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Aurora Solar Technologies Inc. Audit Report / Information 2025
46082_rns_2025-07-29_edb87aad-122a-4292-998d-8781da4f686e.pdf
Audit Report / Information
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Aurora Solar Technologies
AURORA SOLAR TECHNOLOGIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
TABLE OF CONTENTS
Independent Auditor’s Report...i
Consolidated Statements of Financial Position...1
Consolidated Statements of Net Loss and Comprehensive Loss...2
Consolidated Statements of Changes in Equity...3
Consolidated Statements of Cash Flows...4
Notes to the Consolidated Financial Statements...5
1) Nature of operations and going concern...5
2) Basis of preparation – statement of compliance...5
3) Material accounting policies...6
4) Critical accounting judgements and key sources of estimation uncertainty...14
5) Financial instruments and risk management...15
6) BTi acquisition...18
7) Amounts receivable...19
8) Inventory...19
9) Intangibles – intellectual property...20
10) Goodwill...20
11) Other assets...22
12) Equipment...23
13) Right of use assets...24
14) Lease liability...24
15) Share capital and reserves...25
16) Related party transactions and balances...26
17) Supplemental information for statements of net loss and comprehensive loss...27
18) Revenue...27
19) Loans and borrowings...28
20) Provisions...29
21) Capital management...29
22) Income taxes...30
23) Consolidated supplemental disclosure of cash and non-cash activities...31
24) Segmented disclosure...32
25) Subsequent events...32
BDO
Tel: (604) 688-5421
Fax: (604) 688-5132
www.bdo.ca
BDO Canada LLP
Royal Centre, 1055 West Georgia Street
Unit 1100, P.O. Box 11101
Vancouver, British Columbia
V6E 3P3
Independent Auditor’s Report
To the Shareholders of Aurora Solar Technologies Inc.
Opinion
We have audited the consolidated financial statements of Aurora Solar Technologies Inc. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at March 31, 2025 and March 31, 2024, and the consolidated statements of net loss and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated 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 March 31, 2025 and March 31, 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively "IFRS Accounting 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 these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company has incurred operating losses since inception, and that continuing operations are dependent upon economic and market factors which involve uncertainties including the Company's ability to raise adequate equity financing and ultimately develop profitable operations. As stated in Note 1, these events or conditions 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 judgment, were of most significance in our audit of the consolidated financial statements of the current period. 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 Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO
Impairment testing of goodwill
Description of the key audit matter
The Company recognized goodwill as a result of the acquisition of BT Imaging Pty. Ltd. which management determined to be business combinations in accordance with IFRS 3 Business Combinations. In accordance with IAS 36 Impairment of Assets, management is required to test goodwill for impairment annually, or when facts and circumstances suggest it may be impaired. Management is required to exert significant judgment when determining cash generating units ("CGUs") within the Company and impairment testing requires the application of estimates with respect to revenues, growth rates, operating margins and the application of an appropriate discount rate. Management concluded that an impairment charge of $1,054,252 was required as a result of the impairment testing performed.
Please refer to Notes 3(i), 3(p), 4(b) and 10 of the consolidated financial statements for the Company's accounting policies, the significant judgments and estimates applied in determining the recoverable amount of the identified CGU, and other relevant information with respect to the impairment testing performed.
How the key audit matter was addressed in the audit
Our approach in addressing this matter included the following procedures, among others:
- Assessing management's determination of CGUs, the allocation of goodwill to the identified CGUs and the application of an appropriate valuation methodology to test for impairment;
- Critically assessed management's forecasts through considering whether the judgments and estimates applied were appropriate based on our understanding of the CGU, it's historical performance, the performance of the CGU since the acquisition transaction was completed, and other market factors;
- Involving our valuation professionals with specialized skills and knowledge in evaluating certain assumptions and inputs applied in the model; and
- Reviewing the adequacy of the disclosures in the consolidated financial statements, including disclosures related to significant judgments and estimates.
Other Information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis for the year ended March 31, 2025 (the "MD&A").
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 identified above 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 MD&A for the year ended March 31, 2025 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 in this auditor's report. We have nothing to report in this regard.
BDO
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 IFRS Accounting 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 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 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.
BDO
- Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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 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 Rob Scupham.
BDO Canada LLP
Chartered Professional Accountants
Vancouver, Canada
July 29, 2025
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| As at | 31 March | 31 March | |
|---|---|---|---|
| 2025 | 2024 | ||
| Assets | |||
| Current Assets | |||
| Cash | $ 1,257,957 | $ 2,850,338 | |
| Restricted investments | 44,950 | - | |
| Amounts receivable | (7) | 1,071,091 | 920,936 |
| Prepaid expenses | 89,545 | 618,860 | |
| Inventory | (8) | 3,872,067 | 3,634,738 |
| 6,335,610 | 8,024,872 | ||
| Non-current Assets | |||
| Right of use assets | (13) | 102,682 | 299,070 |
| Intangibles | (9) | 378,868 | 740,484 |
| Other assets | (11) | 41,838 | 60,585 |
| Equipment | (12) | 238,303 | 345,487 |
| Deferred tax | (22) | - | 95,754 |
| Goodwill | (6)(10) | - | 628,927 |
| 761,691 | 2,170,307 | ||
| $ 7,097,301 | $ 10,195,179 | ||
| Liabilities | |||
| Current Liabilities | |||
| Amounts payable and accrued liabilities | (16) | $ 1,449,909 | $ 1,272,525 |
| Lease liabilities | (14) | 92,361 | 199,262 |
| Short-term loan | (19) | 686,147 | 6,801 |
| Deferred revenue | (18) | 1,733,724 | 2,318,057 |
| Provisions | (20) | 62,681 | 401,970 |
| 4,024,822 | 4,198,615 | ||
| Non-current Liabilities | |||
| Lease liabilities | (14) | - | 108,694 |
| Long-term loan | (19) | 24,718 | 32,120 |
| Deferred tax | (22) | 68,201 | - |
| Provisions | (20) | 28,554 | 39,324 |
| 4,146,295 | 4,378,753 | ||
| Equity | |||
| Share capital | (15) | 27,706,728 | 27,706,728 |
| Contributed surplus – options | (15) | 3,210,000 | 2,980,090 |
| Contributed surplus – warrants | (15) | 225,203 | 225,203 |
| Accumulated other comprehensive income | 442,079 | 317,190 | |
| Deficit | (28,633,004) | (25,412,785) | |
| 2,951,006 | 5,816,426 | ||
| $ 7,097,301 | $ 10,195,179 |
Nature of operations and going concern. (1) Subsequent events. (24)
On behalf of the Board of Directors:
"Kevin Dodds" "David Toyoda"
Kevin Dodds, Director David Toyoda, Director
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--The accompanying notes form an integral part of the consolidated financial statements--
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS
| Note | Year Ended | Year Ended | |
|---|---|---|---|
| 31 March | 31 March | ||
| 2025 | 2024 | ||
| Revenues | |||
| Product sales | (18) | $ 6,293,909 | $ 10,914,622 |
| Cost of sales | (8) | (2,692,353) | (4,701,702) |
| Gross margin | 3,601,556 | 6,212,920 | |
| Expenses | |||
| Sales and marketing | (17) | 1,275,742 | 1,518,437 |
| Research and development | (17) | 867,926 | 838,911 |
| General and administrative | (17) | 3,306,900 | 3,276,587 |
| Net foreign exchange loss (gain) | 135,844 | (131,871) | |
| Depreciation cost | (9)(12)(13) | 677,933 | 519,448 |
| Share-based payments | (15) | 229,910 | 273,125 |
| Impairment of goodwill | (10) | 628,927 | - |
| Impairment of intangibles | (9)(10)(11)(12)(13) | 425,325 | 18,382 |
| Impairment of amounts receivable | (7) | 174,213 | - |
| Provision for arbitration | (20) | - | 233,844 |
| 7,722,720 | 6,546,863 | ||
| Net loss from operations | $ (4,121,164) | $ (333,943) | |
| Other income | |||
| Other income | $ 17,207 | $ 3,581 | |
| Government grant | 3(k) | 853,162 | - |
| Recovery of loan | - | 20,000 | |
| Other expenses | |||
| Finance cost | (14) | (14,537) | (19,907) |
| Other expenses | - | (30,000) | |
| 855,832 | (26,326) | ||
| Loss before income taxes | $ (3,265,332) | $ (360,269) | |
| Income tax | (22) | $ 45,113 | $ 142,632 |
| Net loss after taxes | (3,220,219) | (217,637) | |
| Other comprehensive Income | |||
| Foreign currency translation of foreign operations | 124,889 | 157,595 | |
| Total comprehensive loss for the period | $ (3,095,330) | $ (60,042) | |
| Net Loss per Common Share – Basic and Diluted | $ (0.01) | $ (0.00) | |
| Weighted Average Number of Shares Outstanding - Basic and Diluted | 222,194,076 | 222,194,076 |
--The accompanying notes form an integral part of the consolidated financial statements.
