PyroGenesis Canada : Q3-2021 Condensed Interim Financial Statements

PyroGenesis Canada Inc.

Condensed Consolidated

Interim Financial Statements

Three and nine months ended September 30, 2021

(Unaudited)

The accompanying unaudited financial statements of PyroGenesis Canada Inc. have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these unaudited condensed consolidated interim financial statements for the period ended September 30, 2021.

PyroGenesis Canada Inc.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

	September	December
	30, 2021	31, 2020
	$	$
Assets
Current assets
Cash and cash equivalents [note 6]	15,781,528	18,104,899
Accounts receivable [note 7]	18,229,407	3,329,653
Costs and profits in excess of billings on uncompleted contracts and projects [note 8]	3,293,718	1,073,633
Inventory	552,877	-
Investment tax credits and government wage subsidy receivable [note 9]	311,007	567,059
Current portion of deposits [note 11]	1,727,115	1,421,246
Current portion of royalties receivable	242,687	-
Contract assets	439,753	694,301
Other assets	1,541,787	145,996
Total current assets	42,119,879	25,336,787
Non-current assets
Deposits [note 11]	300,676	301,341
Strategic investments [note 10]	27,638,516	39,991,750
Property and equipment	3,613,090	2,529,570
ROU assets	5,932,217	3,701,000
Royalties receivable	915,521	1,060,000
Investment tax credits receivable	-	705,316
Intangible assets	3,885,125	905,614
Goodwill	2,311,956	-
Total assets	86,716,980	74,531,378
Liabilities
Current liabilities
Accounts payable and accrued liabilities [note 12]	8,230,604	4,708,051
Billings in excess of costs and profits on uncompleted contracts and projects [note 13]	6,574,359	6,592,972
Current portion of term loans [note 14]	624,819	12,208
Balance due on business combination	435,560	-
Current portion of lease liabilities	2,987,113	225,977
Total current liabilities	18,852,455	11,539,208
Non-current liabilities
Lease liabilities	2,438,682	2,762,565
Term loans [note 14]	163,018	100,499
Balance due on business combination	3,258,218	-
Deferred income taxes	760,412	706,000
Total liabilities	25,472,785	15,108,272
Shareholders' equity [note 15]
Common shares and warrants	82,125,269	67,950,069
Contributed surplus	15,015,275	10,480,310
Deficit	(35,896,349)	(19,007,273)
Total shareholders' equity	61,244,195	59,423,106
Total liabilities and shareholders' equity	86,716,980	74,531,378

Contingent liabilities [notes 22]

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PyroGenesis Canada Inc.

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Unaudited)

	Three months ended	Nine months ended
	September 30,		September 30,
	2021	2020	2021	2020
	$	$	$	$
Revenues [note 5]	9,317,926	8,149,427	23,863,001	10,996,789
Cost of sales and services [note 17]	5,265,395	2,616,901	12,733,979	3,930,257
Gross Profit	4,052,531	5,532,526	11,129,022	7,066,532
Expenses (income)
Selling, general and administrative [note 17]	4,901,131	5,311,802	15,287,141	8,253,369
Research and development	389,806	131,955	1,386,847	151,176
	5,290,937	5,443,757	16,673,988	8,404,545
Net income (loss) from operations	(1,238,406)	88,769	(5,544,964)	(1,338,013)
Changes in fair market value of strategic investments
[note 9]	1,868,862	15,220,857	(10,380,709)	20,628,298
Financial expenses [note 18]	6,792	(16,370)	99,965	493,295
Net income (loss) before income taxes	623,664	15,325,996	(16,025,638)	18,796,990
Income taxes - current	-	-	706,000	-
Income taxes - deferred	-	-	(706,000)	-
Net income (loss) and comprehensive income (loss)	623,664	15,325,996	(16,025,638)	18,796,990
Earnings (loss) per share [note 19]
Basic	0.00	0.10	(0.10)	0.13
Diluted	0.00	0.09	(0.10)	0.12

The accompanying notes form an integral part of the condensed consolidated interim financial statements.

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PyroGenesis Canada Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

(Unaudited)

