International Zeolite Corp.
Annual Audited
Consolidated Financial Statements
(Expressed in Canadian Dollars)
As at and for the years ended
June 30, 2023 and 2022
-
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
International Zeolite Corp.
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of International Zeolite Corp. (the Company), which comprise the consolidated statements of financial position as at June 30, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, consolidated statements of cash flows and consolidated statements of changes in equity for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2023 and 2022, and its financial performance and its 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 consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Relating to Going Concern
We draw your attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a comprehensive loss of $1,759,016 during the year ended June 30, 2023. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, 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 judgement, were of most significance in our audit of the consolidated financial statements for the year ended June 30, 2023. 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.
In addition to the matter described in the Emphasis of Matter - Material Uncertainty Related to Going Concern section of our report, we have determined the matter described below to be the key audit matter to be communicated in our report.
Goodwill impairment assessment
Refer to Notes 3 and 4 in the consolidated financial statements, the Company recorded an impairment loss on write down of goodwill associated with Earth Innovations Inc.
Goodwill acquired in a business combination is allocated to the CGU (or group of CGUs) that will benefit from the synergies of the combination. IAS 36 - Impairment of Assets ("IAS 36") requires indefinite life
intangible assets to be tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
The recoverable amount of a CGU (or group of CGUs), which is a significant estimate, is the higher of its value in use and its fair value less costs of disposal. In determining the recoverable amount of the CGU (or group of CGUs) on a value in use basis, the Company uses significant assumptions including projected future revenues, gross profit and discount rate.
We determined this as a key audit matter as it represented an area of significant risk of material misstatement given the magnitude of the goodwill and the high degree of estimation uncertainty in determining the recoverable amount. In addition, significant auditor judgement, knowledge and effort were required in evaluating the results of our audit procedures due to the sensitivity of the Company's determination of recoverable amount to minor changes to significant assumptions.
Our approach to addressing the matter included the following procedures, among others:
- Evaluated reasonableness of judgments made in management's assessment of the cash generating units (CGU);
- Evaluated reasonableness of management's cash flow projection used to determine recoverable amount of the GGU; including appropriateness of discount rate, revenue growth rate, gross margin and other key assumptions; and tested the mathematical accuracy;
- We compared management's historical forecasts of cash flow projections with actual results to assess management's ability to accurately predict cash flows;
- We performed our own sensitivity analysis to further assess estimation uncertainty;
- We assessed the appropriateness and completeness of the related disclosures in the consolidated financial statements.
Information Other than the Consolidated Financial Statements and Auditor's Report Thereon Management is responsible for the other information. The other information comprises the annual management's discussion and analysis, but does not include the consolidated financial statements and our auditor's report thereon.
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.
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 International Financial Reporting 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 relating 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 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 of 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 Pat Kenney.
Chartered Professional Accountants
Licensed Public Accountants
Mississauga, Ontario
October 23, 2023
International Zeolite Corp.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
As at | June 30, | June 30, | ||
2023 | 2022 | |||
Assets | ||||
Current | $ | 112,472 | ||
Cash and cash equivalents | $ | 283,533 | ||
Accounts receivable and other receivables (note 13) | 131,898 | 22,210 | ||
Inventory (note 14) | 141,440 | 127,919 | ||
Prepaid expenses | 5,639 | 4,343 | ||
Non-current | $ | 391,448 | $ | 438,005 |
172,237 | ||||
Exploration and evaluation assets (note 6) | 281,470 | |||
Reclamation and other deposits (note 7) | 37,259 | 22,259 | ||
Property and equipment (note 10) | 65,646 | - | ||
Right-of-use assets (Note 11) | 187,801 | - | ||