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Shares | Amount | Warrants | Amount | Options | Amount | Accumulated Other Comprehensive Income | Deficit | Equity | |
|---|---|---|---|---|---|---|---|---|---|
| Balance 31 March 2023 | 222,194,076 | $ 27,706,728 | 11,833,750 | $ 225,203 | 13,480,000 | $ 2,706,965 | $ 159,595 | $(25,195,148) | $ 5,603,343 |
| Options forfeited | - | - | - | - | (4,463,336) | - | - | - | - |
| Share-based compensation | - | - | - | - | 32,550,000 | 273,125 | - | - | 273,125 |
| Warrants expired | - | - | (11,833,750) | - | - | - | - | - | - |
| Net income for the period | - | - | - | - | - | - | 157,595 | (217,637) | (60,042) |
| Balance 31 March 2024 | 222,194,076 | $ 27,706,728 | - | $ 225,203 | 41,566,664 | $ 2,980,090 | $ 317,190 | $(25,412,785) | $ 5,816,426 |
| Balance 31 March 2024 | 222,194,076 | $ 27,706,728 | - | $ 225,203 | 41,566,664 | $ 2,980,090 | $ 317,190 | $(25,412,785) | $ 5,816,426 |
| Options forfeited | - | - | - | - | (3,116,664) | - | - | - | - |
| Share-based compensation | - | - | - | - | 1,250,000 | 229,910 | - | - | 229,910 |
| Net loss for the period | - | - | - | - | - | - | 124,889 | (3,220,219) | (3,095,330) |
| Balance 31 March 2025 | 222,194,076 | $ 27,706,728 | - | $ 225,203 | 39,700,000 | $ 3,210,000 | $ 442,079 | $(28,633,004) | $ 2,951,006 |
--The accompanying notes form an integral part of the consolidated financial statements--
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Operating Activities | ||
| Net loss for the period | $ (3,220,219) | $ (217,637) |
| Items not affecting cash | ||
| Depreciation | 677,933 | 519,448 |
| Share-based payments | 229,910 | 273,125 |
| Impairment of intangible assets | 425,325 | 18,382 |
| Impairment of goodwill | 628,927 | - |
| Impairment of inventory | - | 172,656 |
| Impairment of amounts receivable | 174,213 | - |
| Disposal of lease liability | - | - |
| Finance cost | 14,537 | 19,907 |
| Disposal of equipment | - | 344 |
| Early termination of ROU asset | - | (32,344) |
| Recovery on lease liability | - | (4,626) |
| Income tax benefit | 163,955 | (237,219) |
| (905,419) | 512,036 | |
| Net Change in non-cash working capital | ||
| Amounts receivable | (324,369) | 398,331 |
| Prepaid expenses | 529,315 | (527,431) |
| Inventory | (237,329) | (574,317) |
| Amounts payable and accrued liabilities | 177,384 | 60,061 |
| Income tax | - | 19,936 |
| Provisions | (350,059) | 111,043 |
| Deferred revenue | (584,333) | 409,815 |
| (789,391) | (102,562) | |
| Net cash (used in) provided by operating activities | (1,694,810) | 409,474 |
| Investing Activities | ||
| Purchase of equipment | (372,856) | (337,565) |
| Purchase of other assets | (8,256) | (8,523) |
| Purchase of patents | (1,435) | (36,341) |
| Disposal of equipment | - | 119,526 |
| Net cash used in investing activities | (382,547) | (262,903) |
| Financing Activities | ||
| Loan payment | (6,801) | - |
| Loan received | 678,745 | - |
| Interest payment | (14,537) | (19,907) |
| Lease liability payment | (212,820) | (216,126) |
| Net cash provided by (used in) financing activities | 444,587 | (236,033) |
| Net decrease in cash | (1,632,770) | (89,462) |
| Cash position – beginning of period | 2,850,338 | 2,801,217 |
| Net effect - foreign exchange | 40,389 | 138,583 |
| Cash position – end of period | $ 1,257,957 | $ 2,850,338 |
4 | Page
--The accompanying notes form an integral part of the consolidated financial statements--
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1) Nature of operations and going concern
Aurora Solar Technologies Inc. (“Aurora” or the “Company”) was incorporated under the laws of the Province of British Columbia, Canada on 26 October 2006. The address of the Company’s corporate and administrative office and principal place of business is Suite 900, 2025 Willingdon Avenue, Burnaby, BC V5C 0J3.
On 25 August 2022, the Company acquired all the outstanding shares of BT Imaging Pty Ltd. (“BTi”) through a share purchase agreement (Note 6). BTi is a private, Australian limited liability corporation who is a well-established leader in photoluminescence (PL) imaging tools for photovoltaic (PV) material inspection and quality control during production, and for laboratory use during product development.
These consolidated financial statements (the “Consolidated Financial Statements”) have been prepared on a going concern basis, which assumes the Company will continue to operate for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of operations.
Since inception and prior to the BTi acquisition, the Company experienced recurring operating losses and relied heavily on external financing to meet its ongoing cash needs. The acquisition of BTi has enhanced the Company’s financial position, improving its capacity for self-financing and access to external capital, which is expected to support operations through market downturns. However, prevailing economic and market conditions present risks that could impact the Company’s ability to sustain operations and achieve its financial goals. These factors indicate the existence of material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to raise adequate equity financing and the successful execution of the Company’s business strategy are important factors in mitigating business critical risks. The Company is of the view that these objectives can be met, and that the going concern assumption remains appropriate.
If the going concern assumption were not appropriate for these Consolidated Financial Statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses and the consolidated statement of financial position classifications used, and such adjustments could be material.
A material adverse effect on our employees, customers, suppliers and/or logistics providers could have a material adverse impact on us. Specifically, the potential for future tariffs and/or other trade barriers could significantly impact and put additional downward pressure on the Company’s ability to generate future revenues and profitability.
2) Basis of preparation – statement of compliance
These Consolidated Financial Statements, including comparatives, have been prepared in accordance International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board and Interpretations (collectively “IFRS Accounting Standards”) as issued by the International Accounting Standards Board (“IASB”).
The Consolidated Financial Statements were approved by the Board of Directors and authorized for issuance on 29 July 2025.
The Consolidated Financial Statements have been prepared on a historical cost basis, except for financial instruments which have been measured at their fair value.
The policies set out were consistently applied to all the periods presented unless otherwise noted below. The preparation of Consolidated Financial Statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, profit, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about
5 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.
3) Material accounting policies
a) Basis of consolidation
These Consolidated Financial Statements incorporate the financial statements of the Company and the entities controlled by the Company. These Consolidated Financial Statements include the accounts of the Company and its 100% wholly-owned subsidiaries, Aurora Solar Technologies (Canada) Inc. ("ASTC"), BTi, and BT (Jiaxing) Semiconductor Technology Co., Ltd ("BTJ").
Control exists when the Company is exposed to or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entities. Subsidiaries are all entities over which the Company has control. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. All intercompany transactions and balances have been eliminated.
b) Foreign currency
The Consolidated Financial Statements are presented in Canadian dollars, which is the functional currency of the Company and ASTC, whereas BTi's functional currency is Australian dollars and BTJ's functional currency in Chinese Renminbi. The presentation currency of the Company is Canadian dollars. Each entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the foreign currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the respective functional currency of the entity at the rates prevailing on the end of reporting period date.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the presentation currency, which is Canadian dollars, at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Canadian dollars using average exchange rates for the month during which the transactions occurred. Foreign currency differences are recognized in the consolidated statement of loss and comprehensive loss within other comprehensive loss and are accumulated in the foreign currency translation reserve in the consolidated statement of financial position.
c) Share-based payments
The Company grants stock options to buy common shares of the Company to directors, officers, employees, and service providers. The Board of Directors grants such options for periods of up to ten years, with vesting periods determined at its sole discretion and at prices equal to or greater than the closing market price on the day preceding the date the options were granted.
The fair value of the options is measured at grant date, using the Black-Scholes option pricing model, and is recognized over the period that the options vest. The fair value is recognized as an expense with a corresponding increase in equity. The amount recognized as expense is adjusted to reflect the number of share options expected to vest.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For non-employees, share-based payment measurements are based on the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the fair value of the goods or services received cannot be estimated reliably, the transaction is measured by referring to the fair value of the equity instruments granted. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable.
d) Financial instruments
All financial instruments are measured at initial recognition at fair value plus any transaction costs that are directly attributable to the acquisition of the financial instruments except for transaction costs related to financial instruments classified as at FVTPL, which are expensed as incurred.