				Equity portion of
	Number of Common	Common shares and	Contributed	convertible
	Shares	warrants	Surplus	debentures	Deficit	Total
		$	$	$	$	$
Balance - December 31, 2020	159,145,993	67,950,069	10,480,310	-	(19,007,273)	59,423,106
Share issued on exercise of stock options	3,477,000	1,437,022	(349,254)	-	-	1,087,768
Share issued on exercise of warrants and compensation options	8,337,897	13,085,197	-	-	-	13,085,197
Shares purchased for cancellation	(166,684)	(347,019)	-	-	(863,440)	(1,210,459)
Share-based payments	-	-	4,884,219	-	-	4,884,219
Net income (loss) and comprehensive income (loss)	-	-	-	-	(16,025,636)	(16,025,636)
Balance - September 30, 2021	170,794,206	82,125,269	15,015,275	-	(35,896,349)	61,244,195
Balance - December 31, 2019	141,303,451	47,073,243	6,679,730	401,760	(60,237,656)	(6,082,923)
Share issued on exercise of stock options	1,858,000	1,018,658	(396,059)	-	-	622,599
Shares issued upon exercise of share purchase warrants	5,596,467	4,383,858	-	-	-	4,383,858
Conversion of debentures into shares	3,369,375	3,073,356	-	(360,981)	-	2,712,375
Conversion of loan into shares	3,225,000	925,982		(98,422)		827,560
Shares purchased for cancellation	(1,285,000)	(426,370)	-	-	(538,021)	(964,391)
Equity component of convertible debentures	-	-	40,779	(40,779)	-	-
Share-based payments	-	-	3,111,913	-	-	3,111,913
Equity component of convertible debentures issued	-	-	-	98,422	-	98,422
Net income (loss) and comprehensive income (loss)	-	-	-	-	18,796,990	18,796,990
Balance - September 30, 2020	154,067,293	56,048,727	9,436,363	-	(41,978,687)	23,506,403

The accompanying notes form an integral part of the condensed consolidated interim financial statements.

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PyroGenesis Canada Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

	Three months ended September 30,	Nine months ended September 30,
		2021	2020	2021	2020
		$	$	$	$
	Cash flows provided by (used in)
	Operating activities
	Net (loss) income	623,664	15,325,998	(16,025,636)	18,796,990
	Adjustments for:
	Share-based expenses	673,194	3,017,409	4,884,219	3,111,913
	Depreciation of property and equipment	93,701	19,125	254,079	39,238
	Depreciation of ROU assets	153,177	128,971	404,188	306,541
	Amortization of intangibles assets	91,333	6,782	104,892	20,408
	Amortization of contract assets	118,696	-	424,765
	Financial expenses	6,793	121,408	99,965	631,073
	Change in fair value of investments	(1,868,862)	(15,220,857)	10,380,709	(20,628,298)
		(108,302)	3,398,836	527,181	2,277,865
	Net change in non-cash operating working
	capital items [note 16]	(2,324,191)	(1,008,940)	(16,877,125)	(640,447)
		(2,432,493)	2,389,896	(16,349,944)	1,637,418
	Investing activities
	Purchase of property and equipment	(223,412)	(437,057)	(1,408,300)	(541,512)
	Addition to ROU assets	-	-	(36,903)	-
	Purchase of intangible assets	(100,964)	(48,282)	(208,116)	(63,893)
	Purchase of strategic investments	(1,205,011)	(2,949,672)	(10,401,522)	(3,009,672)
	Disposal of strategic investments	-	2,103,024	12,374,047	2,103,024
	Variation of deposits	-	(108,489)	-	(112,254)
	Business acquisition, net of cash acquired	1,104,393	-	1,104,393	-
		(424,994)	(1,440,476)	1,423,599	(1,624,307)
	Financing activities
	Repayment of R&D loans	-	(247,500)	-	(461,500)
	Repayment of term loan [note 14]	(3,078)	(115,200)	(9,076)	(115,200)
	Repayment of convertible debenture	-	-	-	(358,500)
	Repayment of lease liabilities	(80,198)	(1,232,520)	(161,249)	(1,300,792)
	Repayment of promissory notes payables to the
	controlling shareholder and CEO	-	-	-	(295,000)
	Proceeds from convertible loans	-	-	-	903,000
	Proceeds from issuance of shares upon exercise
	of stock options	683,323	15,599	1,087,768	603,599
	Proceeds from issuance of shares upon exercise
	of warrants and compensation options	-	1,242,189	13,085,197	4,402,858
	Share purchase for cancellation	-	-	(1,210,459)	(964,391)
	Interest paid	(37,571)	(84,246)	(189,207)	(366,097)
		562,476	(421,678)	12,602,974	2,047,977
	Net (decrease) increase in cash	(2,295,011)	527,742	(2,323,371)	2,061,088
	Cash - beginning of period	18,076,539	1,567,777	18,104,899	34,431
	Cash - end of period	15,781,528	2,095,519	15,781,528	2,095,519
Supplemental cash flow disclosure
	Non-cash transactions:
	Purchase of property and equipment included in
	accounts payables	72,565	(181,863)	113,657	7,170
	Purchase of intangibles assets included in
	accounts payables	74,911	(120,468)	19,372	129,650
	Addition of right-of-use assets and lease
	liabilities	-	366,566	2,120,894	366,566
	Interest included in accounts payable	-	19,408	-	-
	Investments received in payment of trade
	accounts receivables	-	395,514	-	395,514

The accompanying notes form an integral part of the condensed consolidated interim financial statements.

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