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Current Water Technologies Inc. Audit Report / Information 2024
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Audit Report / Information
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WATER TECHNOLOGIES INC.
WATER TECHNOLOGIES INC.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(Expressed in Canadian Dollars)
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
PAGE 1 OF 32
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WATER TECHNOLOGIES INC.
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT ...3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ...7
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIENCY ...8
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) ...9
CONSOLIDATED STATEMENTS OF CASH FLOWS ...10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...11-32
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
PAGE 2 OF 32
CAN Partners LLP
Chartered Professional Accountants
PUBLIC ACCOUNTANTS and ADVISORS
7030 Woodbine Ave., Suite 405
Markham ON, L3R 6G2
T 905 604 6665
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Current Water Technologies Inc.:
Opinion
We have audited the consolidated financial statements of Current Water Technologies Inc. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2024, and the consolidated statements of (loss) income and comprehensive (loss) income, changes in shareholders' deficiency, and cash flows for the year ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board.
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.
Emphasis of Matter - Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended December 31, 2024 and, as of that date, the Company had an accumulated deficit. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of these matters.
Other Matters - Comparative Information
The consolidated financial statements of the Company for the year ended December 31, 2023 were audited by another auditor who expressed an unqualified opinion on those statements on April 29, 2024.
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 for the year ended December 31, 2024. 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 matter described below to be the key audit matters to be communicated in our report.
Revenue Recognition using the Percentage of Completion Method and Related Deferred Revenues
Why this matter was considered to be one of the most significant in the audit
The Company recognizes revenue from long-term construction contracts using the percentage of completion method. This method involves significant judgment in determining the stage of completion of each contract, estimated total contract revenue and costs, and the assessment of contract modifications and claims. These estimates directly impact the amount of revenue recognized in the period and the related measurement of deferred revenues.
Given the inherent estimation uncertainty and management judgment involved, particularly in forecasting future costs to complete and assessing project performance and collectability, we identified revenue recognition under the percentage of completion method and the related deferred revenues as a key audit matter.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures in relation to this key audit matter included, among others:
- Evaluating the design and implementation of relevant internal controls over the Company’s revenue recognition process.
- Assessing the appropriateness of the Company’s accounting policies related to revenue recognition in accordance with the applicable financial reporting framework.
- Testing a sample of contracts to evaluate the Company’s identification of performance obligations and contract terms.
- Evaluating management’s estimates of total contract revenue and total estimated costs by reviewing supporting documentation, including budgets, forecasts, and accumulated cost information.
- Assessing the reasonableness of the percentage of completion calculations by comparing actual costs incurred to date with total estimated costs.
- Performing retrospective reviews of completed contracts to evaluate the historical accuracy of management’s estimates.
- Evaluating the adequacy of the Company’s disclosures related to revenue recognition and deferred revenues in the financial statements.
Other Information
Management is responsible for the other information. The other information comprises the Management Discussion and Analysis.
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 Management’s Discussion and Analysis 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. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board, and for such internal control as management determines is necessary to enable the preparation of 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.
Auditors' 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.
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.
3
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 Charles Sung.
CNA Partners LLP
Markham, Ontario
April 28, 2025
Chartered Professional Accountants
Licensed Public Accountants
4
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WATER TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT DECEMBER 31, 2024 AND 2023
| Expressed in Canadian Dollars | As at December 31 | |
|---|---|---|
| 2024 | 2023 | |
| CURRENT ASSETS | ||
| Cash and cash equivalents | 79,115 | 113,140 |
| Accounts receivable (note 5) | 263,764 | 583,147 |
| Inventories (note 6) | 307,050 | 324,624 |
| Prepaid | 120,729 | 84,049 |
| Current total | 770,658 | 1,104,960 |
| RIGHT-TO-USE ASSET (note 9) | 692,119 | 899,755 |
| PROPERTY, PLANT AND EQUIPMENT (note 7) | 77,494 | 99,443 |
| INTANGIBLE ASSETS (Patents) (note 8) | 3,261 | 3,834 |
| 1,543,532 | 2,107,992 | |
| CURRENT LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities (note 12) | 475,385 | 503,955 |
| Deferred revenue | 463,832 | 469,831 |
| Lease Liability (note 17) | 201,426 | 185,349 |
| Bank loans (note 10) | - | 120,000 |
| 988,941 | 1,279,135 | |
| Long term | ||
| Lease Liability (note 17) | 530,839 | 732,266 |
| 682,541 | 732,266 | |
| SHAREHOLDERS' DEFICIT | ||
| CAPITAL STOCK (note 11) | 21,327,916 | 20,827,916 |
| Shares to be issued (note 22) | 280,000 | - |
| Warrants (note 11) | 304,628 | 985,520 |
| Contributed surplus | 8,523,976 | 7,829,338 |
| 30,436,520 | 29,642,774 | |
| DEFICIT | (30,564,470) | (29,546,183) |
| (127,950) | 96,591 | |
| $ 1,543,532 | $2,107,992 |
Going concern note 1
Equity method investment note 18
Subsequent Events note 22
APPROVED ON BEHALF OF THE BOARD:
"Gene Shelp"
Gene Shelp, Director
"Alex Kaszuba"
Alex Kaszuba, Director
(The accompanying summarized notes form an integral part of these audited consolidated financial statements)
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
CURRENT WATER TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIENCY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Common shares | Shares to be Issued | Warrants | Contributed Surplus | Deficit | Total | ||
|---|---|---|---|---|---|---|---|
| Number | Amount | ||||||
| Balance – January 1, 2023 | 212,275,038 | $ 20,827,916 | - | $ 985,520 | $7,714,934 | $ (29,993,335) | $ (464,965) |
| Net loss/income | 447,152 | 447,152 | |||||
| Share-based payments | 114,404 | 114,404 | |||||
| Balance – December 31, 2023 | 212,275,038 | 20,827,916 | - | 985,520 | 7,829,338 | (29,546,183) | 96,591 |
| Balance – January 1, 2024 | 212,275,038 | 20,827,916 | - | 985,520 | 7,829,338 | (29,546,183) | 96,591 |
| Net loss/income | (1,018,287) | (1,018,287) | |||||
| Share-based payments | 280,000 | 13,746 | 13,746 | ||||
| Shares to be issued | 280,000 | ||||||
| Private Placement | 16,666,666 | 500,000 | 500,000 | ||||
| Expiration of warrants | - | (680,891) | 680,891 | - | |||
| Balance – December 31, 2024 | 228,941,704 | 21,607,916 | 280,000 | 304,629 | 8,523,975 | (30,564,470) | (127,950) |
(The accompanying summarized notes form an integral part of these audited consolidated financial statements)
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Year Ended December 31 | ||
|---|---|---|
| Expressed in Canadian Dollars | 2024 | 2023 |
| REVENUE - sales | $ 1,525,730 | $ 2,017,722 |
| Other income (note 10, 18) | $ 75,044 | $ 1,026,173 |
| $ 1,600,774 | $ 3,043,895 | |
| EXPENSES | ||
| Direct operating expenses | $ 1,662,644 | $ 1,701,475 |
| General and administrative expenses | 659,361 | 532,021 |
| Interest expense - long term | 53,152 | 39,283 |
| Depreciation and amortization | 230,158 | 209,560 |