The initial classification of a financial asset depends upon the Company's business model for managing its financial assets and the contractual terms of the cash flows. There are three categories into which the Company can classify its financial assets:
i) Amortized cost. A financial asset is measured at amortized cost if the contractual cash flows to repay the principal and interest are made at specific dates and if the Company's business model is to collect the contractual cashflows. Subsequent measurement uses the effective interest method, less any provision for impairment.
ii) Fair value through other comprehensive income ("FVOCI"). A financial asset is measured at FVOCI if the Company's business model is both to collect the contractual cashflows and sell assets and the contractual terms of the assets give rise on specified dates to cash flows that are solely repayments of principal and interest.
iii) Fair value through profit or loss. A financial asset is measured at FVTPL if it cannot be measured at amortized cost or FVOCI. At initial recognition the Company may also irrevocably designate a financial asset at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship.
A financial asset is derecognized when the Company no longer has the rights to the contractual cash flows due to expiration of that right or the transfer of the risks and rewards of ownership to another party. The Company recognizes a loss allowance for expected credit losses on its financial assets using the simplified approach which permits the use of the lifetime expected loss provision for all amounts receivables. At each reporting date the Company assesses impairment of amounts receivable on a collective basis as its amounts receivable possess shared credit risk characteristics and have been grouped based on days past due. The loss allowance will be based upon the Company's historical credit loss experience over the expected life of trade receivables and contract assets, adjusted for forward looking estimates. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. The Company's financial assets include cash, restricted investments, and amounts receivable.
A financial liability is initially classified as measured at amortized cost or FVTPL. A financial liability is classified as measured at FVTPL if it is held for trading, a derivative, contingent consideration of an acquirer in a business combination, or has been designated as FVTPL on initial recognition. Financial liabilities at FVTPL are measured at fair value with changes in fair value, along with any interest expense, recognized in profit or loss. All other financial liabilities are initially measured at fair value less directly attributable transaction costs and are subsequently measured at amortized cost using the effective interest method. The Company's financial liabilities consist of amounts payables, accrued liabilities, lease liabilities and loans which have been classified as financial liabilities at amortized cost and are measured at amortized cost using the effective interest method.
A financial liability is derecognized when the obligation is discharged, cancelled, or expired.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e) Inventory
Materials inventory and work in progress items are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method for parts inventories. The cost excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventories are written down to net realizable value or inventories are written down when the cost of inventories exceed their net realizable value and are estimated to be unrecoverable due to obsolescence, damage, or declining market prices.
Consignment Inventory
The Company retains title and significant risks and rewards of ownership of consignment inventory until it is sold to the end customer. The Company recognizes consigned inventory at the lower of cost and net realizable value.
f) Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the Consolidated Statement of Comprehensive Loss except to the extent it relates to items recognized in equity.
Current income tax
Current tax expense is based on the results for the year as adjusted for items that are not taxable or not deductible. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting year. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred taxes are the taxes expected to be payable or recoverable on the difference between the carrying amounts of assets in the Consolidated Statement of Financial Position and their corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities:
- are generally recognized for all taxable temporary differences;
- are recognized for taxable temporary differences arising on investments in subsidiaries except where the reversal of the temporary difference can be controlled, and it is probable that the difference will not reverse in the foreseeable future; and
- are not recognized on temporary differences that arise from goodwill which is not deductible for tax purposes.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets:
- are recognized to the extent it is probable that taxable profits will be available against which the deductible temporary differences can be utilized; and
- are reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of an asset to be recovered.
g) Loss per share
Basic loss per share is computed by dividing the loss attributable to common shareholders by the weighted average number of shares outstanding during the reporting year. Diluted loss per share is computed by dividing the loss attributable to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive options and other dilutive potential units. All options and warrants are considered anti-dilutive when the Company is in a loss position, therefore basic loss per share is the same as diluted loss per share.
h) Share capital
The proceeds from the exercise of stock options or warrants together with amounts previously recorded over the vesting periods are recorded as share capital.
Common shares issued by the Company are classified as equity. Incremental costs directly attributable to the issuance of common shares from treasury are recognized in equity, net of tax, as a deduction from the share proceeds.
Common shares issued for consideration other than cash are valued on their market value at the date the shares are issued.
The Company uses the residual method in determining the fair value of the warrants issued to subscribers, which method provides for the allocation of the consideration received to the fair value of the common shares issued and allocating any residual amounts to warrants issued. The fair value attributed to the warrants is recorded as contributed surplus. When warrants are exercised, the value is transferred from contributed surplus to common shares.
i) Intangible assets
The Company's current intangible assets consist of intellectual property (including patents).
Product registration costs related to efforts by the Company to acquire legal protections for its proprietary products, such as trademarks and patents, are capitalized if the Company believes that obtaining the trademark or patent, and recovery of the costs from future related revenues is reasonably assured, otherwise the costs are expensed.
Other assets represent the cumulative legal fees incurred by the Company on patent application processes that are currently ongoing. The Company's management believes that these applications will lead to the issuance of a legal patent, and therefore has capitalized the costs associated with this process. Once a particular patent application process completes, the costs associated with the newly issued patent will be reclassified to patents and depreciated over its useful life of 20 years.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Intangible assets are recorded at cost less accumulated amortization and any impairment losses. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is calculated on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any, over the following terms:
Patents – 20 years
Other Intellectual Property – 5 – 15 years
The estimated useful lives, residual values and amortization methods are reviewed annually and any changes in estimates are accounted for prospectively. Intangible assets with an indefinite life or not yet available for use are not subject to amortization.
Finite life intangible assets are assessed at the end of each reporting period for whether there is any indication of impairment. They are tested whenever there is an indication of impairment.
If indicators of impairment exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
j) Research and development costs
Research costs are expensed in the year incurred. Development costs include all expenditures considered directly attributable to efforts by the Company to develop, and bring to commercial production, a new product. Such amounts are charged as an expense in the period incurred except in circumstances where the product or process is clearly defined and the costs attributable thereto can be identified, the technical feasibility has been established, management has indicated its intention to produce and market the product, the future market is clearly defined, adequate resources are available, and recovery of development costs can reasonably be regarded as assured, in which case such costs are capitalized.
k) Government assistance
On 9 April 2020 the Government of Canada launched the Canada Emergency Business Loan ("CEBA") providing interest-free loans to eligible small business. During the year ended 31 March 2021, the Company applied and was approved for the CEBA loan. Effective 1 January 2024, any outstanding balance on the term loan shall bear interest at a rate of 5% per annum. The term loan matures on 31 December 2025. On 27 August 2020, the Company received the CEBA Loan in the amount of $40,000. On 28 January 2021, the Company also applied and received an additional $20,000 as a top-up amount to the original loan. During the fiscal year ended 31 March 2024, the Company applied and received the CEBA loan forgiveness in the amount of $20,000. During the fiscal year ended 31 March 2024 the Company converted the CEBA loan into a bank term loan (Note 19).
During the fiscal year ended 31 March 2025, the Company incurred expenses totalling $1,961,293 in eligible research and development (R&D) related expenditures. To encourage innovation and investment in eligible R&D activities conducted in Australia, the Australian Government provides refundable tax credits for eligible
11 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
expenditures in the form of grants, at a proportionate rate. During the fiscal year ended 31 March 2025, the Company incurred $853,162 in refundable R&D related grants..
The accounting for these grants is in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. Government grants are recognized in profit or loss on a systematic basis over the periods in which the entity recognizes the related costs as expenses for which the grants are intended to compensate.
The Company has recorded amounts receivable for the grant claimed of $853,162 within the statements of financial position which represents the eligible R&D expenditures incurred during the fiscal year ended 31 March 2025. Further, the grant has been recognized as other income within the consolidated statements of net loss and comprehensive loss (Note 7).
The Company's ability to retain these grants is contingent upon compliance with the terms and conditions stipulated by the Australian Government, including demonstrating that the R&D activities meet the eligibility criteria and the expenditure claims are verifiable. Management regularly reviews its compliance with these conditions and, as of the reporting date, has reasonable assurance that all the necessary requirements for the grants recognized have been met and the grants will be received.
l) Revenue recognition
The Company generates revenues from hardware and software product sales. Product revenues are derived primarily from standard product sales contracts.
Revenue is recognized when risk of loss and title has transferred which is generally upon shipment, or in some instances, upon delivery when control has been transferred, and secondly once the installation, calibration and product training has been completed. Customer contracts are fulfilled in accordance with international commercial terms. When contracts contain multiple performance obligations, the Company allocates the transaction price to each performance obligation identified in the contract. Revenue is recognized when each performance obligation is achieved.
