Nexera Energy Inc.
Consolidated Financial Statements
For the Twelve Months Ended December 31, 2023
(expressed in Canadian dollars)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, 2023 | December 31, 2022 |
10,204 | 475,928 |
348,791 | 355,643 |
616,729 | 356,459 |
1,686 | 2,209 |
977,410 | 1,190,239 |
1,475,276 | 2,643,258 |
2,452,686 | 3,833,497 |
14,744,136 | 10,972,292 |
291,628 | 291,628 |
57,010 | 57,010 |
4,176,491 | 4,277,107 |
5,785,406 | 5,785,406 |
103,496 | 103,496 |
17,340 | 14,863 |
25,175,506 | 21,501,802 |
60,061 | - |
2,907,256 | 3,829,742 |
192,890 | 200,210 |
348,700 | - |
28,684,413 | 25,531,753 |
18,130,848 | 17,536,639 |
36,339 | - |
23,291 | - |
2,441,269 | 2,441,269 |
(247,970) | (247,970) |
(44,632,712) | (41,631,188) |
(1,982,792) | 202,993 |
(26,231,727) | (21,698,256) |
2,452,686 | 3,833,497 |
Signed "Shelby D. Beattie" | Signed "Gibson C. Scott" |
Director | Director |
(Unaudited, expressed in Canadian Dollars)
Assets Current assets
Cash
Short-term investments
Trade and other receivables (notes 13(a) and 17(b))
Prepaid expenses and deposits
Total current assets
Non-current assets
Property and equipment (note 6)
Total assets
Liabilities Current liabilities
Accounts payable and accrued liabilities
Shareholder indemnity (note 15(a))
Demand loan (note 8)
Credit facility (note 9(b))
Note payable (note 9(a))
Other liabilities (note 15(b))
Lease liability - short-term (note 14)
Total current liabilities
Non-current liabilities
Lease liability (note 14)
Decommissioning obligations (note 7)
Royalty obligation (note 6)
Convertible Debentures
Total liabilities
Shareholders' deficiency
Share capital (note 11(b))
Equity component of convertible debenture
Warrants (note 11(c))
Contributed surplus
Share purchase loan (note 13(a))
Deficiency
Accumulated other comprehensive income
Total shareholders' deficiency
Total liabilities and shareholders' deficiencyReporting entity and going concern (note 1)
Subsequent events (note 19)
Approved on behalf of the Board of Directors
The notes are an integral part of these consolidated financial statements.
1
CONSOLIDATED STATEMENTS OF INCOME(LOSS) AND COMPREHENSIVE INCOME(LOSS)
(Unaudited, expressed in Canadian Dollars)
Three months ended December 31, 2023 2022
Twelve months ended December 31, 2023 2022
Revenue
Petroleum and natural gas revenue | 347,746 | 486,300 | 1,519,623 | 1,974,735 |
Other revenue | (10,255) | 406,307 | 48,463 | 182,500 |
Royalties | (89,096) | (114,147) | (389,522) | (470,812) |
248,395 | 778,460 | 1,178,564 | 1,686,424 | |
Operating expenses | ||||
Production and operating expenses | 126,252 | 316,264 | 546,286 | 900,073 |
Depletion and depreciation (note 6) | (20,259) | 8,869 | 182,989 | 301,092 |
General and administrative (note 13(b)) | 356,209 | 498,762 | 1,814,089 | 1,600,656 |
Bad Debt (note 17(b)) | 139,214 | 540,880 | 139,214 | 526,013 |
Foreign exchange | 1,320 | 25,652 | 1,320 | 26,086 |
Gain on participation agreement | - | (304,548) | - | (304,548) |
Gain on sale of assets | (10,872) | (100,672) | (10,872) | (100,672) |
591,864 | 985,207 | 2,673,026 | 2,948,700 | |
Results from operating activities | (343,469) | (206,747) | (1,494,462) | (1,262,277) |
Finance expense | ||||
Interest expense | (413,856) | (149,729) | (1,362,937) | (952,218) |
Interest on lease liability | (2,301) | (1,978) | (8,234) | (7,910) |
Accretion of decommissioning obligations (note 7) | (2,403) | (92,703) | (135,892) | (102,065) |
(418,560) | (244,410) | (1,507,062) | (1,062,193) | |
Net loss | (762,029) | (451,157) | (3,001,524) | (2,324,469) |
Other comprehensive income (loss): Foreign | ||||
currency translation adjustment | (1,840,559) | (222,307) | (2,185,785) | (589,420) |
Total comprehensive loss | (2,602,588) | (673,464) | (5,187,309) | (2,913,889) |
Basic and fully diluted loss per share (note 11(e)) | (0.01) | (0.01) | (0.05) | (0.04) |
Weighted average number of common shares outstanding | 65,817,274 | 62,434,122 | 66,424,9442 | 62,434,122 |
2 |
The notes are an integral part of these consolidated financial statements.