| Share-based payments | 13,746 | 114,404 |
| $ 2,619,061 | $ 2,596,743 | |
| NET EARNINGS (COMPREHENSIVE LOSS) FOR THE PERIOD | $ (1,018,287) | $ 447,152 |
| Basic and diluted earnings (loss) per share | (0.005) | 0.002 |
| Weighted average number of shares outstanding – basic and diluted | 222,229,376 | 212,275,038 |
(The accompanying summarized notes form an integral part of these audited consolidated financial statements)
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
CURRENT WATER TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Year Ended December 31 | ||
|---|---|---|
| Expressed in Canadian dollars | 2024 | 2023 |
| Operating activities | ||
| Net earnings (loss) for the period | $ (1,018,287) | $ 447,152 |
| Add: Items not involving an outlay of cash | ||
| Depreciation and amortization | 230,158 | 209,560 |
| Share-based payments | 13,746 | 114,404 |
| $ (774,383) | $ 771,116 | |
| Changes in non-cash working capital | ||
| Decrease (Increase) in accounts receivable | 319,383 | (546,084) |
| Decrease (Increase) in inventories | 17,574 | 134,150 |
| Decrease (Increase) in prepaid expenses | (36,680) | (29,989) |
| Increase (Decrease) in accounts payable and accrued liabilities | (28,550) | (83,515) |
| Increase (Decrease) in deferred revenue | (5,999) | (77,371) |
| Cash flow from operating activities | $ (508,655) | $ 168,307 |
| Investment Activities | ||
| Acquisition of property, plant and equipment | - | (4,000) |
| Cash flow from financing activities | $ - | $ (4,000) |
| Financing activities | ||
| Common shares issued for cash (net share issue costs) | 500,000 | - |
| Proceeds from shares to be issued | 280,000 | - |
| Repayment of bank loan | (120,000) | - |
| Reduction in lease liability | (185,370) | (169,841) |
| Cash flow from financing activities | $ 474,630 | $ (169,841) |
| Net change in cash and cash equivalents during the period | (34,025) | (5,534) |
| Cash and cash equivalents, beginning of period | 113,140 | 118,674 |
| Cash and cash equivalents, end of period | $ 79,115 | $ 113,140 |
| Non-cash investing and financing activities | ||
| IFRS 16 Lease acquisition | $ - | $ 1,038,179 |
| Interest paid in cash | $ 59,397 | $ 44,791 |
(The accompanying summarized notes form an integral part of these audited consolidated financial statements)
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
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WATER TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(CANADIAN DOLLARS)
1. DESCRIPTION OF BUSINESS AND GOING CONCERN
CORPORATE INFORMATION
Current Water Technologies Inc. (the 'Company'), is incorporated under the Ontario Business Corporations Act and is a publicly traded company whose common shares are listed under the symbol "WATR" on the TSX Venture Exchange. Previously the Company's name was Enpar Technologies Inc. under the symbol "ENP" on the TSX Venture Exchange and changed its name effective January 2, 2018. The Company is engaged in the development of innovative electrochemical water treatment and environmental technologies. The Company currently markets its products throughout the world and in this regard the Company has signed a number of marketing and distribution agreements with various parties granting exclusive rights to these parties for the sale of the Company's various technologies in specific geographic regions. The Company's corporate head office and principal place of business is located at 70 Southgate Drive, Unit 4, Guelph, Ontario, Canada N1G 4P5.
GOING CONCERN
These consolidated financial statements have been prepared under the assumption that the Company is a going concern. This assumption, among other things, contemplates that the Company will be able to realize on its assets and discharge its liabilities in the normal course of operations. The Company has incurred a loss during the current year in the amount of 1,018,287 (2023: income of $447,152) resulting in an accumulated deficit of $30,564,470 (2023: $29,546,183) and a working capital deficiency of $218,283 (2023: $174,175). The Company has been able to fund these operating losses mainly by raising equity; however, there can be no assurance that the Company will be able to do so in the future. As such, there is material uncertainty relating to these conditions that cast significant doubt concerning the Company's ability to continue as a going concern. Should the going concern assumption be proven to be invalid, adjustments to the carrying amounts of certain assets could be material.
BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements of Current Water Technologies Inc. were approved for issuance by the Board of Directors on April 28, 2025. The policies applied in these consolidated financial statements are based on IFRS's issued and effective or available for early adoption as of December 31, 2024.
These consolidated financial statements are presented in Canadian dollars, which is our presentation and functional currency. These consolidated financial statements have been prepared using the historical cost basis except for certain financial instruments that have been evaluated at fair value. Recognizing that the Company is responsible for both the integrity and objectivity of the consolidated financial statements, management is satisfied that these consolidated financial statements have been fairly presented.
These consolidated financial statements incorporate the financial statements of Current Water Technologies Inc. and its wholly-owned subsidiary, Pumptonics Incorporated over which Current Water Technologies Inc. has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee. The Company owns 100% of Pumptonics.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current WATER TECHNOLOGIES INC.
2. ADOPTION OF NEW ACCOUNTING POLICIES
Standards and interpretations effective in the current period
The IASB has issued amendments to IAS 1 Presentation of Financial Statements affecting the presentation of liabilities as current or non-current in the statement of financial position, amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to enhance the transparency of supplier finance arrangements by including disclosure requirements, and amendments to IFRS 16 Leases to include variable payments when measuring a lease liability arising from a sale-and-leaseback transaction. These amendments to IAS 1, IAS 7, IFRS 7 and IFRS 16 are effective for annual periods beginning on or after January 1, 2024, with early application permitted. There was no impact on the Company's accounting policies or the consolidated financial statements as a result of adopting such amendments.
3. MATERIAL ACCOUNTING POLICIES
The material accounting policies used in the preparation of these consolidated financial statements have been applied consistently to all periods presented in these consolidated financial statements other than the adoption of new standards not requiring retrospective disclose as disclosed in note 2.
(a) KEY ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates are used when accounting for items such as share-based payments and warrants, impairment of long-lived assets, percentage of completion on contracts, onerous contracts, collectability of receivables, inventory obsolescence and business combinations. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
(i) Measurement of share-based payments and warrants
The Company uses the Black-Scholes option pricing model to estimate the fair value of the options and warrants granted at the grant date. This model requires the input of a number of assumptions including expected dividend yields, expected stock volatility, expected time until exercise, expected forfeitures, and risk-free interest rates. Although the assumptions used reflect management's best estimates, they involve uncertainties based upon market conditions generally outside the control of the Company. If other assumptions were used, the fair value of share-based payments and warrants could be significantly impacted.
(ii) Impairment of long-lived assets
The Company reviews these long-lived assets for objective evidence of impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability is measured by comparison of the assets carrying amount to the assets recoverable amount which is the greater of fair value less cost to sell and value in use. Value in use is measured as the expected future discounted cash flows expected to be derived from the asset. If the carrying value exceeds the recoverable amount, the asset is written down to the recoverable amount.
Estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
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AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
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(iii) Percentage of completion of contracts
The percentage of completion of jobs in progress at the end of the year requires management to estimate the percentage of work done at each reporting period. The estimates are made based on the best information available and are adjusted at each reporting period.
(iv) Onerous contracts
The Company enters into percentage of completion contracts in the ordinary course of its business. When the unavoidable cost of meeting the obligations under these contracts exceeds the associated expected future net benefits, an onerous contract provision is recognized. The calculation of this provision involves the use of estimates including, but not limited to, contract gross margin, and the effect of labour hours related to learning curves of production and the timing of achieving certain operational efficiencies. These actual results can vary significantly from these estimates with consequent variability in the amounts of the provision recorded. The onerous contract provision is calculated by taking the expected future costs that will be incurred under the contract and deducting any estimated revenues. The company has recorded nil provision associated with onerous contracts during the year end December 31, 2024 and 2023.
(v) Collectability of receivables
Significant judgments, estimates and assumptions are required when calculating the expected credit losses of financial assets. In measuring the expected credit losses, management makes assumptions about the timing and extent of missed payments or default events. In addition, management makes assumptions and estimates about the impact that future events may have on the historical data used to measure expected credit losses.
In estimating expected credit losses, the Company develops a number of assumptions as follows:
- The period over which the Company is exposed to credit risk
- The probability-weighted outcome, including identification of scenarios that specify the amount and timing of the cash flows for particular outcomes and the estimated probability of those outcomes
- The risk of default occurring on receivables during their expected lives
- Expected cash short falls including, recoveries, costs to recover and the effects of any collateral or other credit enhancements
- Estimates of effective interest rates used in incorporating the time value of money
(vi) Inventory obsolescence
Inventories are valued at the lower of cost and net realizable value. Inventory is reviewed monthly to ensure the carrying value does not exceed net realizable value. The company also assesses inventory for slow moving items. Where inventory aging indicates the value may not be realized or cost exceeds net realizable value, a write-down is recognized. The write-down may be reversed if the circumstances which caused it no longer exist.
(vii) Business combinations
Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition. In determining the fair value of all identifiable assets and liabilities acquired, the most significant estimates relate to the valuation of intangibles assets, goodwill and property plant and equipment.
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AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
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(viii) Equity method investment
The Company exercises judgment in determining whether it has significant influence over an investee, which is required for the application of the equity method under IAS 28. Significant influence is usually presumed when the Company holds 20% or more of the voting rights of an investee, but may also exist when holding less than 20% if other qualitative factors are present, such as board representation, participation in policy-making decisions, or significant transactions with the investee.
(b) CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly liquid and having an initial term of less than 90 days.
(c) RESEARCH AND DEVELOPMENT:
Research and development activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding are expensed as incurred. The costs of developing new products are capitalized as deferred development costs, if they meet the development capitalization criteria under IFRS. These criteria include the ability to measure development costs reliably, the product is technically, and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset. To date all of the research and development costs have been expensed. Investment tax credits and government assistance relating to expensed research and development costs are applied to reduce the relevant expense.
(d) INVENTORIES:
Inventory is measured at the lower of cost or net realizable value. Cost is determined using the first in first out method. Work in process includes direct costs, direct labour and over heads.
(e) PROPERTY PLANT AND EQUIPMENT:
Property plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives at the following annual rates:
Office furniture and fixtures - 20% declining-balance basis
Equipment - 20% declining-balance basis
Computer hardware - 30% declining-balance basis
Automotive - 20% declining-balance basis
Leasehold improvements - 5 years on a straight-line basis
Demonstration units - 5 years on a straight-line basis
Gains and losses on disposals of property, plant, and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included in the statement of loss and comprehensive loss.
(f) INTANGIBLE ASSETS:
Patents and rights to technology are carried at cost less accumulated amortization. Rights of Use Assets ("ROU") assets are initially recorded at cost, which comprises the initial amount of the lease liability and any initial direct costs incurred less any lease payments made at or before the initial recognition date. ROU assets are depreciated on a straight-line basis over the estimated useful life of the asset if the Corporation expects to take ownership of the asset at the end of the lease term, or over the lease term if the Corporation does not expect to take ownership of the asset at the end of the lease term. The lease
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AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
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WATER TECHNOLOGIES INC.
term includes periods covered by an option to extend if the Corporation's intention is to exercise that option. ROU assets are periodically reduced by impairment losses, if any, and adjusted for re-measurements of the lease obligation. Amortization is provided using the following annual rates:
Patents
- 6 years on a straight-line basis
Rights to technology
- 6% declining-balance basis
Rights of Use Assets
- straight line over the remaining term of lease
(g) INCOME TAXES:
Income tax on the profit or loss consists of current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years. The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled.
(h) REVENUE RECOGNITION:
The Company receives revenue on construction contracts to construct treatment units, which is specifically negotiated for the construction of an asset or combination of assets. All construction contracts are fixed-price contracts. Revenue on contracts to construct treatment units are recorded on the basis of percentage of completion of individual contracts. That portion of the total contract price applicable to contract expenditures incurred and work performed is accrued on the basis of engineering estimates of the percentage of completion. As these long-term contracts extend over one or more years, revisions in cost and profit estimates during the course of the work are reflected in the accounting period in which the facts requiring the revision become known.
The Company receives revenue on short term contracts to construct commercial pumping solutions. All pump-related contracts are fixed-price contracts.
The Company receives service revenue related to the certain service contracts for maintaining water treatment units and pumping solutions.
The Company also receives revenue from distribution and licensing fees where the Company grants exclusive license to sell and market the Company's extensive portfolio patented, patent-pending and proprietary innovative electrochemical water treatment and green hydrogen and lithium recovery technologies. These licensing fees are recognized as other income in the period it is earned.
PRESENTATION OF CONTRACT BALANCES
Accounts receivables are amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an expected credit loss to provide for the estimated amount of receivables that will not be collected in accordance with IFRS 9.
Deferred revenue represents the excess of amounts billed to customers over revenue earned on uncompleted contracts.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
SUTTEN WATER TECHNOLOGIES INC.
IDENTIFICATION OF A CONTRACT WITH A CUSTOMER
When determining the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or to separate a single contract into multiple performance obligations could affect the amount of revenue and profit recorded in a given period.
The Company accounts for a contract when it has commercial substance, the parties have approved the contract in accordance with customary business practices and are committed to their obligations, the rights of the parties and payment terms are identified, and collectability of consideration is probable.
IDENTIFYING PERFORMANCE OBLIGATIONS IN A CONTRACT AND ALLOCATING REVENUE
For most of the Company's contracts, the customer contracts with the Company to provide a significant service of integrating a complex set of tasks and components into a single project. Consequently, the entire contract is accounted for as one performance obligation. Less frequently, however, the Company may provide several distinct goods or services as part of a contract, in which case the Company separates the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative stand-alone selling prices of the promised goods or services underlying each performance obligation. The expected cost plus a margin approach is typically used to estimate the standalone selling price of each performance obligation. To determine the appropriate margin, management considers margins for comparable services under similar contracts in similar markets.
