounts payable and accrued liabilities relating to operating activities | (571,430 | ) | 1,096,074 | |||||
| 75,895 | (1,141,192 | ) | ||||||
| Net (loss) income for the year adjusted for non-cash and working capital items | (3,494,833 | ) | 6,766,616 | |||||
| Interest paid | (128,130 | ) | (129,967 | ) | ||||
| CASH (USED IN) GENERATED FROM OPERATIONS | (3,622,963 | ) | 6,636,649 | |||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (980,733 | ) | (388,821 | ) | ||||
| CASH USED IN INVESTING ACTIVITIES | (980,733 | ) | (388,821 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Stock options exercised | 16,900 | 81,290 | ||||||
| Increase in restricted cash | (10,000 | ) | - | |||||
| Repayment of lease liabilities | (370,460 | ) | (299,109 | ) | ||||
| CASH USED IN FINANCING ACTIVITIES | (363,560 | ) | (217,819 | ) | ||||
| (Decrease) increase in cash | (4,967,256 | ) | 6,030,009 | |||||
| Cash at beginning of the year | 13,810,998 | 7,780,989 | ||||||
| Cash at end of the year | 8,843,742 | 13,810,998 |
TO CONSOLIDATED FINANCIAL STATEMENTS
Inc. (the "Company") is incorporated under the Canada Business Corporations Act and is listed on the TSX Venture Exchange
under the symbol CZO and on the OTCQX Best Market under the symbol CRPOF. The Company's primary business activities
relate to the development and commercialization of natural products for personal care, cosmetic, human, and animal health industries
using proprietary technology, natural, renewable resources, and developing innovative products, technologies, and delivery systems.
Company's head office address is 7824 51 Avenue NW, Edmonton, AB T6E 6W2.
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IASB") ("IFRS Accounting Standards").
Board of Directors authorized these consolidated financial statements for issue on April 24, 2024.
consolidated financial statements have been prepared on the historical cost basis. All transactions are recorded on an accrual basis.
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Ceapro (P.E.I.) Inc. and JuventeDC
intercompany accounts and transactions have been eliminated on consolidation. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent, using consistent accounting policies. Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal,
preparation of consolidated financial statements requires management to make critical judgements, estimates, and assumptions that affect
the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses recorded during the reporting period. In making estimates and judgements,
management relies on external information and observable conditions where possible, supplemented by internal analysis as required. Actual
results may differ from those estimates. Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and in any future periods affected.
that are critical for the presentation of the financial position and financial performance of the Company and that require judgements
are discussed as follows.
functional currency for the Company and each of the Company's subsidiaries is the currency of the primary economic environment
in which the respective entity operates; the Company has determined the functional currency of each entity to be the Canadian dollar.