NEXERA ENERGY INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
Share CapitalWarrantsContributed
SurplusShare purchase loan
DeficiencyEquity Component of Convertible
DebenturesAccumulated other comprehensive lossTotal deficiency
(unaudited)
($)
($)
($)
($)
($)
($)
($)
($)Balance - December 31, 2021
Reallocation on expiry of warrants Loss for the year
Foreign exchange translation to presentation currency
$ 17,184,374 352,265
Balance - December 31, 2022
$
352,265 (352,265)
$ 17,536,639
$ 2,441,269
$
-$(247,970)
$ 2,441,269
$(39,306,718)
(2,324,469)
$(247,970)
$
-$(41,631,187)
$
792,413
- (589,420)
$
-$ (18,784,367)
- (2,324,469)
(589,420)
$
202,993
$ (21,698,256)
Reallocation on expiry of warrants
Value of warrants attached to convertible debenture
Financing fees related to convertible debenture
Loss for the year
Issue of convertible debentures (Note 10) Issue of shares on conversion of debentures Foreign exchange translation to presentation currency
(23,921) (5,000)
23,291
622,500 622,500
Balance - December 31, 2023
$ 18,130,848
$
23,291
(3,001,524)
$ 2,441,269
$(247,970)
$(44,632,712)
The notes are an integral part of these consolidated financial statements.
36,339 36,339
(2,185,785)
$
36,339
$
(1,982,792)
- -
(5,000)
(3,006,524)
(2,185,785)
$ (26,231,727)
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, expressed in Canadian Dollars)
Three months ended December 31, 2023 2022
Cash (used in) provided by: Operating activities
Twelve months ended December 31, 2023 2022
Net loss for the year | (762,028) | (451,156) | (3,001,524) | (2,324,469) |
Adjustments for: | ||||
Bad debt expense (note 17(b)) | 139,214 | 526,013 | 139,214 | 526,013 |
Depletion and depreciation (note 6) | (20,259) | 8,869 | 182,989 | 301,092 |
Accretion of decommissioning obligation (note 7) | 2,403 | 92,703 | 135,892 | 102,065 |
Interest on lease liability (note 14) | 2,302 | 1,978 | 8,234 | 7,910 |
Modification to lease liability | (13,853) | (13,853) | (13,853) | (13,853) |
Unrealized foreign exchange (gain) loss | (9,306) | 209,237 | (354,530) | (157,876) |
(661,527) | 373,791 | (2,903,579) | (1,559,119) | |
Change in trade and other receivables | 251,148 | 2,427,596 | (260,270) | (193,045) |
Change in prepaid expenses and deposits | 525 | 102,565 | 523 | 102,578 |
Change in accounts payable and accrued liabilities | 459,762 | (2,760,153) | 3,771,844 | 1,919,390 |
Change in short-term investments | - | (816) | - | (816) |
49,908 | 142,983 | 608,517 | 268,988 | |
Investing activities | ||||
Property and equipment expenditures (note 6) | (74,460) | 147,391 | (61,075) | (94,295) |
(74,460) | 147,391 | (61,075) | (94,295) | |
Financing activities | ||||
Repayment of demand loan | - | (5,000) | - | (5,000) |
Lease payments (note 14) | (4,588) | (4,195) | (13,166) | (18,425) |
Debenture (note 10)) | 19,726 | - | (1,000,000) | - |
15,138 | (9,195) | (1,013,166) | (23,425) | |
Increase (decrease) in cash | (9,414) | 281,179 | (465,724) | 151,269 |
Cash, beginning of period | 19,618 | 194,749 | 475,928 | 324,659 |
Cash, end of period | 10,204 | 475,928 | 10,204 | 475,928 |
4 |
The notes are an integral part of these consolidated financial statements.