DETERMINING THE TRANSACTION PRICE
Variable consideration for contracts related to change orders approved as to scope but unapproved as to price, is included in estimated revenue to the extent it is highly probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates variable consideration at the most likely amount it expects to be entitled. Estimates of variable consideration are based on historical experience, anticipated performance, and management's best judgment based on the information available at the time.
Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications exist when the change either creates new, or changes existing, enforceable rights and obligations. Most of the Company's contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of these contract modifications on the transaction price and the measure of progress for the performance obligation to which it relates, is recognized as a cumulative adjustment to revenue as either an increase or decrease in revenue. However, if a contract modification is for distinct goods and services from the existing contract and the pricing of the contract modification reflects the standalone selling pricing of the additional goods or services, then the contract modification is treated as a separate contract.
Due to the nature of many of the Company's performance obligations, the estimation of total revenue and costs at completion is complex, subject to many variables, and requires significant judgment. These areas of measurement uncertainty are discussed further in the Critical accounting judgments, estimates and assumptions section. Any changes to the estimates of forecasted revenue and total costs are recognized on a cumulative basis, which recognizes in the current period the cumulative effect of the changes based on a performance obligation's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of the Company's performance obligations.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current WATER TECHNOLOGIES INC.
When estimates of total costs to be incurred on a performance obligation exceed the total estimated revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.
PERFORMANCE OBLIGATIONS SATISFIED OVER TIME
The Company typically transfers control of goods or services, and satisfies performance obligations, over time. Therefore, the Company recognizes revenue over time as these performance obligations are satisfied. This continuous transfer of control to the customer is often supported by the customer's physical possession or legal title to the work in process, as well as contractual clauses that provide the Company with a present right to payment for work performed to date plus a reasonable profit in the event a customer unilaterally terminates the contract for convenience. As a result of control transferring over time, revenue for fixed fee contracts is recognized based on the extent of progress towards completion of the performance obligation. The Company generally uses the cost-to-cost measure of progress for its contracts because it best reflects the transfer of an asset to the customer which occurs as costs are incurred on the contract. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill contracts may include labour, materials, subcontractor, and other direct costs, as well as an allocation of indirect costs.
(i) FINANCIAL INSTRUMENTS
Financial assets
Financial assets are classified as either financial assets at fair value through profit or loss ("FVTPL"), fair value through other comprehensive income ("FVTOCI") or amortized cost. The Company determines the classification of financial assets at initial recognition.
Financial assets at Fair-value through profit or loss
Financial instruments classified as fair value through profit and loss are reported at fair value at each reporting date, and any change in fair value is recognized in the statement of operations in the period during which the change occurs. Realized and unrealized gains or losses from assets held at FVPTL are included in losses in the period in which they arise.
Financial assets at Fair-value through other comprehensive income
Financial assets carried at FVTOCI are initially recorded at fair value plus transaction costs with all subsequent changes in fair value recognized in other comprehensive income (loss). For investments in equity instruments that are not held for trading, the Company can make an irrevocable election (on an instrument-by-instrument bases) at initial recognition to classify them as FVTOCI. On the disposal of the investment, the cumulative change in fair value remains in other comprehensive income (loss) and is not recycled to profit or loss.
Financial assets at amortized cost
Financial assets are classified at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. The Company's cash and cash equivalents and accounts receivable is recorded at amortized cost as they meet the required criteria. A provision is recorded based on the expected credit losses for the financial asset and reflects changes in the expected credit losses at each reporting period.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current WATER TECHNOLOGIES INC.
Financial liabilities
Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost, unless they are required to be measured at FVTPL (such as derivatives) or the Company has elected to measure at FVTPL. The Company's financial liabilities include trade and other payables which are classified at amortized cost.
Impairment
IFRS 9 requires an 'expected credit loss' model to be applied, which requires a loss allowance to be recognized based on expected credit losses. This applies to financial assets measured at amortized cost. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in initial recognition.
Fair value hierarchy
Financial instruments recorded at fair value on the statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
- Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
- Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(j) LEASES:
Right of use ("ROU") assets
ROU assets are initially recorded at cost, which comprises the initial amount of the lease liability and any initial direct costs incurred less any lease payments made at or before the initial recognition date. ROU assets are depreciated on a straight-line basis over the estimated useful life of the asset if the Corporation expects to take ownership of the asset at the end of the lease term, or over the lease term if the Corporation does not expect to take ownership of the asset at the end of the lease term. The lease term includes periods covered by an option to extend if the Corporation's intention is to exercise that option. ROU assets are periodically reduced by impairment losses, if any, and adjusted for re-measurements of the lease obligation.
Lease liabilities
The lease liability is measured at the present value of the expected lease payments over the lease term, discounted at the implicit rate in the lease; if the rate cannot be determined, the incremental borrowing rate of the asset or asset grouping is used. The lease liability is increased for the passage of time and payments on the lease are offset against the lease liability. The liability is subsequently re-measured when there is a change in the lease agreement, such as a change in future lease payments or if the Corporation decides to purchase, extend or terminate the lease option. When the lease liability is re-measured, an adjustment is applied to the carrying value of the ROU asset.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current WATER TECHNOLOGIES INC.
(k) FOREIGN CURRENCY TRANSLATION:
Transactions denominated in foreign currencies other than the Company's functional currency of Canadian dollars are translated at exchange rates in effect at the dates of the transactions. When the transaction is settled, at the actual cost of the foreign currency, any difference in the exchange rate is booked to the corresponding expense account. At year-end, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at exchange rate in effect at the end of the year. Statement of loss items are translated at exchange rates prevailing at the transaction dates. Exchange gains and losses are included in the statement of loss.
(l) 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 options vesting over a period of twenty-four months and at prices equal to or greater than the closing market price on the day preceding the date the options were granted less any applicable discount.
The fair value of share purchase options granted is recognized as an expense with a corresponding increase in equity. The fair value for share purchase options granted to employees or those providing services similar to those provided by a direct employee is measured at the vesting date and each tranche is recognized using the accelerated method basis over the period during which the share purchase options vest. The fair value of the share purchase options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the share purchase options were granted. The fair value for share purchase options granted to non-employees for services provided is measured at the date the services are received. The fair value of the share purchase options granted is measured at the fair value of the services received, unless the fair value of services received cannot be estimated reliably, in which case the fair value of the share purchase options is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the share purchase options were granted.
At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share purchase options that are expected to vest.
(m) RELATED PARTY TRANSACTIONS:
Transactions with related parties which occur in the normal course of business are recorded at the amount of consideration established and agreed to by the related parties.
