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STICKIT TECHNOLOGIES INC. Audit Report / Information 2024
48399_rns_2025-03-28_cec1ea1c-5ac6-415a-93b4-9990b26aeeb2.pdf
Audit Report / Information
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STICKIT TECHNOLOGIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
(formerly Aquazoom Hydropower Solutions Inc.)
DECEMBER 31, 2024
INDEX
| Page | |
|---|---|
| Auditors Report | 2 |
| Consolidated Statements of Financial Position | 6 |
| Consolidated Statements of Comprehensive Income | 7 |
| Consolidated Statements of Changes in Equity | 8 |
| Consolidated Statements of Cash Flows | 9 |
| Notes to the Consolidated Financial Statements | 10-33 |
BOKS INTERNATIONAL
Ovadia Kriheli & Co.
Member of firms association of Ovadia Arieh & Co An Independent Member of BOKS International Limited
Report on the audit of the financial statements
Opinion
We have audited the consolidated financial statements of Stickit Technologies Inc. (formerly Aquazoom Hydropower Solutions Inc.) and its subsidiary company (hereafter: the "Company"), which comprise the statements of financial position as of 31 December 2024 and 2023 and the consolidated statements of comprehensive income, statements of changes in shareholders' capital and statements of cash flows for the three years ended on 31 December 2024, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the incomplete disclosure of the information referred to in the basis for qualified opinion section of our report for the values of the assets and liabilities and their classification that may be necessary should the Company not be able to continue operating as a going concern. The accompanying financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2024 and 2023, and its financial performance and comprehensive income, changes in shareholders' capital, and its cash flow for the three years ended on 31 December 2024 in accordance with International Financial Reporting Standards (IFRS).
Basis for Qualified Opinion
As more fully described in Note 1 E, since inception the Company has incurred continuous losses from its research and development activities and operations aggregate to CAD 53,327 thousand and has generated negative cash flows from operating activities of CAD 438 thousand and CAD 745 thousand during 2024 and 2023, respectively, which were finance by capital raising.
The Company is expected to further generate losses operations which will be expressed in negative cash flows from operating activities.
The Company's ability to continue as a going concern, is dependent on the Company meeting the factors of the business plan designed by Management, forecasts and related key assumption, potential liquidity risks and cash flow projection.
As of December 31, 2024, the Company's balance of cash in bank is CAD 439 thousand.
Mr. Eli Ben Harosh, CEO of the Company and Mr., Asher Holzer the President of the Company has undertaken to defer the payments of their consulting fees under their consulting agreements. As of December 31, 2024, the outstanding fees owe by the Company to its CEO and the President is aggregated to CAD 471 thousand, which is considered overdue under the provisions of the consulting agreements.
Judaide Maker
POB 772
2510500 Israel
Main: +972 4-6767477
Fax: +972 4-67667447
Ashkelon
Katsanelson13
7862312, Israel
Main +972 8-6726383
Fax +972 8-6725562
Ramat Gan
Tuval St 40
5252247, Israel
Main +972 3-7538300
Fax +972 3-7606787
Ovadia Arieh & Co. is an independent member of BOKS International, a global alliance of top professionals and expert firms with quality-assured member firms around the world. boks-international.com.
All these factors indicates that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not adequately disclose this matter.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the financial statements section of our report. We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the year ended 31 December 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined that no other matters to be the key audit matters to be communicated in our report.
Other information included in the Company's 2024 Annual Report
Other information consists of the information included in the Company's 2024 Annual Report other than the financial statements and our auditor's report thereon. Management is responsible for the other information. The Company's 2024 Annual Report is expected to be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Responsibilities of Management and the Board of Directors for the financial statements.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as Management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the 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 as basis of accounting, unless Management and the Board of Directors either intend to liquidate the Company or to cease its operations, or has no realistic alternatives, but to do so.
The Board of Directors is responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements.
Our objectives are to obtain reasonable assurance about whether the 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 ISAs 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 financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the 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 the Company's Management.
- Conclude on the appropriateness of the Company's 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 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 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 auditors' 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements.
We communicate with the Board of Directors 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 the Board of Directors 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 the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements for the year ended 31 December 2024 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.