1. Reporting entity and going concern
Nexera Energy Inc. (the "Company") was incorporated under the Business Corporations Act of Alberta on May 9, 1997 and is listed on the TSX Venture exchange. The Company is engaged in the exploration for and development of petroleum and natural gas properties, principally in Alberta, Canada and Texas, USA. The Company is listed on the TSX Venture exchange under the symbol "NGY.V". The Company's registered head office is located at #3A, 4015 - 1 Street South East, Calgary, Alberta, Canada T2G 4X7.
At December 31, 2023, the Company had not yet achieved profitable operations, had an accumulated deficiency of $44,632,712 since its inception and had a working capital deficiency of $24,198,097 (defined as current assets less current liabilities), and expects to incur further losses in the development of its business. The ability to continue as a going concern is dependent on obtaining continued financial support, completing public equity financing or generating profitable operations in the future. Management is committed to raising additional capital to meet its exploration and operating obligation, however, additional equity financing is subject to the global financial markets and economic conditions, which have recently been disrupted and are volatile, and the debt and equity markets, which are distressed, particularly for junior petroleum and natural gas companies. All of these factors, together with the current unstable economic conditions, indicate the existence of material uncertainties related to events or conditions that may cast significant doubt as to whether the Company can continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. These consolidated financial statements do not reflect the adjustments to the carrying value of assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications that would be necessary if the going concern assumption was not appropriate. Any adjustments necessary to the consolidated financial statements if the Company ceases to be a going concern could be material.
2. Basis of presentation
a)Statement of compliance:
These annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
The Board of Directors approved the consolidated financial statements on March 3, 2023.
b) Basis of measurement: The consolidated financial statements have been prepared on the historical cost basis.
c) Basis of consolidation:
These consolidated financial statements include the accounts of the Company and its wholly-owned United States subsidiaries Emerald Bay Texas Inc., Production Resources, Inc. ("PRI") and Cotulla Vacuum Services, Ltd. Control exists when the Company has the power over the investee, exposure or rights to variable returns from its involvement and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries, including entities which the Company controls, are included in the consolidated financial statements from the date that control commences until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances have been eliminated.
d) Nature and purpose of equity and reserves:
The reserves recorded in equity on the Company's consolidated statement of financial position include 'Contributed surplus', 'Accumulated other comprehensive 'loss', and 'Deficiency'.
'Contributed surplus' is used to recognize the value of stock options and broker warrants prior to exercise as well as residual amounts from transactions with shareholders acting in their capacity as shareholders.
'Accumulated other comprehensive loss' is used to recognize the foreign exchange gain or loss resulting from the translation of the Corporation's foreign subsidiaries.
'Deficiency' is used to record the Corporation's change in deficiency from profit or loss from year to year.
e) Use of estimates and judgements:
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 and the reported amounts of assets, liabilities, income and expenses. By their nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in such estimates in future periods could be significant.
Estimates and underlying 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.
Significant judgements
Determination of cash-generating units ("CGU")
Property and equipment are aggregated into CGUs based on their ability to generate largely independent cash flows and are used for impairment testing. The determination of the Company's CGUs is subject to management's judgement.
Indicators of Impairment
At each reporting date, the Company assesses whether or not there are circumstances that indicate a possibility that the carrying values of property and equipment are impaired. Such circumstances include incidents of deterioration of commodity prices, changes in the regulatory environment, or a reduction on estimates of proved and probable reserves. When management judges that circumstances indicate impairment, property and equipment are tested by comparing the carrying values to their recoverable amounts. These calculations require the use of estimates and assumptions that are subject to changes as new information becomes available including information on future commodity prices, expected production volumes, quantity of reserves, discount rates, as well as future development and operating costs.