(n) LOSS PER SHARE:
Basic loss per share (LPS) is computed by dividing net loss available to owners of the Company by the weighted average number of common shares outstanding. Diluted EPS is computed by dividing net loss available to owners of the Company by the weighted average number of Common Shares outstanding adjusted to include the potentially dilutive effect of outstanding stock options and warrants, if not anti-dilutive.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
Surrent WATER TECHNOLOGIES INC.
(o) IMPAIRMENT OF NON-FINANCIAL ASSETS:
The Company's tangible assets are reviewed for an indication of impairment at each statement of financial position date. If indication of impairment exists, the asset's recoverable amount is estimated. Long-lived assets that are not amortized are subject to an annual impairment assessment.
An impairment loss is recognized when the carrying amount of an asset, or its cash-generating unit, exceeds its recoverable amount. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Impairment losses are recognized in profit and loss for the period.
The recoverable amount is the greater of the asset's fair value less costs to sell and value in use. 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. 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.
An impairment loss is reversed if there is an indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's (or its cash-generating unit's) carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment of goodwill is not reversed.
(p) INVESTMENT TAX CREDITS:
As a result of incurring scientific research and development expenditures, management has estimated that there will be non-refundable federal and refundable and non-refundable provincial investment tax credits receivable following the completion of an audit process by tax authorities. Investment tax credits are recorded when received or when there is reasonable assurance that the credits will be realized. Upon recognition, amounts will be recorded as a reduction of research and development expenditures.
(q) BUSINESS COMBINATIONS:
A business combination is a transaction or event in which an acquirer obtains control of one or more businesses and is accounted for using the acquisition method. The total consideration paid for the acquisition is the aggregate of the fair values of assets given, liabilities incurred or assumed, and equity instruments issued in exchange for control of the acquiree at the acquisition date. The acquisition date is the date where the Company obtains control of the acquiree. The identifiable assets acquired and liabilities assumed are recognized at their acquisition date fair values, except for deferred taxes and share-based payment awards where IFRS provides exceptions to recording the amounts at fair value. Acquisition costs are expensed to profit or loss.
(r) SEGMENT REPORTING:
Segment reporting is based on the Company's divisional operations. The breakdown by division mirrors the Company's internal reporting systems. Operating segments are components of the Company that engages in business activities from which they earn revenues and incur expenses (including revenues and expenses related to transactions with other components of the Company), the operations of which can be clearly distinguished, and the operating results of which are regularly reviewed by the chief operating decision maker ("CODM") for the purposes of resource allocation and assessing its performance.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
Surrent
WATER TECHNOLOGIES INC.
(s) EQUITY METHOD INVESTMENTS
The Company accounts for investments in associates and joint ventures using the equity method, in accordance with IAS 28 – Investments in Associates and Joint Ventures. Associates are entities over which the Company has significant influence, generally presumed when the Company holds 20% or more of the voting power but not control or joint control.
Under the equity method, investments are initially recognized at cost, including transaction costs. Subsequently, the carrying amount is adjusted to recognize the Company's share of the investee's profit or loss, other comprehensive income, and dividends received after the date of acquisition.
The Company recognizes its share of post-acquisition profits or losses in the consolidated statement of income and its share of other comprehensive income in OCI. Dividends received reduce the carrying amount of the investment. At each reporting date, the Company assesses whether there is objective evidence of impairment. If such evidence exists, the investment is tested for impairment in accordance with IAS 36.
4. RECENT ACCOUNTING PRONOUNCEMENTS
At the date of authorization of these financial statements, the Company has not yet applied the following new and revised IFRS Standards that have been issued but are not yet effective.
The IASB has also issued IFRS 18 Presentation and Disclosure in Financial Statements which includes requirements for the presentation and disclosure of information in general purpose financial statements to help ensure they provide relevant information that faithfully represents an entity's assets, liabilities, equity, income and expenses. The new IFRS 18 standard is effective for annual periods beginning on or after January 1, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
5. ACCOUNTS RECEIVABLE
| 2024 | 2023 | |
|---|---|---|
| Trade receivables | $ 308,428 | $ 627,811 |
| Expected credit loss | $ (44,664) | $ (44,664) |
| $ 263,764 | $ 583,147 |
The Company applies the simplified approach to trade receivables by making provision for the full amounts of accounts receivable and recognizes a loss allowance provision based on lifetime ECLs. The loss allowance provision is based on the Company's historical collection, loss experience and incorporates forward looking factors, where appropriate.
6. INVENTORIES
| 2024 | 2023 | |
|---|---|---|
| Raw materials | $ 307,050 | $ 309,055 |
| Finished Goods | $ - | $ 15,569 |
| $ 307,050 | $ 324,624 |
The cost of inventories recognized as an expense and included in direct operating expenses is $779,916 (2023: $775,555).
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
CURRENT WATER TECHNOLOGIES INC.
7. PROPERTY, PLANT AND EQUIPMENT
| Cost January 1, 2024 | Accumulated Amortization January 1, 2024 | Additions (disposal) | Depreciation | Net December 31, 2024 | |
|---|---|---|---|---|---|
| Office furniture and fixtures | $ 72,118 | $ 67,239 | $ - | $ 976 | $ 3,903 |
| Equipment | 205,822 | 149,364 | - | 11,292 | 45,166 |
| Computer hardware | 143,689 | 123,093 | - | 6,179 | 14,417 |
| Automotive | 85,849 | 68,339 | - | 3,502 | 14,008 |
| Leasehold improvements | 313,298 | 313,298 | - | - | - |
| Demonstration units | 50,872 | 50,872 | - | - | - |
| $ 871,648 | $ 772,205 | $ - | $ 21,949 | $ 77,494 | |
| Cost January 1, 2023 | Accumulated Amortization January 1, 2023 | Additions (disposal) | Depreciation | Net December 31, 2023 | |
| Office furniture and fixtures | $ 72,118 | $ 66,020 | $ - | $ 1,220 | $ 4,879 |
| Equipment | 201,822 | 135,749 | 4,000 | $ 13,615 | $ 56,458 |
| Computer hardware | 143,689 | 114,265 | - | $ 8,827 | $ 20,596 |
| Automotive | 85,849 | 63,962 | - | $ 4,377 | $ 17,510 |
| Leasehold improvements | 313,298 | 313,298 | - | - | - |
| Demonstration units | 50,872 | 50,872 | - | - | - |
| $ 867,648 | $ 744,166 | $ 4,000 | $ 28,039 | $ 99,443 |
8. INTANGIBLE ASSETS
| Cost January 1, 2024 | Accumulated Amortization January 1, 2024 | Additions Disposals | Amortization | Impairment Loss | Net December 31, 2024 | |
|---|---|---|---|---|---|---|
| Patents | $ 548,692 | $ 546,886 | $ - | $ 452 | $ - | $ 1,354 |
| Right to technology | 10,000 | 7,972 | - | 121 | - | 1,907 |
| $ 558,692 | $ 554,858 | $ - | $ 573 | $ - | $ 3,261 | |
| Cost January 1, 2023 | Accumulated Amortization January 1, 2023 | Additions Disposals | Amortization | Impairment Loss | Net December 31, 2023 | |
| --- | --- | --- | --- | --- | --- | --- |
| Patents | $ 548,692 | $ 546,434 | $ - | $ 451 | $ - | $ 1,806 |
| Right to technology | 10,000 | 7,843 | - | 129 | - | 2,028 |
| $ 558,692 | $ 554,277 | $ - | $ 581 | $ - | $ 3,834 |
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
Surrent
WATER TECHNOLOGIES INC.