Material uncertainties
As discussed in Note 1D, the Company is in a preliminary business development phase and its success depends on several factors including, among others: the knowledge and technology it has in comparison to its competitors, compliance with regulatory and standard requirements, dependence on professional and key personnel, fund raising for development activities and finding a strategic partner for penetrating the global market. Some of the Company's competitors or potential competitors may have greater or better knowledge,
technology, financial resources, and business experience. Therefore, the Company’s ability to continue and achieve its research and development goals and plans are not guaranteed.
Due to certain regulatory changes in Thailand, USA and Spain, the Company announced during 2024 a reorganization of its operations, whereby the company decided to minimize production CBD sticks and focus on licensing its technologies and intellectual properties. Accordingly, effective from December 31, 2024, the activities of the associated joint venture Stick-it Thailand, Stick-it USA and a wholly owned subsidiary Stick-it Spain has been discontinued.
Certified Public Accountants (Isr)
Members of BOKS International
March 26, 2025
Ovadia Arieh & Co. is an independent member of BOKS International, a global alliance of top professionals and expert firms with quality-assured member firms around the world. boks-international.com.
STICKIT TECHNOLOGIES INC
CONSOLIDATED STATEMENTS OF FINANCIAL POITION
| CAD in thousands | |||
|---|---|---|---|
| Note | As of December 31, | ||
| 2024 | 2023 | ||
| Assets | |||
| Current assets | |||
| Cash in banks | 439 | 827 | |
| Trade accounts receivable- Stick-it Thailand | 5 | - | 42 |
| Other accounts receivable | 4 | 156 | 114 |
| Inventories – finished goods | - | 38 | |
| Total current assets | 595 | 1,021 | |
| Non-current assets | |||
| Fixed assets | 3 | 17 | |
| Total assets | 598 | 1,038 | |
| Liabilities and shareholders’ equity | |||
| Current liabilities | |||
| Excess of losses over investment in associate joint venture companies | 5 | - | 147 |
| Other accounts payable | 6 | 544 | 368 |
| Total current liabilities | 544 | 515 | |
| Non-current liabilities | |||
| Deferred income | 16 | 45 | 71 |
| Total non-current liabilities | 45 | 71 | |
| Total liabilities | 589 | 586 | |
| Shareholders’ Equity | 7 | ||
| Share capital | 48,123 | 48,123 | |
| Share premium | 4,047 | 4,047 | |
| Reserve for share-based payment transactions | 964 | 964 | |
| Foreign currency translation adjustments | 202 | 204 | |
| Accumulated deficit | (53,327) | (52,886) | |
| Total equity | 9 | 452 | |
| Total equity and liabilities | 598 | 1,038 | |
| Eli Ben Harosh | |||
| Chief Executive Officer and Director | Sophie Galper Komet | ||
| Chief Financial Officer | March 26, 2025 | ||
| Date of approval of the financial statements |
The accompanying notes are an integral part of these financial statements.
STICKIT TECHNOLOGIES INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CAD in thousands
| Note | For the year ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | *2022 | ||
| Revenues | 8 | 36 | 203 | 564 |
| Cost of revenue | 9 | 50 | 154 | 420 |
| Gross (loss) profit | (14) | 49 | 144 | |
| Research and development expenses | 10 | 120 | 101 | 253 |
| General and administrative expenses | 11 | 307 | 1,004 | 591 |
| Other expenses | - | - | 1 | |
| Issuance costs in a reverse acquisition | 1A | - | 47,695 | - |
| Net operating loss | (441) | (48,751) | (701) | |
| Equity in net loss of investees | ||||
| 5 | - | 64 | 186 | |
| Finance expense | - | (8) | (4) | |
| Finance income | - | 2 | 158 | |
| Net loss | (441) | (48,821) | (733) | |
| Other comprehensive loss: | ||||
| Amounts that will not be reclassified subsequently to profit or loss: | ||||
| Foreign currencies translation adjustments | 2 | (165) | (73) | |
| Total other comprehensive loss | 2 | (165) | (73) | |
| Total comprehensive loss | (439) | (48,986) | (806) | |
| Loss per share attributable to ordinary shareholders of the Company: | ||||
| Basic and diluted loss per share | 14 | (0.004) | (0.046) | (0.007) |
*See Note 1 A for a reverse acquisition
The accompanying notes are an integral part of these financial statements.