Functional currency determination
The functional currency for the Company and its subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of functional currency is conducted through an analysis of the consideration factors identified in IAS 21. The Effects of Changes in Foreign Exchange Rates and may involve certain judgements to determine the primary economic environment. The Company reconsiders the functional currency of its entities if there is a change in events and conditions which determine the primary economic environment. Significant changes to those underlying factors could cause a change to the functional currency.
Going Concern
The financial statements have been prepared on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgement to assess the Company's ability to continue as a going concern and the existence of conditions that cast doubt upon the going concern assumption.
Significant estimates and assumptions
Reserve estimates
The estimate of reserves is used in forecasting the recoverability and economic viability of the Company's oil and gas properties, and in the depletion and impairment calculations. Reserves are estimates of the amount of hydrocarbons that can be economically and legally extracted from the Company's oil and gas properties. The Company's estimates its commercial reserves and resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the hydrocarbon body and suitable production techniques and recovery rates. Commercial reserves are determined using estimates of oil and gas in place, recovery factors and future commodity prices, the latter having an impact on the total amount of recoverable reserves. Future development costs are estimated using assumptions as to the number of wells required to produce the commercial reserves.
Decommissioning obligations
The Company estimates the decommissioning obligations for oil and natural gas wells and their associated production facilities and pipelines. Amounts recorded for the decommissioning obligations and related accretion expense require estimates regarding removal date, future environmental legislation, the extent of reclamation activities required, the engineering methodology for estimating costs, future removal technologies in determining the removal costs, and discount rates to determine the present value of these cash flows.
Shareholder indemnity
The accounting policy for the shareholder indemnity liability is described in note 14(a). The application of this policy requires management to make certain estimates and assumptions as to the tax filing positions of the subscribers, their tax rates and the amount of personal taxes that may be payable and the interpretation of the indemnity agreement, which will not be known until potentially affected subscribers are reassessed for their tax positions by the Canada Revenue Agency.
Recoverability of assets
The Company assesses impairment on its assets that are subject to amortization when it has determined that a potential indicator of impairment exists. Impairment exists when the carrying value of a non-financial asset or CGU exceeds its recoverable amount, which is the higher of its fair value less costs to sell ("FVLCTS") and its value in use. The Company used the calculation of FVLCTS to determine the fair value of its CGUs. In determining the FVLCTS, the amount is most sensitive to the future commodity prices, discount rates, and estimates of proved and probable reserves.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements.
Cash
Cash include cash on hand and deposits held with banks. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management, whereby management has the legally enforceable right and ability and intent to net bank overdrafts against cash, are included as a component of cash for the purpose of the consolidated statement of cash flows.
Property and equipment and exploration and evaluation assets
Recognition and measurement:
(i) E&E expenditures:
Pre-license costs are recognized in the consolidated statement of comprehensive loss as incurred.
All costs associated with the exploration and evaluation of oil and natural gas reserves are initially capitalized. Exploration and evaluation costs are those expenditures for an area where technical feasibility and commercial viability has not yet been determined. These costs include unproven property acquisition costs, exploration costs, geological and geophysical costs, decommissioning costs, E&E drilling, and sampling and appraisals.
When an area is determined to be technically feasible and commercially viable, the accumulated costs are tested for impairment and transferred to property and equipment. When an area is determined not to be technically feasible and commercially viable or the Company decides not to continue with its activity, the unrecoverable costs are charged to the consolidated statement of comprehensive loss as impairment of exploration and evaluation costs.
(ii) Property and equipment:
All costs directly associated with the development of oil and gas reserves are capitalized on an area-by-area basis. Development costs include expenditures for areas where technical feasibility and commercial viability has been determined. These costs include proven property acquisitions, development drilling, completion, gathering and infrastructure, decommissioning costs and transfers of exploration and evaluation assets.
Costs accumulated within each area are depleted using the unit-of-production method based on proven plus probable reserves incorporating estimated future prices and costs. Costs subject to depletion include estimated future costs to be incurred in developing
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Nexera Energy Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2024 19:37:05 UTC.