9. RIGHT OF USE ASSET ("ROU ASSETS")
As of December 31, 2024 the Company has the following ROU assets:
| Cost January 1, 2024 | Accumulated Amortization January 1, 2024 | Additions Disposals | Amortization | Impairment Loss | Net December 31, 2024 | |
|---|---|---|---|---|---|---|
| Right to Use Asset | $ 1,038,179 | $ 138,424 | $ 207,636 | $ 692,119 | ||
| Cost January 1, 2023 | Accumulated Amortization January 1, 2023 | Additions Disposals | Amortization | Impairment Loss | Net December 31, 2023 | |
| Right to Use Asset | $ 616,503 | $ 510,209 | $1,038,179 | $ 180,940 | $ 63,778 | $ 899,755 |
In May 2023 the Company renewed its lease for an additional 5 years resulting in another addition of $1,038,179 in ROU and an adjustment write-off of $63,778. As of December 31, 2024 the total net base rent paid of $233,067 (2023: $201,008) on the lease was offset against the Lease liability adjusted for interest expense of $47,718 (2023: $32,769). Right to Use Asset is depreciated on a straight line basis over the remaining term of the lease. A total of $47,718 (2023: $32,769) in interest expense based on a 6% discount rate was expensed and included in interest expense - long term.
10. BANK LOANS
During the prior years, there was a global outbreak of COVID-19 (coronavirus), which has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. The outbreak of coronavirus has impacted the company's business resulting in reduction of sales revenue for the current year. As a result of the outbreak the Company and its subsidiary has applied and obtained bank loans financing totaling $120,000 under the terms of the Canada Emergency Business Account ('CEBA'). The loans are government guaranteed, non-interest bearing loans until January 18, 2024. If 75% of the loan is repaid by January 18, 2024, the remaining 25% balance will be forgiven. If the loans are not repaid by January 18, 2024 the loans will bear interest at an annual rate of 5% per annum and will be due in full by December 31, 2025. On January 12, 2024 the Company repaid 75% of the bank loans and earned the 25% portion in forgiven loans for a total of $40,000, which is included in Other Income.
11. CAPITAL STOCK
(a) Capital stock consists of 228,941,704 common shares outstanding as at December 31, 2024. An unlimited number of common shares and an unlimited number of preferred shares are authorized. To date the Company has not issued any preferred shares. The following are share issuances and cancellations for the most recently completed financial year.
Common shares issued:
| # of shares | $ amount | |
|---|---|---|
| Balance December 31, 2022 | 212,275,038 | $ 20,827,916 |
| Balance December 31, 2023 | 212,275,038 | $ 20,827,916 |
| Common shares issued | 16,666,666 | 500,000 |
| Balance December 31, 2024 | 228,941,704 | $ 21,607,916 |
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
The following table summarizes information about warrants issued and outstanding as at December 31, 2024:
| Warrants outstanding | Weighted average exercise price | Weighted average remaining contractual life in years | |
|---|---|---|---|
| Outstanding January 1, 2023 | 57,150,500 | 0.06 | 1.61 |
| Outstanding December 31, 2023 | 57,150,500 | 0.06 | 0.61 |
| Outstanding January 1, 2024 | 57,150,500 | 0.06 | 0.61 |
| Expired March 5, 2024 | (26,325,000) | ||
| Expired March 10, 2024 | (8,765,500) | ||
| Outstanding December 31, 2024 | 22,060,000 | 0.05 | 0.28 |
No new warrants were issued in 2023 and 2024.
Basic income (loss) per share was calculated on the basis of the weighted average number of common shares outstanding for the year. Fully dilutive income (loss) per share has not been disclosed as the exercise of the common share purchase options and warrants outstanding as at December 31, 2024 and 2023 would have anti-dilutive effect.
(b) Stock incentive plan
Approved by the shareholders on September 25, 2000, and amended on June 5, 2008, November 29, 2013, November 28, 2014, November 27, 2015, December 17, 2021, December 23, 2022, December 20, 2024, and pursuant to Policy 4.4 of the TSX Venture Exchange, the Company maintains a Stock Incentive Plan for designated officers, directors, consultants and employees. Each stock option entitles the holder to one common share. Under the terms of the plan the term of the options shall not exceed ten years. The Option price of any shares in respect of which an option may be granted under the Plan shall be not less than the closing price of the Company's common shares on the TSX Venture Exchange on the last day of trading immediately preceding the date of the grant less any applicable discount, provided that where the common shares have not traded for a period of twenty days (20) preceding the date of grant, the Option price shall be determined based upon the average between the closing bid and asked prices for the five days (5) immediately preceding the date of grant. A summary of the status of the outstanding and exercisable stock options under the Stock Incentive Plan is presented below.
The following table summarized information about the options outstanding at December 31, 2024:
| Options | Weighted average exercise price | |
|---|---|---|
| Outstanding December 31, 2022 | 21,100,000 | $ 0.06 |
| Cancelled January 13, 2023 | (400,000) | $ 0.05 |
| Granted February 22, 2023 | 2,000,000 | 0.05 |
| Expired April 26, 2023 | (250,000) | 0.15 |
| Cancelled October 15, 2023 | (400,000) | 0.05 |
| Outstanding December 31, 2023 | 22,050,000 | $ 0.06 |
| Outstanding December 31, 2024 | 22,050,000 | $ 0.06 |
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
In February 2023, the Company granted 2,000,000 options to employees and directors of the Company. The options can be exercised at $0.05 per share and vests over a period of 18 months. The value of these stock options were calculated using the Black-Scholes model and the assumptions at grant date were as follows: grant date share price of $0.05, risk free rate of 3.85%, expected volatility of 129%, expected life of 10 years, and dividend yield of 0%. For the year ended December 31, 2024, the Company recorded a $13,746 share-based compensation (2023: $114,404).
Other than the options issued in February 2023 noted above, all remaining outstanding options as of December 31, 2024 and 2023 were fully vested.