STICKIT TECHNOLOGIES INC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CAD in thousands
| Share Capital | Share Premium | Share-Based Payments | Foreign Currency Translation Adjustments | Accumulated Deficit | Total | |
|---|---|---|---|---|---|---|
| Issuance of shares | ||||||
| Exercise of stock options | * | 156 | - | - | - | 156 |
| Share-based payments | - | - | 186 | - | - | 186 |
| Loss for the year | - | - | - | - | (733) | (733) |
| Other comprehensive loss | - | - | - | (73) | - | (73) |
| Balance as of December 31, 2022** | 3 | 3,101 | 1,862 | 39 | (4,065) | 940 |
| Exercise of stock options | (*) | 1,100 | (993) | - | 107 | |
| Share-based payments | - | - | 95 | - | - | 95 |
| Loss for the year | - | - | - | - | (48,821) | (48,821) |
| Other comprehensive loss | - | - | - | 165 | - | 165 |
| Reverse acquisition | 48,120 | (154) | - | - | - | 47,966 |
| Balance as of December 31, 2023 | 48,123 | 4,047 | 964 | 204 | (52,886) | 452 |
| Exercise of stock options | - | - | - | - | - | - |
| Share-based payments | - | - | - | - | - | - |
| Loss for the year | - | - | - | - | (441) | (441) |
| Other comprehensive loss | - | - | - | (2) | - | 2 |
| Balance as of December 31, 2024 | 48,123 | 4,047 | 964 | 202 | (53,328) | 9 |
- Represent amount less than CAD 1
**See Note 1 A for a reverse acquisition
The accompanying notes are an integral part of these financial statements.
8
CONSOLIDATED STATEMENTS OF CASH FLOWS
CAD in thousands
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Cash flows from operating activities | |||
| Loss | (441) | (48,821) | (733) |
| Adjustments required for presenting Cash flows and cash equivalents from operating activities (Appendix A): | 3 | 48,076 | 266 |
| Net cash used in operating activities | (438) | (745) | (467) |
| Cash flows from investing activities | |||
| Investment in associate joint venture company | - | - | (101) |
| Purchase of fixed assets | - | - | (5) |
| Net cash used in investing activities | - | - | (106) |
| Cash flows from financing activities | |||
| Shares issuance and premium on shares | - | 107 | 156 |
| Repayment of loans | - | - | - |
| Cash from a reverse acquisition | - | 316 | |
| Net cash provided by financing activities | - | 423 | 156 |
| Net increase/(decrease) in cash and cash equivalents | (438) | (322) | (417) |
| Exchange rate differences on balances of cash and cash equivalents | 50 | 154 | (78) |
| Cash and cash equivalents at the beginning of year | 827 | 995 | 1,490 |
| Cash and cash equivalents at the end of year | 439 | 827 | 995 |
*See Note 1 A for reverse acquisition
Appendix A - Adjustments required for presenting cash flows from operating activities:
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Significant non-cash transactions: | |||
| Depreciation | 16 | 20 | 11 |
| Share-based payments | - | 95 | 186 |
| Issuance costs in a reverse acquisition | - | 47,695 | - |
| Equity in net loss of investees | (143) | 69 | 186 |
| Changes in operating assets and liabilities: | |||
| Increase in accounts payable | 155 | 348 | 4 |
| Decrease in trade accounts receivable | (32) | (42) | - |
| Decrease (Increase) in inventories | 40 | 4 | (45) |
| (Increase) decrease in other accounts receivable | (15) | 6 | (52) |
| decrease in trade accounts payable | (18) | (119) | (24) |
| 3 | 48,076 | 266 |
SUPPLEMENTARY INFORMATION ON NON-CASH INVESTING AND FINANCING ACTIVITIES
*See Note 1 A for reverse acquisition
The accompanying notes are an integral part of these financial statements.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 1 - General
A. General description of the Company and its operations
STICKIT LIMITED an Israeli corporation ID 516091360 (hereafter: "Stickit LTD") incorporated on 2019 as a private company limited by shares, in Israel, and commenced its business operations in October 2019. The registered office of the Company is Tel-Aviv, Hapeleh 7, Israel.
Stickit LTD. has a wholly owned subsidiary in the Spain Stickit Labs SL.