Hardware products are typically sold on a stand-alone basis. Various software applications are embedded in our hardware to deliver the product's essential functionality. These embedded applications are not licensed separately. The functionality that the software provides is part of the overall product and accordingly we do not record separately the revenue associated with the embedded software. Post installation maintenance services are provided to customers on an ad hoc basis and revenue relating to these services are recognized at the time the service has been performed and completed.
When an amount is received as an advance or a deposit from a customer, prior to the recognition of revenue, deferred revenue is recognized.
m) Equipment
Equipment assets are depreciated using the straight-line method based on estimated useful lives, which generally range from 2-15 years. The costs of day-to-day servicing are recognized in profit or loss as incurred. These costs are more commonly referred to as "maintenance and repairs".
n) Leases
The Company recognises a right-of-use asset ("ROU asset") and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The ROU asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The estimated useful life of ROU assets are determined on the same basis as those of property and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, then the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
o) Business combinations
The Company uses the acquisition method of accounting for business combinations, whereby the purchase consideration is allocated to the fair value of the identifiable assets and liabilities at the date of acquisition. Preliminary fair values allocated at a reporting date are finalized as soon as the relevant information becomes available, within a period not to exceed twelve months from the acquisition date with retrospective restatement of the impact of adjustments to those preliminary fair values effective as at the acquisition date. Acquisition related costs are expensed as incurred.
When the cost of the acquisition exceeds the fair value attributable to the Company's share of the identifiable net assets, the difference is recorded as goodwill. If the cost of the acquisition is less than the fair value attributable to the Company's share of the identifiable net assets the difference is recognized in the consolidated statements of loss.
p) Goodwill
Goodwill represents the excess of the price paid for the acquisition of an entity over the fair value of the net identifiable assets acquired. Goodwill is allocated to the operating segment in which it relates. The Company has determined that the goodwill associated with all acquisitions belongs to the development, manufacturing and marketing material inspection and inline quality control systems for the solar polysilicon, wafer, cell, and module manufacturing industries operating segment.
Goodwill is measured as historical cost and is evaluated for impairment annually or more often if events or circumstances indicate there may be an impairment. Impairment is determined for goodwill by assessing if the carrying value of an operating segment, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs to sell and the value in use. Impairment losses recognized in respect of an operating segment are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the operating segment. Any goodwill impairment is recorded as a loss in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed.
q) Provision for product warranty
The Company's products are typically sold with a 1-year warranty. The Company accrues the estimated costs of warranties based on the assessment of the Company's accrual history, estimates of failure rates from the Company's quality review, and other assumptions that the Company believes to be reasonable under the circumstances. Actual warranty costs are accumulated and charged against the accrued warranty liability. To the extent that accrual warranty costs differ from the estimates, the Company will prospectively revise its warranty accrual. For the year ended 31 March 2025, there were no warranty claims.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
r) New and revised IFRS Accounting Standards issued
The following is a listing of amendments, revisions and new IFRS Accounting Standards adopted.
Amendment to IAS 1 - Presentation of financial statements
In October 2022, the IASB issued an amendment to IAS 1 - Presentation of financial statements, which specifies that covenants to be complied with after the reporting date do not affect the classification of long-term debt as current or non-current at the reporting date. Instead, the amendment requires disclosures about these covenants in the notes to the financial statements. The Company adopted this amendment for the fiscal period beginning on 1 April 2024 with no substantial impact on the disclosure of its accounting policies.
New accounting standards, amendments and interpretations not yet adopted
IFRS ACCOUNTING STANDARDS 18 – Presentation and disclosure of financial statements
In April 2024, the IASB issued IFRS Accounting Standards 18 – Presentation and Disclosure in Financial Statements, which will replace IAS 1 – Presentation of Financial Statements. IFRS Accounting Standards 18 introduces significant changes intended to enhance the quality and comparability of financial reporting. Key provisions include the requirement to present specified subtotals in the statement of profit or loss, disclosures regarding management-defined performance measures, and new principles for the aggregation and disaggregation of financial information. The standard is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted. The Company is currently assessing the potential impact of IFRS Accounting Standards 18 on its consolidated financial statements.
Amendments to IFRS Accounting Standards 9 and IFRS Accounting Standards 7
In May 2024, the IASB issued targeted amendments to IFRS Accounting Standards 9 – Financial Instruments and IFRS Accounting Standards 7 – Financial Instruments: Disclosures to address practical implementation challenges and enhance the clarity of classification, measurement, and disclosure requirements. These amendments include (i) clarification of the recognition and derecognition dates for certain financial assets and liabilities, including an exception for liabilities settled through electronic payment systems, (ii) guidance on assessing whether financial assets meet the 'solely payments of principal and interest' (SPPI) criterion — including instruments with environmental, social, and governance (ESG)-linked or other contingent features, (iii) new disclosure requirements for financial instruments with contingent terms not directly related to basic lending risks and costs, and (iv) revised disclosure requirements for equity instruments designated at fair value through other comprehensive income (FVOCI). The amendments are effective for annual reporting periods beginning on or after January 1, 2026, with early application permitted. The Company is currently evaluating the potential impact of these amendments on its consolidated financial statements.
There are no other IFRS Accounting Standards or interpretations that are not yet effective that would be expected to have a material impact on the financial statements of the Company.
14 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4) Critical accounting judgements and key sources of estimation uncertainty
The following are the critical judgements and areas involving estimates, that management have made in the process of applying the Company's accounting policies and that have the most significant effect on the amount recognized in the Consolidated Financial Statements.
a) Critical judgements in applying accounting policies
Revenue recognition
Revenue is recognized once the control of a good or service is transferred to a customer and is available to make use of the good or service. Contracts detail the specific performance obligations associated with the distinct service or good provided. In the instance of a contract that does not specify distinct goods and services, the one performance obligation may include several goods or services that are provided to a customer and delivered against a performance metric. Judgement is used to determine whether multiple promised goods or services in a contract should be accounted for separately or as bundle. Significant judgement and estimation are also exercised to the extent of determining the stand-alone price to be allocated to each of the promised goods and services.
b) Key sources of estimation uncertainty
Inventory valuation
The Company's raw inventory is only valuable to the extent that it can be turned into saleable product. Inventory must be measured at the lower of cost and net realizable value and the Company must estimate that the measurement criteria used has not changed. The Company reviews its inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the Company to determine the estimated selling price of its units less the estimated cost to convert the inventory on-hand into a finished product.
Estimates of net realizable value require assessment of the impact of technological changes and estimates of salvage values if products or components are judged obsolete. Any future changes in the estimated inventory valuation could have a material adverse impact on our financial condition and results of operations.
Impairment testing
The Company assesses impairment of tangible and intangible assets with finite lives when an impairment indicator arises (e.g. change in use or discontinued use, obsolescence or physical damage). If indication of impairment exists, the assets recoverable amount is estimated. In the case of goodwill and intangibles with infinite lives, the Company tests at least annually for impairment, in accordance with IAS 36 Impairment of Assets. The recoverable amounts of cash-generating units ("CGU") are determined based on the greater of their fair value less costs of disposal and value in use which require the use of estimates and judgements.
A CGU is defined as the smallest identifiable group of assets that generates cash inflows largely independent of other assets or groups of assets. The Company has only one CGU, which consist of the assets of both BTi and Aurora.
When the asset does not generate cash inflows that are largely independent of those from other assets or group of assets, the asset is tested at the CGU level. In assessing impairment, the Company compares the carrying amount of the asset or CGU to the recoverable amount, which is determined as the higher of the asset or CGU's fair value less costs of disposal and its value-in-use. Value-in-use is assessed based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects applicable market and economic conditions, the time value of money and the risks specific to the asset. Fair value is determined as the amount that
15 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. An impairment loss is recognized whenever the carrying amount of the asset or CGU exceeds its recoverable amount and is recorded in the consolidated statements of loss and comprehensive loss.
The Company tests goodwill and indefinite life intangible assets for impairment on an annual basis at 31 March or whenever events or changes in circumstances indicate that the asset’s carrying amount may be less than its recoverable amount.
Amounts receivable
The Company estimates the recoverability of amounts receivable based on assessments of client credit ratings, payment history and other related items. Estimates of expected credit losses take into account the Company’s collection history, deterioration of collection rates during the average credit period, as well as observable charges in and forecasts of future economic conditions that affect default risk.
Provisions and contingent liabilities
A provision is recognized if the Company has a present legal or constructive obligation, as a result of past events, that can be estimated reliably, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation for product liability, accrual of product warranties, liabilities for potential litigation claims and settlements. Management must use judgement in determining whether all the above three conditions have been met to recognize a provision or whether a continent liability is in existence at the reporting date. Should an event change that impacts the recognition of a provision or a contingency, the impact could be materially different from management’s initial estimate and affect future Consolidated Financial Statements.