The following table summarizes information about the options outstanding at December 31, 2024:
| Options outstanding | Remaining contractual life in years | Weighted average exercise price | |
|---|---|---|---|
| $0.05 | 2,000,000 | 8.15 | |
| $0.05 | 6,225,000 | 7.04 | |
| $0.05 | 9,000,000 | 5.37 | |
| $0.05 | 1,000,000 | 6.76 | |
| $0.06 | 500,000 | 6.39 | |
| $0.10 | 3,325,000 | 2.30 | |
| 22,050,000 | 5.72 | $0.06 |
The following table summarizes information about the options outstanding at December 31, 2023:
| Options outstanding | Remaining contractual life in years | Weighted average exercise price | |
|---|---|---|---|
| $0.05 | 2,000,000 | 9.15 | |
| $0.05 | 6,225,000 | 8.04 | |
| $0.05 | 9,000,000 | 6.38 | |
| $0.05 | 1,000,000 | 7.76 | |
| $0.06 | 500,000 | 7.39 | |
| $0.10 | 3,325,000 | 3.31 | |
| 22,050,000 | 6.73 | $0.06 |
12. RELATED PARTY TRANSACTIONS
Included in general and administrative expenses are officer fees paid to Officers of the Company in the amount of $94,843 (2023: $88,079). Included in accounts payable and accrued liabilities is $11,168 (2023: $6,000) payable to a Director and an Officer of the Company. These expenses were paid/accrued in the normal course of operations and were measured at the amounts agreed to by the related parties.
Included in deferred revenue is $168,351 from WATR- H₂ Pte. Ltd, an entity in which the Company has a 36.4% interest in (note 18).
Included in share-based compensation expense is $10,309 (2023: $77,524) to key management and directors of the Company.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
13. COMPENSATION OF KEY MANAGEMENT AND DIRECTORS
Key management compensation includes the Chief Executive Officer and the Chief Financial Officer. Director fees and share-based payments include the Board of Directors:
| 2024 | 2023 | |
|---|---|---|
| Salaries, fees and short term benefits | $ 89,675 | $ 80,079 |
| Officer fees | 5,168 | 8,000 |
| Share-based payments | 13,746 | 77,524 |
| $ 108,589 | $ 162,603 |
14. CONTINGENT LIABILITIES
Upon commercialization of the Acid Mine Drainage Technology ("AmdELTechnology"), payments shall be made annually in an amount equal to the greater of $20,000 or 25% of the net annual after tax income of the Corporation until an aggregate amount of $80,000 is paid to Dofasco Inc. The AmdEL Technology shall be considered to be commercialized when the first contract on commercial terms for its use is received. As at December 31, 2024, management did not consider the AmdEL Technology to be commercialized.
15. GEOGRAPHIC INFORMATION
All of the Company's operations and assets are located in Canada.
Projects revenue earned by geographic region for the years ended December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Canada | $ 1,512,239 | $ 1,957,542 |
| United States | 13,491 | 60,180 |
| $ 1,525,730 | $ 2,017,722 |
On January 8, 2018, the Company acquired Pumptronics Inc. to realize operational efficiencies and as a result, the Company now has two operating segments. Key measures used by the CODM in assessing performance and in making resource allocation decisions include revenues, gross profit and net loss.
The Company's operating results are divided into two reportable operating segments. The two reportable operating segments are Current Water and Pumptronics. Included in Current Water is corporate activity.
Current Water segment, ("Current Water") operates in treating water and engineering, manufacturing and sales of advanced water systems.
Pumptronics segment, ("Pumptronics") engages in developing hydraulic fluid systems to move water and other liquids.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
| December 31, 2024 | Current Water $ | Pumptronics $ | Total $ |
|---|---|---|---|
| Revenue | $159,265 | 1,366,465 | 1,525,730 |
| Gross profit | (454,231) | 317,317 | (136,914) |
| Net income (loss) | (973,144) | (45,143) | 1,018,287 |
| Total assets | 1,152,987 | 390,635 | 1,543,532 |
| Total liabilities | 1,223,941 | 447,541 | 1,671,482 |
16. EXPENSES BY NATURE
Included in general and administrative expenses are the following:
| 2024 | 2023 | |
|---|---|---|
| Advertising & promotion | 676 | 300 |
| Bank charges and interest | 6,245 | 5,508 |
| Officer's fees | 5,168 | 8,000 |
| Filing fees | 40,617 | 25,554 |
| Insurance | 100,919 | 91,720 |
| Office expenses | 108,300 | 94,284 |
| Rent and occupancy | 112,133 | 113,406 |
| Professional fees | 116,271 | 71,404 |
| Salaries and benefits | 126,232 | 77,407 |
| Travel | 18,968 | 12,391 |
| Utilities | 16,740 | 18,943 |
| Vehicle expense | 7,092 | 13,104 |
| 659,361 | 532,021 |
17. LEASE LIABILITY
The lease liability is measured at the present value of the expected lease payments over the lease term, discounted at the implicit rate in the lease; if the rate cannot be determined, the incremental borrowing rate of the asset or asset grouping is used. The lease liability is increased for the passage of time and payments on the lease are offset against the lease liability. The liability is subsequently re-measured when there is a change in the lease agreement, such as a change in future lease payments or if the Corporation decides to purchase, extend or terminate the lease option. When the lease liability is re-measured, an adjustment is applied to the carrying value of the ROU asset.
The Company had the following future payments related to its lease liability:
Balance at December 31, 2023 $ 917,614
Interest expense 47,718
Repayments (233,067)
Balance at December 31, 2024 $ 732,265
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
Principal Payments due over next 5 years:
| 2025 | $ 201,426 |
|---|---|
| 2026 | 218,419 |
| 2027 | 236,530 |
| 2028 and after | 75,890 |
| $ 732,265 |
Minimum lease payments due over the next 5 years:
| 2025 | $ 237,728 |
|---|---|
| 2026 | 242,483 |
| 2027 | 247,332 |
| 2028 and after | 76,402 |
| $ 803,945 | |
| Less: future interest payments | (71,680) |
| $ 732,265 |
18. EQUITY METHOD INVESTMENT
In February of 2023, the Company (CWTI) signed a Memorandum of Agreement (MOA) with Separtis Technologies Global Pte Ltd (Separtis) of Singapore. Separtis and CWTI had embarked upon an ambitious schedule to establish a 50/50 joint venture company for global sales and marketing activities focused on the water treatment and green hydrogen sectors. CWTI shall grant the Joint Venture the right to distribute and license to sell and market the Company's extensive portfolio of patented, patent-pending and proprietary innovative electrochemical water treatment and green hydrogen and lithium recovery technologies. Upon execution of the Definitive Agreement CWTI shall receive a US$1,000,000 Annual Fee. Furthermore, Separtis will support the launch of the JV by covering the operating expenses of the JV and the Licensing Fee to CWTI until such time as sufficient income is generated to sustain the business, or for the first five (5) years, whichever is sooner. In June 2023 the Company signed the Definitive Sales and Marketing Joint-Venture Agreement with ecoX Global Pte. Ltd. (formerly Separtis Technologies Global Pte Ltd) of Singapore. As of December 31, 2024, CWTI has received $35,000 (2023: $1,026,173) of licensing fee revenue from ecoX, which is included in Other Income.
In August 2023, CWTI issued a termination notice to ecoX due to a breach of the agreement by ecoX and the Definitive Agreement signed between CWTI and ecoX was terminated. In order to salvage previous efforts made prior to the termination, in August of 2024, CWTI entered into a non-exclusive sales and marketing agreement and a licensing agreement as amended with WATR-H $_2$ Pte. Ltd. ("Watr-H2"), a company incorporated in Singapore. The sales and marketing agreement granted Watr-H2 the rights to market and sell CWTI's licensed products globally. The licensing agreement dictated that CWTI is to receive 50,000 common shares to Watr-H2 and granted CWTI an annual licensing fee of $25\%$ of cash raised in Watr-H2 up to a total of US$1 million to support CWTI's ongoing operations.