Stickit LTD develop, market and sell high-quality "Cannabis Sticks" based on a registered PCT patent no. 11582996 B2, for which the patent application was assigned to the Company for CAD 0.001 on 1 2021 by Mr. Asher Holzer, President of the Company; designed to be inserted into any cigarette/joint of any kind. The cannabis stick is reminiscent of a toothpick, which allows it to be easily inserted into any cigarette. The stick consists of a source extract of cannabis ingredients (the "green plant") - and not oil-derived - it burns as fast as a cigarette and saves the cumbersome need of rolling and allows the user to consume more percent of active ingredients than any other product.
On October 23, 2023, Stickit Technologies Inc. (formerly Aquazoom Hydropower Solutions Inc.) (the "Company") closed its business acquisition of Stickit LTD, accordingly, the Company changed its name to Stickit Technologies Inc. Pursuant to the terms of the Acquisition, the Company issued 110,816,407 common shares (111.1357 common shares in the capital of the Company for each ordinary share in the capital of Stickit) (the "Payment Shares"), at a deemed price of $0.4304 per Payment Share. Following completion of the Acquisition, Stickit LTD became a wholly owned subsidiary of the Company. Concurrently with completion of the Acquisition, the Company completed a financing of $441,000. The financing consisted of a total of 1,024,628 subscription receipts at a price of $0.4304 each, that were converted on a 1:1 basis into the Company's common shares. In addition, in connection with closing of the Acquisition, the Company issued (i) 23,232 finder warrants to arms'-length finders in connection with the Company's concurrent financing, and (ii) 5,342,404 incentive stock options to employees of the Company (111.1357 incentive options in exchange for each the outstanding Stick LTD warrants). The terms of the exercise of the options shall be consistent with the terms of the originally issued underlying Stick LTD's securities. Each of the finder warrants will be exercisable into one common share of the Company at a price of $0.55 per Company's common share in a period of 24 months from the date of issuance.
Immediately following the completion of the Acquisition, the following persons were appointed as directors of the Company: Eli Ben-Harosh, Asher Holzer, Sophya Galper-Komet, Steven Glaser, Orit Berger. Also, immediately following the completion of the Acquisition, the following persons were appointed as officers of the Company: Eli Ben-Harosh, Chief Executive Officer Sophya Galper-Komet, Chief Financial Officer and Corporate Secretary Asher Holzer, Executive Chairman of the Board of Directors.
On October 27, the Company's shares commenced trading on the Canadian Securities Exchange (CSE) under the ticker symbol "STKT". The Company's CSE listing statement was filed on Stickit's CSE portal and under the Company's profile on SEDAR+.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 1 - General (Cont.)
A. General description of the Company and its operations (Cont.)
The purchase price, for the acquisition was approximately CAD 47.7 million, determined in accordance with the value of Stickit LTD.'s capital instruments on October 23, 2023. The excess purchase price over the carrying amount of assets and liabilities value of the Company in the amount of approximately CAD 47.7 million that were recognized as registration expenses (issuance expenses) within the profit or loss statements.
The results of the merger transaction by share split resulted in the fact that, from a legal point of view, the company owns Stickit Ltd. Since the controlling owners of Stickit Ltd. gain control of the company, it was determined that Stickit Ltd. is the accounting acquirer of the activity and therefore the transaction was treated as a reverse acquisition which does not constitute Business combination.
Accordingly, in the consolidated financial statements the comparative financial information as of December 31, 2022, and for the two years ended on December 311, 2022, consists of the financial information of the Stickit Limited that is considered as the accounting acquirer for accounting of reverse acquisition.
In connection with the reverse acquisition, the Israeli Tax Authorities issue to Stickit LTD tax ruling that under certain compliance with condition, including a restriction on performing a disposition of the Company and Stickit LTD shares, is differing the tax evet arise in the acquisition to the date of actual disposal of the Company's and Stickit LTD Stickit LTD shares.
B. Definitions
In these financial statements:
Related parties - as defined in IAS 24
CAD - Canadian dollar
C. Material event in the reporting period
Effects of the "Iron Swords" war
Following the brutal attacks on Israel, the mobilization of army reserves and the Government declaration of a state of war ("Iron Swords" war) in October 2023, there was a decrease in Israel's economic and business activity. The security situation has led, inter alia, to a disruption in the chain of supply and production, a decrease in the volume of national transportation, a shortage in manpower as well as a decrease in the value of financial assets and a rise in the exchange rate of foreign currencies in relation to the shekel.