Goodwill (notes 3 & 4) | 84,830 | 742,669 | ||
$ | 939,223 | $ | 1,484,403 | |
Liabilities | ||||
Current | $ | 962,011 | ||
Accounts payable and accrued liabilities (note 8) | $ | 829,262 | ||
Lease liability - current portion (note 11) | 124,130 | - | ||
CEBA loan (Note 18) | 60,000 | 60,000 | ||
Short-term promissory note (note 9) | 66,000 | 65,610 | ||
Related party promissory notes (note 8 and 9) | 560,521 | 400,326 | ||
$ | 1,772,662 | $ | 1,355,198 | |
Non-Current | 485,894 | |||
Related party promissory notes (note 8) | 601,060 | |||
Long-term loan (note 9) | 312,250 | - | ||
Decommissioning provision (note 7) | 35,000 | 20,000 | ||
Lease liability - non-current portion (note 11) | 67,366 | - | ||
$ | 2,673,172 | $ | 1,976,258 | |
Shareholders' Deficiency | ||||
Share capital (note 12) | $ | 15,308,435 | $ | 15,019,419 |
Contributed surplus | 3,198,910 | 2,899,003 | ||
Deficit | (20,241,294) | (18,482,277) | ||
$ | (1,733,949) | $ | (491,855) | |
$ | 939,223 | $ | 1,484,403 |
Nature of operations and going concern (note 1)
Subsequent events (note 20)
These Financial Statements were authorized for issue by the Board of Directors on October 19, 2023. They are signed on behalf of the Board of Directors by:
(Signed) "Ray Paquette" | , Director | (Signed) "David Kepkay" | , Director |
`The accompanying notes are an integral part of the audited consolidated financial statements. | 5 |
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
Year ended | Year ended | ||||
Jun 30, 2023 | Jun 30, 2022 | ||||
Revenue | $ | 613,147 | |||
Sales | $ | 671,198 | |||
Commissions and others (note 7) | 3,353 | 2,789 | |||
Total Revenue | $ | 616,500 | $ | 673,987 | |
Cost of Product Sold | (263,367) | ||||
Cost of product sold | (338,002) | ||||
Impairment of inventory | (20,356) | - | |||
Gross Margin | $ | 332,777 | $ | 335,985 | |
Expenses | $ | 371,433 | |||
Administrative (note 8) | $ | 347,271 | |||
Management fees (note 8) | 108,000 | 108,000 | |||
Consulting fees (note 8) | 159,744 | 155,347 | |||
Professional fees (note 8) | 131,327 | 67,713 | |||
Research costs | 28,403 | 44,211 | |||
Sales and marketing | 22,362 | 24,958 | |||
Selling and distribution expenses | 169,000 | 139,636 | |||
Investor relations | 2,539 | 18,000 | |||
Depreciation of property and equipment (note 10) | 3,112 | - | |||
Amortization of right-of-use assets (note 11) | 62,600 | - | |||
Share-based compensation (note 8) | 390,548 | 156,804 | |||
Impairment loss - Goodwill (note 4) | 657,838 | - | |||
$ | 2,106,906 | $ | 1,061,940 | ||
Net loss before finance costs and other income/expenses | $ | (1,774,129) | $ | (725,955) | |
Interest on promissory notes (note 8 & 9) | 67,924 | 44,112 | |||
Interest on loan (note 9) | 12,250 | - | |||
Interest on finance lease (note 11) | 8,592 | - | |||
Grants (note 18) | (149,298) | - | |||
Promissory notes amortized cost accretion (note 8) | 45,419 | 60,102 | |||
Net loss and comprehensive loss | $ | (1,759,016) | $ | (830,169) | |
Loss per share - basic and diluted | $ | (0.04) | $ | (0.02) | |
Weighted average number of common shares outstanding | 41,813,209 | 40,070,142 | |||
International Zeolite Corp.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
For the year ended June 30, | 2023 | 2022 | ||
Cash provided by (used for): | ||||
Operating activities | ||||
Net and comprehensive loss | $ | (1,759,016) | $ | (830,169) |
Add items not affecting cash: | 3,112 | |||
Depreciation of property and equipment | - | |||
Amortization of right-of-use assets | 62,600 | - | ||
Interest accrued on promissory notes | 67,924 | 44,112 | ||
Interest on loan | 12,250 | - | ||
Interest expense on finance lease | 8,592 | - | ||
Impairment loss - Goodwill | 657,838 | - | ||
Impairment of inventory | 20,356 | |||
Share-based compensation | 390,548 | 156,804 | ||
Promissory notes amortized cost accretion | 45,419 | 60,102 | ||
Changes in working capital items | (490,378) | (569,151) | ||
Accounts payable and accrued liabilities | 64,827 | 330,110 | ||
Accounts receivable and other receivables | (109,688) | (20,395) | ||
Inventory | (33,878) | 12,095 | ||
Prepaid expenses | (1,295) | (2,265) | ||
(570,412) | (249,606) | |||
Financing activities | ||||
Lease liability payment | (67,500) | - | ||
Proceeds of issuance of shares | - | 366,000 | ||
Proceeds of exercised options | 126,375 | 94,794 | ||
Proceeds from loan | 300,000 | - | ||
358,875 | 460,794 | |||
Investing activities | ||||
Exploration and evaluation expenditures | (71,130) | (10,282) | ||
E&E property option payments received | 160,851 | - | ||
Purchase of property and equipment | (68,758) | - | ||
Royalties and E&E cost recoveries | 19,512 | 12,330 | ||
40,475 | 2,048 | |||
(Decrease) / increase in cash and cash equivalents | (171,061) | 213,236 | ||
Cash, beginning of year | 283,533 | 70,297 | ||
Cash, end of year | $ | 112,472 | $ | 283,533 |
Supplemental cash flow information (note 5)
`The accompanying notes are an integral part of the audited consolidated financial statements. | 7 |
International Zeolite Corp.