As at December 31, 2024, CWTI owns $36.4\%$ of the common shares of Watr-H2. Two directors of CWTI collectively own $39.4\%$ of the common shares of Watr-H2. On April 25, 2025, the two directors surrendered their shares, increasing CWTI's ownership to $50\%$ . CWTI has not made any financial contributions to Watr-H2; as such, this equity method investment has $\$nil$ value on the financial statements.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
CURRENT WATER TECHNOLOGIES INC.
As at December 31, 2024, Watr-He2's financial statement is set out below:
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Current assets | $ 166,608 | $ - |
| Non-current assets | - | - |
| Current liabilities | 169,328 | - |
| Non-current liabilities | 189 | - |
| Shareholders' deficit | (2,909) | - |
| Revenue | - | - |
| Net loss | (2,909) | - |
19. INCOME TAXES
(a) Current income taxes
A reconciliation of combined federal and provincial corporate income taxes at the Company's effective tax rate of 26.5% (2023: 26.5%) follows.
| 2024 | 2023 | |
|---|---|---|
| Net income (loss) before income taxes | $ (1,018,287) | $ 447,152 |
| Income taxes at statutory rates | (269,846) | 118,495 |
| Permanent differences | 15,840 | 48,103 |
| (254,006) | 161,603 | |
| Valuation allowance | 254,006 | (161,603) |
| $ - | $ - |
The company has the following deferred income tax assets:
| 2024 | 2023 | |
|---|---|---|
| Non-capital losses | $ 3,408,233 | $ 3,463,486 |
| Property, plant and equipment and intangibles | 250,370 | 333,745 |
| Leases | (10,639) | (4,733) |
| Research and development | 1,561,071 | 1,499,682 |
| 5,209,036 | 5,292,180 | |
| Tax asset not recognized | (5,209,036) | (5,292,180) |
| Net deferred tax assets | $ - | $ - |
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
(b) Losses Carried Forward
The company has loss carry-forwards in the amount of approximately $12,861,000 (2023: $13,068,000) available to reduce future income taxes. The potential benefit of these losses has not been recorded and will expire as follows:
| 2027 | 1,249,000 |
|---|---|
| 2028 | 2,239,000 |
| 2029 | 1,113,000 |
| 2030 | 424,000 |
| 2031 | 1,567,000 |
| 2032 | 792,000 |
| 2033 | 699,000 |
| 2034 | 937,000 |
| 2035 | 252,000 |
| 2036 | 207,000 |
| 2037 | 61,000 |
| 2038 | 679,000 |
| 2039 | 70,000 |
| 2040 | 546,000 |
| 2041 | 1,436,000 |
| 2042 | 591,000 |
| 2040 | 241,000 |
| $ 13,103,000 |
(c) Investment Tax Credits
As at December 31, 2024, the Company has $1,561,071 (2023: $1,499,682) of unclaimed investment tax credits available to reduce federal income taxes payable in future years.
20. FINANCIAL INSTRUMENTS
Credit Risk
The Company's financial assets include cash and cash equivalents, and accounts receivable. The Company's maximum exposure to credit risk as at December 31, 2024, is the carrying value of its financial assets. The Company manages credit risk by maintaining bank and broker accounts with reputable banks and financial institutions.
Liquidity Risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2024, the Company had cash and cash equivalent balances of $79,115 (2023: $113,140) to settle current liabilities of $988,941 (2023: $1,279,135) and long-term liabilities of $682,541 (2023: $732,265). Of the current liabilities outstanding, $475,385 (2023: $503,955) of the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
Interest rate risk
In the fiscal year ended 2020 the Company obtained bank loans financing totaling $120,000 under the terms of the Canada Emergency Business Account. These loans are government guaranteed, non-interest bearing up to January 18, 2024. If 75% of the loans are repaid by January 18, 2024 the remaining 25% balance will be forgiven. If still outstanding on January 18, 2024 the loans will bear interest at an annual rate of 5% and will be due in full by December 31, 2025. On January 12, 2024, the Company repaid 75% of the loans and earned 25% of the forgiven portion of the loans. The company therefore has no exposure to interest rate risk.
Foreign currency rate risk
The Company has bank balances, accounts receivable, and accounts payable that are in US dollars and therefore subject to foreign currency rate risk. Balances denominated in the USD at December 31, 2024 are as follows:
| Bank | $ 100 |
|---|---|
| Accounts receivable | 13,573 |
| Accounts payable | (34,867) |
| Deferred revenue | (117,000) |
| Total net asset (liability) | (138,194) |
Fluctuations in the Canadian dollar exchange rate have an impact on the Company's results from operations. A 5% fluctuation of the US dollar relative to the Canadian dollar would impact net income by approximately $6,910 as of December 31, 2024.
Fair value of financial instruments and Hierarchy
The book value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, other liabilities, and loans payable all approximate their fair values as at December 31, 2024. The Company did not hold any FVTPL financial instruments during the current year.
For disclosure purposes, the Company categorizes its financial assets and liabilities measured at the fair value into one of three different levels depending on the observation of the inputs used in the measurement.
The three levels are defined as follows:
Level 1: Fair value is based on unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2: Fair value is based on inputs other than quoted prices included within Level 1 that are not observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e., derived from prices); and
Level 3: Fair value is based on valuation techniques that require one or more significant unobservable inputs.
As at December 31, 2024 the Company's financial instruments are cash and cash equivalents, considered to be Level 1 as the market value is readily available.
The company does not have any financial assets or liabilities recorded at fair value or reoccurring basis.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
current
WATER TECHNOLOGIES INC.
21. CAPITAL MANAGEMENT
The Company manages its capital (debt, including accounts payable and loans payable and equity, including capital stock and contributed surplus) to ensure that the Company will be able to continue as a going concern while attempting to maximize the return to shareholders through the optimization of a reasonable equity balance commensurate with current operating requirements. The strategy remains unchanged during 2024.
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than that of the TSXV which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months. As of December 31, 2024, the Company is not compliant with the policies of the TSXV. The impact of this violation is not known and is ultimately dependent on the discretion of the TSXV.
The Company raises capital, as necessary, to meet its needs and to take advantage of perceived opportunities and therefore, does not have a numeric target for its capital structure. There were no changes to the Company's approach to capital management during the year ended December 31, 2024 compared to the year ended December 31, 2023. The Company does not have any covenants respecting its capital ratios.
22. SUBSEQUENT EVENT
On February 12, 2025, the Company has raised a total of $320,000 and issued 10,666,667 Common Shares at a price of $0.03 per share. As at April 30, 2025, the Company has 239,608,371 in issued and outstanding common shares.
CURRENT WATER TECHNOLOGIES INC.
AUDITED YEAR END FINANCIAL STATEMENTS AND NOTES 2024
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