5) Financial instruments and risk management
a) Fair value measurement
The Company classifies its fair value measurements with a fair value hierarchy, which categorizes into three levels the inputs used in making the measurements. The three levels of hierarchy are:
- Level 1 – quoted prices in active markets for identical financial instruments.
- Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant and significant value drivers are observable in active markets.
- Level 3 – valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
b) Classification of fair values of financial assets and liabilities
Financial instruments of the Company carried on the Consolidated Statements of Financial Position are carried at amortized cost.
The Company’s financial assets classified as amortized cost include cash, restricted investments and amounts receivable. Amounts payable and accrued liabilities are classified as financial liabilities at amortized cost. The carrying value of these financial assets and liabilities approximate the fair value because of their short-term nature.
Lease liabilities and loans are also classified as other financial liabilities at amortized cost, applying a market rate of interest, and are subsequently measured using the effective interest method.
16 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c) Other risk
Market risk is the risk that changes in market prices will affect the Company's earnings or the value of its financial instruments. Market risk is comprised of commodity price risk and interest rate risk. The objective of market risk management is to manage and control exposures within acceptable limits, while maximizing returns. These market risks are evaluated by monitoring changes in key economic indicators and market information on an on-going basis and adjusting operations and budgets accordingly.
d) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's exposure to credit risk is both from its bank accounts as well as from credit sales. The Company is exposed to credit risk by holding cash, which are all held in financial institutions in Australia, Canada and China, and management believes the exposure to credit risk with respect to such institutions is not significant. The Company's other exposure to credit risk is through its amounts receivable that are made up of a small number of customers. Management assesses the credit risk of new customers as well as monitors the creditworthiness of existing customers through a review of the trade receivables' aging analysis. The Company determines the allowance using an expected credit loss ("ECL") model. Over-due balances are reviewed for collectability and allowance for doubtful amounts, where appropriate, will be provided. As at 31 March 2025 the Company has $158,966 (31 March 2024 - $604,974) in trade amounts receivable.
e) Interest rate risk
Interest rate risk is the risk of losses that arise as a result of changes in contracted interest rates. The Company maintains cash in accounts at Canadian, Australian, and China Chartered Banks that bear interest at nominal rates. The Company's lease liabilities and loans are based on fixed interest rates. The Company's exposure to interest rate risk is minimal (Note 19).
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
f) Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign currency risk, as it deals with customers and vendors in currencies other than its functional currency. A 5% change in exchange would impact the Consolidated Financial Statements by $26,000 (31 March 2024 - ($19,000)). As at 31 March 2025 the Company held currency totalling the following:
| Rounded (000's) | Sensitivity (CAD$) | 31 March 2025 | 31 March 2024 | |
|---|---|---|---|---|
| Cash in United States dollars | 5% $ | (23,000) | $ 319,000 USD | $ (109,000) USD |
| Cash in Chinese RMB | 5% $ | (3,000) | $ 325,000 RMB | $ (2,000) RMB |
| Cash in Australian dollars | 5% $ | (37,000) | $ 820,000 AUD | $ (29,000) AUD |
| Cash in Euros | 5% $ | - | $ 1,000 EURO | $ - EURO |
| Amounts receivable in United States dollars | 5% $ | (45,000) | $ 628,000 USD | $ (30,000) USD |
| Amounts receivable in Australian dollars | 5% $ | (2,000) | $ 45,000 AUD | $ (7,000) AUD |
| Amounts payable in United States dollars | 5% $ | 13,000 | $ (179,000) USD | $ 10,000 USD |
| Amounts payable in Chinese RMB | 5% $ | 4,000 | $ (454,000) RMB | $ 5,000 RMB |
| Amounts payable in Australian dollars | 5% $ | 31,000 | $ (680,000) AUD | $ 27,000 AUD |
| Amounts payable in Euros | 5% $ | 1,000 | $ (8,000) EURO | $ - EURO |
| Deferred revenue in United States Dollars | 5% $ | 87,000 | $ (1,212,000) USD | $ 116,000 USD |
g) Liquidity
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company's objective in managing this is to maintain readily available reserves to meet its liquidity requirements at any point in time.
The Company manages liquidity risk through the management of its capital structure and resources to ensure that it has sufficient liquidity to settle obligations and liabilities when they are due. The Company's ability to fund its operating requirements depends on future operating performance and cash flows, which are subject to economic, financial, competitive, and regulatory conditions, and other factors, some of which are beyond its control. The Company's primary short-term liquidity needs are to fund its net operating losses and lease payments. The Company's medium-term liquidity needs primarily relate to debt repayments and lease payments. The Company's long-term liquidity needs primarily relate to potential strategic plans.
The table below presents the contractual maturity of the Company's financial liabilities, including both principal and interest payments as at 31 March 2025:
| Less than 1 year | 1 to 5 years | Total^{1} | |
|---|---|---|---|
| Amounts payable and accrued liabilities | $ 1,449,909 | $ - | $ 1,449,909 |
| Lease liabilities | 92,361 | - | 92,361 |
| Term loan | 686,147 | 24,718 | 710,865 |
| $ 2,228,417 | $ 24,718 | $ 2,253,135 |
1 The Company has no contractual obligations greater than 5 years.
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AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company monitors its level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables regularly.
The Company's objective in managing its liquidity is to ensure it has sufficient readily available funds to meet its financial obligations when due, under both normal and stressed conditions. The Company is currently operating in a challenging economic environment characterized by a significant market downturn. This downturn has introduced increased liquidity risk due to impacts on cash flows from operations and the ability to access capital markets.
Management actively monitors the Company's liquidity position through continuous forecasting of cash flows, prioritizing the allocation of its constrained cash resources to meet critical obligations.
While the primary focus is on liquidity, the market downturn also presents elevated credit risk related to the collectability of trade receivables. Management monitors customer accounts closely and maintains an allowance for expected credit loss. For the fiscal year ended 31 March 2025, the Company recognized a credit loss amount of $174,213 (2024-$Nil).
The Chinese Renminbi held in China are not freely convertible into other currencies, and the exchange risk is, therefore, less easily managed. However, under China's Foreign Exchange Control Regulations and the Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Company is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business. Further, the cash balances held in Industrial Commercial Bank of China ("ICBC") accounts represent only a small portion of the Company's total cash resources and the exchange risk is, therefore, proportionally small. As at 31 March 2025, the Company held cash balances in ICBC of $64,005 (2024 - $36,822).
6) BTi acquisition
On 25 August 2022, the Company acquired 100% of the outstanding shares of BTi through a share purchase agreement. In consideration for the acquisition of BTi, the Company paid $1,205,310 in cash and issued 62,969,351 common shares of the Company to BTi shareholders. During the fiscal year ended 31 March 2024, the final tranche of the 42,934,348 were released from escrow.
In accordance with IFRS Accounting Standards 3 – Business Combinations, the Company accounted for the acquisition as a business combination using the acquisition method whereby the net assets acquired, and the liabilities assumed were recorded at fair value.
The purchase price allocated to BTI's identifiable assets and liabilities based on their estimated fair values on the acquisition date is summarized as follows:
| Purchase consideration | |
|---|---|
| Cash consideration | $ 1,205,310 |
| Fair value of common shares issued | 5,544,772 |
| Total purchase consideration | $ 6,750,082 |
| Fair value of net assets acquired | $ 6,121,155 |
| --- | --- |
| Goodwill | 628,927 |
| Total fair value of net assets acquired | $ 6,750,082 |
19 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7) Amounts receivable
| 31 March 2025 | 31 March 2024 | |
|---|---|---|
| Trade receivables | $ 158,966 | $ 604,974 |
| GST receivable and other taxes recoverable | 912,125 | 315,962 |
| Total amount receivable | $ 1,071,091 | $ 920,936 |
During the year ended 31 March 2025, the Company recognized a loss on trade amounts receivable in the amount of $Nil (31 March 2024 -$16,485) for deemed uncollectible accounts. For the year ended 31 March 2025, the Company recorded a credit loss of $174,213 (31 March 2024-$Nil).
As at 31 March 2025, the Company recognized a receivable of $853,162 related to the refundable R&D tax credit. The amount represents a cash refund expected from the Australian Taxation Office under the R&D Tax Incentive program, for qualifying scientific research and experimental development expenditures incurred by the Company during the fiscal year ended 31 March 2025.
The R&D tax incentive is a government program designed to encourage innovation by providing financial support for eligible R&D activities in Australia. The receivable was recognized when the Company determined that it had met all the eligibility criteria for the refundable tax offset, and management has a reasonable assurance that the full amount of $853,162 is fully recoverable.