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars2
Number | Share | Contributed | Deficit | Total equity | |
of shares | capital | surplus | |||
$ | $ | $ | $ | ||
Balance June 30, 2021 | 38,369,462 | 14,648,712 | 2,724,111 | (17,652,108) | (279,285) |
Shares issued for cash | 2,287,500 | 275,758 | 90,242 | - | 366,000 |
Share options exercised | 620,000 | 166,949 | (72,155) | - | 94,794 |
Share based compensation | - | - | 156,805 | - | 156,805 |
Net loss for the year | - | - | - | (830,169) | (830,169) |
Balance June 30, 2022 | 41,276,962 | 15,091,419 | 2,899,003 | (18,482,277) | (491,855) |
Warrant revaluation | - | - | 94,015 | - | 94,015 |
Share options exercised | 1,130,000 | 217,016 | (90,641) | - | 126,375 |
Share based compensation | - | - | 296,533 | - | 296,533 |
Net loss for the year | - | - | - | (1,759,016) | (1,759,016) |
Balance June 30, 2023 | 42,406,962 | 15,308,435 | 3,198,910 | (20,241,294) | (1,733,949) |
`The accompanying notes are an integral part of the audited consolidated financial statements. | 8 |
International Zeolite Corp.
Notes to Consolidated Financial Statements
For the years ended June 30, 2023 and 2022
(Expressed in Canadian Dollars)
1. Nature of operations and going concern
International Zeolite Corp. (the "Company" or International Zeolite") was originally incorporated in Alberta under the name "Adamas Resources Inc." by Certificate of Incorporation dated June 5, 1987. Since incorporation, the Company has undergone a number of name changes - to "Zeacan Products Ltd." on March 1, 1989, to "Canadian Zeolite Ltd." on June 15, 1993, to "The Canadian Mining Company Ltd." on November 19, 1996, to "Zeo-Tech Enviro Corp." on April 10, 2000, and to "Canadian Mining Company Inc." on January 31, 2007. On February 6, 2016, the Company changed its name to "Canadian Zeolite Corp." and the Company was continued out of the jurisdiction of Alberta and into the jurisdiction of British Columbia. On March 6, 2018, the Company swapped corporate names with its B.C. subsidiary, International Zeolite Corp., changing its name to International Zeolite Corp. while the subsidiary became Canadian Zeolite Corp.
The Company is a vertically integrated, publicly traded industrial minerals company whose principal business activities are the exploration and development of mineral properties and the development, marketing and sales of industrial commercial products from the production of its properties and the supply of raw materials from third party suppliers.
The head office of the Company is located at Suite 900-1021 West Hastings St Vancouver, BC V6E OC3.
The Company is a reporting issuer in the Provinces of British Columbia and Alberta. The common shares of the Company are listed on the TSX Venture Exchange (the "Exchange") under the trading symbol "IZ", the Frankfurt Exchange under the trading symbol "ZEON" and on the OTC Pink platform in the United States under the symbol "IZCFF".
The Company's website ishttp://internationalzeolite.com/.
These consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue in operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
The Company has generated limited revenue from operations and incurred a net loss and comprehensive loss of $1,759,016 during the year ended June 30, 2023 (June 30, 2022 - $830,169), and as of that date, the Company had a working capital deficiency of $1,381,213 (June 30, 2022 - $857,193) and accumulated deficit of $20,241,294 (June 30, 2022 - $18,482,277). These conditions indicate material uncertainties exist that cast significant doubt on the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon raising additional capital to meet its present and future commitments, the continued support of certain shareholders and creditors, and on achieving profitable commercial operations. If additional financing is arranged through the issuance of shares, control of the Company may change, and shareholders may suffer significant dilution.
If the going concern assumption was not appropriate for these financial statements, adjustments would be necessary to the carrying value of assets and liabilities, net and comprehensive loss and statement of financial position classifications used. These realization values may be substantially different from carrying values as shown in these consolidated financial statements.
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International Zeolite Corp. published this content on 23 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2023 04:50:39 UTC.