8) Inventory
| 31 March 2025 | 31 March 2024 | |
|---|---|---|
| Raw materials | $ 2,471,902 | $ 2,553,860 |
| Work-in-process | 936,176 | 988,896 |
| Finished goods | 347,304 | 91,982 |
| Finished goods on consignment | 116,685 | - |
| Total inventory | $ 3,872,067 | $ 3,634,738 |
Inventory expensed to cost of sales during the year ended 31 March 2025 was $1,642,585 (31 March 2024 – $3,569,321).
During the year ended 31 March 2025, the Company wrote off $362,970 of inventory related to slow moving and/or obsolescent products (31 March 2024 – $172,656).
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9) Intangibles – intellectual property
| Total | |
|---|---|
| Cost: | |
| Balance, 31 March 2023 | $ 1,010,403 |
| Additions | 36,341 |
| Impairment | (18,382) |
| Impact of foreign exchange | 1,280 |
| Balance, 31 March 2024 | $ 1,029,642 |
| Additions | 1,435 |
| Impairment (Note 10) | (244,521) |
| Impact of foreign exchange | 11,318 |
| Balance, 31 March 2025 | $ 797,874 |
| Accumulated Depreciation: | |
| --- | --- |
| Balance, 31 March 2023 | $ (124,133) |
| Additions | (165,026) |
| Balance, 31 March 2024 | (289,159) |
| Additions | (129,847) |
| Balance, 31 March 2025 | $ (419,006) |
| Carrying Amount | |
| --- | --- |
| Balance, 31 March 2025 | $ 378,868 |
| Balance, 31 March 2024 | $ 740,484 |
10) Goodwill
Changes in goodwill were as follows:
| Total | |
|---|---|
| Balance as at 31 March 2023 | $ 628,927 |
| Additions | - |
| Balance as at 31 March 2024 | 628,927 |
| Impairment | (628,927) |
| Balance as at 31 March 2025 | $ - |
Page
21 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During the year ended 31 March 2025, due to operational changes and other commercial factors, the Company determined indicators of impairment existed and it carried out a review of the recoverable amount of its single CGU. In assessing for impairment, the Company compared the recoverable amount of the CGU to its carrying value. Under the value in use approach, the recoverable amount is calculated based on the discounted cash flow analysis for the CGU.
Impairment of the CGU
The Company has made certain assumptions in determining the cash flow projections based on five-year cash flow forecasts which include management's best estimate of expected market conditions including economic trends, industry trends and the CGU's past performance. The key assumptions in conducting the analysis require significant estimations of revenue growth rates (the Company's ability to generate future revenue, with potential fluctuations influenced by external and internal factors), operating margins (a percentage of revenue representing the profitability of the Company's core operations after account for operating expenses), and discount rates (such as the weighted average of the Company's cost of equity and cost of debt, representing the overall required rate of return on the Company's capital). These unobservable units, classified as Level 3 in the fair value hierarchy, are subject to inherent volatility and various uncontrollable factors that could substantially impact the present value of the discounted cash flows. These assumptions are highly sensitive to changes in the underlying economic and business environment, which could materially impact the fair value measure.
For the year ended 31 March 2025, the Company used the below assumptions as presented in the following table, to ascertain the estimated recoverable amount of the CGU.
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Compound annual growth rate on revenues | 17.0% | 11.0% |
| Operating margin | 10% | 15% |
| Pre-tax adjusted discount rate | 22.5% | 21.4% |
| Terminal value multiple | 3.5 | 3.5 |
| Terminal revenue growth rate | 2.0% | 2.0% |
As at 31 December 2024, the Company determined there were indicators of impairment in its CGU due to its revised future earnings outlook. As a result of the CGU's carrying value exceeding its value in use using a discounted cash flow approach, the Company recognized an impairment of the goodwill asset of $628,927 in the consolidated statements of net loss and comprehensive loss. As at 31 March 2025, the Company re-assessed the previously recognized impairment loss to determine whether there was any indication of further impairment. It was determined that the carrying value of the CGU as at 31 March 2025, exceeded its recoverable amount and an additional impairment of $425,325 was recognized during the fourth quarter (31 March 2024-$Nil) in the consolidated statements of net loss and comprehensive loss. For the year ended 31 March 2025, a total impairment expense of $1,054,252 (31 December 2024-$Nil) was recognized, recorded against the goodwill asset of $628,927, patents of $223,369, equipment of $140,497, ROU assets of $36,792 and other assets of $24,667.
These assets and the corresponding impairment loss are allocated to the Company's operating segment (Note 23).
22 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sensitivity Analysis
The following sensitivity has been performed for the CGU:
- estimated future profitability 5% lower than managements estimates;
- terminal value assuming zero growth; and
- pre-tax discount rate 5% higher than managements estimates.
Impact of a 5% change in each of the scenarios:
| Asset / CGU | Actual Impairment Recognized 31 March 2025 (A) | Increase in Discount Rate (B) | Decrease in Estimated Future Profitability (C) | Decrease in Growth Rate (D) |
|---|---|---|---|---|
| Patents | $ 244,521 | $ 141,580 | $ 178,867 | $ 10,684 |
| Equipment | $ 153,801 | $ 89,052 | $ 112,505 | $ 6,720 |
| Other assets | $ 27,003 | $ 15,635 | $ 19,752 | $ 1,180 |
| Total Impact | $ 425,325 | $ 246,267 | $ 311,124 | $ 18,584 |
| Total impairment if scenario occurred (A+B, A+C, A+D) | $ 671,592 | $ 736,449 | $ 443,909 |
At 31 March 2025, a 15% percent increase in the discount rate or a 10.5% percent decrease in the estimated future profitability would have resulted in patents, equipment and other assets being impaired to $NIL.
11) Other assets
| Balance | |
|---|---|
| Balance as at 31 March 2023 | $ 52,062 |
| Additions | 8,523 |
| Balance as at 31 March 2024 | 60,585 |
| Additions | 8,256 |
| Impairment (Note 10) | (27,003) |
| Balance as at 31 March 2025 | $ 41,838 |
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
12) Equipment
| Leasehold Improvement | Furniture, Fixtures and Equipment | R&D Tools and Equipment | Warehouse, Lab and Prototype Equipment | Total | |
|---|---|---|---|---|---|
| Cost: | |||||
| Balance, 31 March 2023 | $ 21,604 | $ 63,074 | $ 422,768 | $ 72,513 | $ 579,959 |
| Additions | - | 35,288 | 209,218 | 93,059 | 337,565 |
| Disposals | - | - | (119,182) | (344) | (119,526) |
| Impact of foreign exchange | (475) | (453) | (820) | (803) | (2,551) |
| Balance, 31 March 2024 | $ 21,129 | $ 97,909 | $ 511,984 | $ 164,425 | $ 795,447 |
| Additions | - | 16,684 | 77,317 | 278,855 | 372,856 |
| Impairment (Note 10) | (3,237) | (17,556) | (90,285) | (42,723) | (153,801) |
| Impact of foreign exchange | 308 | 1,673 | 6,630 | 6,470 | 15,081 |
| Balance, 31 March 2025 | $ 18,200 | $ 98,710 | $ 505,646 | $ 407,027 | $ 1,029,584 |
| 505 | |||||
| 505Accumulated Depreciation: | |||||
| Balance, 31 March 2023 | $ (4,014) | $ (44,161) | $ (245,683) | $ (31,224) | $ (325,082) |
| Additions | (6,505) | (15,718) | (61,199) | (41,457) | (124,879) |
| Balance, 31 March 2024 | $ (10,519) | $ (59,879) | $ (306,882) | $ (72,681) | $ (449,961) |
| Additions | (6,132) | (21,582) | (162,302) | (151,304) | (341,321) |
| Balance, 31 March 2025 | $ (16,651) | $ (81,461) | $ (469,184) | $ (223,984) | $ (791,281) |
| Carrying Amount | |||||
| Balance, 31 March 2025 | $ 1,549 | $ 17,249 | $ 36,462 | $ 183,043 | $ 238,303 |
| Balance, 31 March 2024 | $ 10,610 | $ 38,030 | $ 205,102 | $ 91,744 | $ 345,487 |
--The accompanying notes form an integral part of the consolidated financial statements.
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
13) Right of use assets
The right of use asset is amortized on a straight-line basis over the term of its leases related to its Sydney office.
| Balance | |
|---|---|
| Balance as at 31 March 2023 | $ 220,864 |
| Additions | 398,758 |
| Depreciation | (229,543) |
| Disposal | (89,539) |
| Impact of foreign exchange | (1,470) |
| Balance as at 31 March 2024 | 299,070 |
| Additions | 3,662 |
| Depreciation | (206,766) |
| Impact of foreign exchange | 6,716 |
| Balance as at 31 March 2025 | $ 102,682 |
14) Lease liability
During the year ended 31 March 2024, the Company successfully transferred out of its lease obligation relating to the head office space located in North Vancouver. Subsequently, the Company signed a new month-to-month operating lease for the new head office location in Burnaby.
The Company also holds lease liabilities for leases related to its Sydney office. The incremental borrowing rate for the year ended 31 March 2025 ranged between 4% - 7% (31 March 2024 – ranged from 4% - 7%). During the year ended 31 March 2024, the Company extended its Sydney office leases for an additional 1-year term.
| Balance | |
|---|---|
| Balance as at 31 March 2023 | $ 253,303 |
| Additions | 386,065 |
| Lease accretion | 19,907 |
| Payments | (236,033) |
| Disposal | (113,293) |
| Impact of foreign exchange | (1,993) |
| Balance as at 31 March 2024 | $ 307,956 |
| Lease accretion | 14,537 |
| Payments | (227,357) |
| Impact of foreign exchange | (2,775) |
| Balance as at 31 March 2025 | $ 92,361 |
| Lease liability – current portion | 92,361 |
| Lease liability – non-current portion | - |
| Total lease liability | $ 92,361 |
Page
25 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15) Share capital and reserves
a) Authorized
The authorized share capital is an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. All issued shares, consisting of only common shares are fully paid. There were 222,194,076 (31 March 2024 – 222,194,076) fully paid common shares issued and outstanding as at 31 March 2025.
b) Options and warrants
During the year ended 31 March 2025, the Company granted 1,250,000 options (31 March 2024 – 32,550,000 options) to directors, officers, employees, and consultants of the Company. During the year ended 31 March 2025, the Company recognized $229,910 (31 March 2024 – $273,125) in share-based payments on granted options.
Stock option transactions and the number of stock options outstanding are summarized below:
| For the Year Ended 31 March 2025 | Weighted average exercise price | For the Year Ended 31 March 2024 | Weighted average exercise price | |
|---|---|---|---|---|
| Balance – beginning of period | 41,566,664 | $ 0.16 | 13,480,000 | $ 0.16 |
| Granted | 1,250,000 | 0.05 | 32,550,000 | 0.05 |
| Expired/Forfeited | (3,116,664) | 0.22 | (4,463,336) | 0.07 |
| Balance – end of period | 39,700,000 | $ 0.13 | 41,566,664 | $ 0.11 |
Details of stock options outstanding are as follows:
| Expiry Date | Exercise price | 31 March 2025 Outstanding | 31 March 2025 Exercisable | 31 March 2024 Outstanding | 31 March 2024 Exercisable |
|---|---|---|---|---|---|
| 7 April 2025 | $ 0.10 | 400,000 | 400,000 | 1,100,000 | 1,100,000 |
| 24 February 2026 | $ 0.54 | 1,400,000 | 1,400,000 | 2,316,664 | 2,316,664 |
| 25 March 2027 | $ 0.10 | 3,450,000 | 3,450,000 | 3,750,000 | 3,750,000 |
| 25 August 2027 | $ 0.11 | 3,100,000 | 3,100,000 | 3,700,000 | 3,700,000 |
| 10 July 2028 | $ 0.05 | 15,350,000 | 9,774,988 | 15,950,000 | 5,574,995 |
| 15 August 2028 | $ 0.05 | 8,500,000 | 4,249,998 | 8,500,000 | 1,416,666 |
| 15 November 2028 | $ 0.05 | 1,000,000 | 333,332 | 1,000,000 | - |
| 17 March 2029 | $ 0.05 | 5,250,000 | 1,208,332 | 5,250,000 | - |
| 27 May 2029 | $ 0.05 | 1,250,000 | 208,333 | - | - |
| 39,700,000 | 24,124,983 | 41,566,664 | 17,858,325 |
The outstanding options have a weighted average exercise price of $0.09 (31 March 2024 – $0.09) and the weighted average remaining life of the options is 3.13 years (31 March 2024 – 3.98 years).
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair values of the options granted during the years ended 31 March 2025 and 2024 were determined on the date of the grant using the Black-Scholes option pricing model with the following assumptions:
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Risk free interest rate | 3.55%-4.05% | 3.55%-4.05% |
| Expected life of options (years) | 5 | 5 |
| Expected annualized volatility | 73.85%-77.37% | 73.85%-76.36% |
| Expected dividend yield | Nil | Nil |
| Weighted average Black-Scholes value of each option | $0.01-$0.03 | $0.01-$0.03 |
c) Warrants
Warrant transactions and the number of warrants outstanding are summarized below:
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | Weighted average exercise price | |
|---|---|---|---|
| Balance – beginning of period | - | 11,833,750 | 0.20 |
| Issued | - | - | - |
| Agent’s warrants issued | - | - | - |
| Warrants expired | - | (11,833,750) | 0.20 |
| Balance – end of period | - | - | - |
16) Related party transactions and balances
Key management personnel include the members of the Board of Directors and executive officers of the Company. Related party transactions are recorded as part of the general and administrative expenses on the consolidated statements of comprehensive loss, and include the following expenses recognized during the fiscal year:
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Principal Position Rounded (000's) | ||
| Wages and short-term benefits | $ 928,300 | $ 901,000 |
| Share based payments (Note 15) | 168,000 | 268,000 |
| Total remuneration | $ 1,096,300 | $ 1,169,000 |
Included in amounts payable on the consolidated statements of financial position is $33,906 (31 March 2024 - $150,000) due to related parties with respect to professional fees, wages and short-term benefits, and expense reimbursements, and are non-interest bearing and due on demand.
During the fiscal year ended 31 March 2025, the Company incurred $2,415 (31 March 2024 – $15,000) in legal fees from a company in which a director is a partner. The Company also incurred $54,030 (31 March 2024 – $113,678) in consulting fees from companies in which directors are owners. These indirect costs are in the normal course of business operations and are measured at fair value.
Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17) Supplemental information for statements of net loss and comprehensive loss
| For the Year Ended 31 March | For the Year Ended 31 March | |
|---|---|---|
| The sales and marketing expense consisted of the following: | 2025 | 2024 |
| Salaries and wages | $ 608,839 | $ 489,836 |
| Promotion, marketing and travel | 23,958 | 81,550 |
| Commission and other fees | 642,945 | 947,051 |
| Total | $ 1,275,742 | $ 1,518,437 |
| For the Year Ended 31 March | For the Year Ended 31 March | |
| The research and development expense consisted of the following: | 2025 | 2024 |
| Salaries and wages | $ 838,004 | $ 784,165 |
| Professional and consulting | 21,171 | 28,605 |
| Product research | 8,751 | 26,141 |
| Total | $ 867,926 | $ 838,911 |
| For the Year Ended 31 March | For the Year Ended 31 March | |
| The general and administrative expense consisted of the following: | 2025 | 2024 |
| Salaries and wages | $ 2,114,749 | $ 1,947,981 |
| Professional and consulting | 307,579 | 432,111 |
| Office expense | 778,572 | 836,871 |
| Directors fees | 106,000 | 59,624 |
| Total | $ 3,306,900 | $ 3,276,587 |
18) Revenue
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Contract revenue - photoluminescence imaging tools and instruments | $ 6,153,176 | $ 10,789,606 |
| Tool maintenance and service revenue | 140,733 | 125,015 |
| Total Revenue | $ 6,293,909 | $ 10,914,622 |
Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue that will be recognized in Fiscal 2026 relating to contracts partially completed during the fiscal year ended 31 March 2025 is expected to be $493,988 (31 March 2024 –$609,777).
| Deferred revenue | For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 |
|---|---|---|
| Deferred revenue, beginning | $ (2,318,057) | $ (1,908,242) |
| Additional deferred revenue in the year | (3,401,335) | (2,318,057) |
| Recognized as revenue during the year | 4,026,871 | 1,098,242 |
| Impact of foreign exchange | (41,203) | - |
| Deferred revenue, ending | $ (1,733,724) | $ (2,318,057) |
The Company recognizes two different revenue streams, which includes, contract revenue relating to the imaging hardware, with the embedded software, and the related bundled service to install the tools and supplementary maintenance and customer service. Deposits received against a contract is recognized as deferred revenue liability until such time that the title has transferred to the customer or, the related services has been performed, at which point the related performance obligation has been met, and revenue is recognized. Revenue on supplementary services is recognized once the service has been completed and the obligation to the customer met.
19) Loans and borrowings
The Company's financial liabilities include a short-term and long-term loan. The details of the loans are as follows:
Short-term loan
During the fiscal year ended 31 March 2025, the Company entered into a short-term loan agreement with Paddington St. Finance No 1 Pty Ltd, having a place of business in Paddington, New South Wales, Australia. The total maximum loan amount equals AUD1,615,000, which consists of a Tranche A facility amount of AUD755,000 and a Tranche B facility amount of AUD860,000. The Tranche A loan of AUD755,000 was drawn on 31 March 2025. The loan bears interest at a fixed rate of 12.5% per annum with a payment date of the last day of each quarter from the first drawdown date, with the final interest payment being on the final repayment date. The final repayment date for Tranche A is 31 August 2025 and Tranche B is 31 August 2026. The loan is secured by the Company's estimated refundable research and development offset credits relevant to the fiscal 2025 tax year. The loan bears a 2.0% per month breach of interest rate and a default interest rate of 2.75% per month.
Long-term loan
During the fiscal year ended 31 March 2024, the Company refinanced the $40,000 CEBA loan with its banking institution through a variable rate term loan. The remaining loan shall bear interest of prime plus 1.29% per annum, with equal payments over 5 years.
28 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20) Provisions
| For the Year Ended 31 March 2025 | For the Year Ended 31 March 2024 | |
|---|---|---|
| Warranty provision | $ 40,335 | $ 63,348 |
| Employee service leave | 50,900 | 144,102 |
| Arbitration award (inclusive of legal fees) | - | 233,844 |
| Total provision | $ 91,235 | $ 441,294 |
Warranty
The Company provides a basic one-year product warranty ("warranty period") on its tool sales. Under the terms of this warranty the Company will replace or repair components in the hardware if it fails to perform in accordance with the published specifications, during the warranty period. These assurance-type warranties are not considered to be performance obligations, so revenue is not allocated to them. As at 31 March 2025, the Company estimates the costs relating to these warranties at $40,335 (31 March 2024 – $63,348).
Employee long-service leave
Employees reach an unconditional legal entitlement to long-service leave when they work for the same Company for a qualifying period of service (typically ten years). For shorter periods, long-service leave may be payable on exit in some (but not all) circumstances. As at 31 March 2025, the Company estimates the costs relating to employee long-service leave at $50,900 (31 March 2024 – $144,102).
The estimated costs of the warranties and employee service leave are recognised as provisions under IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'.
Provision for Arbitration
The Company recognizes a provision for arbitration when there is a present obligation that is a result of a past event and in which a reliable estimate of the obligation can be determined. During the year ended 31 March 2023, an inactive subsidiary of the Company received an adverse notice of award from the Shanghai International Arbitration Centre ("SHIAC") relating to a historical contract dispute in China. For the fiscal year ended 31 March 2024, the Company had provisioned for the arbitrated award in the amount of USD$165,000 (CAD$233,844) plus related fees. During the year ended 31 March 2025, the Company amicably settled the arbitration, and any uncertainty relating to an award amount is now closed.
21) Capital management
The Company manages its capital structure and makes adjustment to it, based on the funds available to the Company, to support the development of the Company's measurement technologies as well as the Company's operations. The Company includes components of equity in its managed capital. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. Additional funds may be required to finance investments of the Company.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the size of the Company, is reasonable. The Company currently is not subject to externally imposed capital requirements.
Page
30 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22) Income taxes
A reconciliation of income taxes at statutory rates (combined Canadian federal and BC provincial rate of 27%) with reported taxes is as follows:
| 31 March 2025 | 31 March 2024 | ||
|---|---|---|---|
| Net loss for the year | $ | (3,265,332) | $ (360,269) |
| Expected income tax recovery | $ | (882,000) | $ (104,000) |
| Change in statutory rate, foreign tax, foreign exchange rates and other | 64,000 | 9,000 | |
| R&D tax offset | (443,000) | (281,000) | |
| Adjustment to prior years provision versus statutory tax returns | 210,000 | 125,000 | |
| Permanent differences | 821,000 | 242,000 | |
| Change in unrecognized deductible temporary differences | 185,000 | (134,000) | |
| Total income tax recovery | $ | (45,000) | $ (143,000) |
| 31 March 2025 | 31 March 2024 | ||
| --- | --- | --- | --- |
| Current tax expense (recovery) | $ | (208,000) | $ 29,000 |
| Deferred tax (recovery) | 163,000 | (172,000) | |
| Total income tax (recovery) | $ | (45,000) | $ (143,000) |
The significant components of the Company's temporary differences, unused tax losses that have not been included on the consolidated statements of financial position are as follows:
| 31 March 2025 | Expiry date range | 31 March 2024 | Expiry date range | |
|---|---|---|---|---|
| Temporary differences | ||||
| Other-future acquisition costs | $ - | No expiry date $ | - No expiry date | |
| Investment tax credit | $ 305,000 | 2029-2041 $ | 305,000 | 2029-2040 |
| Property and equipment | $ 159,000 | No expiry date $ | 520,000 | No expiry date |
| Share issuance costs | $ 115,000 | 2040-2047 $ | 201,000 | 2040-2046 |
| Intangible assets | $ 14,000 | No expiry date $ | - No expiry date | |
| Non-capital losses available for future period | $ 21,576,000 | 2029-2045 $ | 22,715,000 | 2029-2044 |
| Canada | $ 21,576,000 | 2029-2044 $ | 22,715,000 | 2029-2044 |
31 | Page
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The significant components of the Company's deferred income taxes are comprised of the following:
| Deferred tax assets (liabilities) | 31 March 2025 | 31 March 2024 |
|---|---|---|
| Employee benefits | $ - | $ 35,567 |
| Warranty | - | 15,837 |
| Right of use assets | - | 2,222 |
| Prepaids and accruals | - | 53,770 |
| Inventory | - | 43,164 |
| Other and affects of foreign exchange | - | 17,214 |
| Fair value of intangibles resulting from BTi acquisition | (68,201) | (71,990) |
| Total deferred tax assets (liabilities) | $ (68,201) | $ 95,784 |
Movement in net deferred tax balances is described below:
| 31 March 2025 | 31 March 2024 | |
|---|---|---|
| Beginning balance | $ 95,784 | $ (75,779) |
| Resulting from BTi acquisition | - | - |
| Recovery through profit and loss | (163,985) | 171,563 |
| Net deferred tax asset (liability) | $ (68,201) | $ 95,784 |
Tax attributes are subject to review, and potential adjustments by tax authorities.
23) Consolidated supplemental disclosure of cash and non-cash activities
| Year Ended 31 March 2025 | Year Ended 31 March 2024 | |
|---|---|---|
| Cash paid for interest | $ 14,537 | $ 19,907 |
| Cash received for interest | 22,521 | 3,581 |
| Non-cash | ||
| Addition to ROU asset | 3,662 | 201,938 |
| $ 40,720 | $ 225,426 |
AURORA SOLAR TECHNOLOGIES INC.
FOR THE YEARS ENDED 31 MARCH 2025 AND 2024
Stated in Canadian Dollars
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24) Segmented disclosure
The Company operates in one reportable operating segment, being the development, manufacturing and marketing material inspection and inline quality control systems for the solar polysilicon, wafer, cell, and module manufacturing industries.
The geographic segmentation of the Company's non-current assets is as follows:
| As at | As at | ||
|---|---|---|---|
| 31 March | 31 March | ||
| Non-current assets* | 2025 | 2024 | |
| Canada | $ | 115,458 | $ 190,810 |
| Australia | 646,233 | 1,883,743 | |
| Total | $ | 761,691 | $ 2,074,553 |
(excluding deferred tax assets)
The geographic segmentation of the Company's sales based on customer location is as follows:
| As at | As at | ||
|---|---|---|---|
| 31 March | 31 March | ||
| 2025 | 2024 | ||
| China | $ | 3,999,475 | $ 10,777,558 |
| International (excluding China) | 1,244,774 | 137,064 | |
| United States | 1,049,660 | - | |
| Total Contract Revenue | $ | 6,293,909 | $ 10,914,622 |
The Company's sales for the year ended 31 March 2025 of $6,293,909 (31 March 2024 – $10,914,622) were predominantly concentrated in Asia. While the Company is exposed to significant concentration in that region, the Company did not depend on any single customer for more than 10% of its revenues for the period.
25) Subsequent events
Subsequent to the fiscal year ended 31 March 2025, there were 400,000 options from the April 2020 issuance that expired.
Subsequent to the fiscal year ended 31 March 2025, the Paddington Street Finance Tranche A Loan in the amount of AUD755,000 plus applicable interest and fees was repaid in full.
Subsequent to the fiscal year ended 31 March 2025, the Company received the R&D tax incentive refund in the amount of AUD948,822.
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