The Company has examined the effects of the aforesaid and on the basis of several scenarios that were examined, has reached the conclusion that the Company is able to continue paying its liabilities in the foreseeable future. In this examination, the Company relied on forecasts and on the liquid assets at its disposal, unutilized credit facilities, possibilities for cost cutting, streamlining plans, unencumbered assets, and so forth.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 1 - General (Cont.)
D. Disclosure of certain risks and uncertainties
The Company is in a preliminary development phase and its success depends on several factors including, among others: the knowledge and technology it has in comparison to its competitors, compliance with regulatory and standard requirements, dependence on professional and key personnel, fund raising for R&D activity and finding a strategic partners for penetrating the global market and commercializing its intellectual properties. Some of the Company’s competitors or potential competitors may have greater or better knowledge, technology, financial resources, and business experience. Therefore, the Company’s ability to continue and achieve its research and development goals and plans are not guaranteed.
The Company’s activity is affected by the various supervisory authorities’ policy to approve its products numerous uncertain.
Due to certain regulatory changes in Thailand, USA and Spain, the Company announced During 2024 a reorganization of its operations, whereby the company decided to minimize production CBD sticks and focus on licensing its technologies and intellectual properties. Accordingly, effective from December 31, 2024, the activities of the associated joint venture Stick-it Thailand, Stick-it USA and a wholly owned subsidiary Stick-it Spain has been discontinued.
E. Financial position
The Company has incurred continuous losses from its business operations amounted as of December 31, 2024, to CAD 53,327 has generated negative cash flows from operating activities of CAD 438 and CAD 745 during 2024 and 2023, respectively.
The Company has so far financed its operations mainly through equity resulting from raising capital. The Company is expected to further generate losses from operations which will be expressed in negative cash flows from operating activity. Hence the continuation of the Company's operations depends on raising the required financing resources or reaching profitability, which are not guaranteed at this point.
The Company’s ability to continue as a going concern, is dependent on the Company meeting the factors of the business plan designed by Management, forecasts and related key assumption, potential liquidity risks and cash flow projection.
Mr. Eli Ben Harosh CEO of the Company and Mr, Asher Holzed the President of the Company has undertaken to defer the payment of their consulting fees under consulting agreements, see Note 16. As of December 31, 2024 the Company owe the CEO and the President an aggregated amount of CAD 471, which is considered overdue under the provisions of the consulting agreements.
As of December 31, 2024 the cash and deposit balance held by the Company is CAD 439.
- 12 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 1 - General (Cont.)
E. Financial position (Cont.)
As part of their ongoing responsibilities, the Company's Board of Directors and Management have undertaken a thorough review of the Company’s cash flow forecast and potential liquidity risks. Forecasts of operating results and cash flow projections were prepared for the period of 12 months from the date of approval of the financial statements. According to such projections, the Company's Board of Directors and Management believe that the Company have sufficient resources for the continuation of its activities and to meet its obligations for at least 12 months from the date of the statement of financial position.
Note 2 - Basis of presentation
A. Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).
The consolidated financial statements were authorized for issuance by the Company’s Board of Directors on March 26, 2025.
B. Use of estimates and judgments
The preparation of financial statements in conformity with IFRSs 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. Actual results may differ from these estimates.
The preparation of accounting estimates used in the preparation of the Company’s financial statements requires that management of the Company makes assumptions regarding circumstances and events that involve considerable uncertainty. Company Management prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about assumptions made by the Company with respect to the future and other reasons for uncertainty with respect to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next financial year are included in the following table:
| Estimate | Principal assumptions | Possible effects | Reference |
|---|---|---|---|
| Recoverability of development costs | The criteria for recognizing development project costs as intangible assets have met. | Amortization of the development costs in profit or loss | Development costs have been expensed as incurred, see Note 3 J. |
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 2 - Basis of presentation (Cont.)
B. Use of estimates and judgments (Cont.)
Fair value of share-based payments
The fair value of share-based payments is determined upon initial recognition by an acceptable option pricing model.
The inputs to the model include share price, exercise price and assumptions regarding expected volatility, expected life of share option and expected dividend yield,
See Note 14 regarding share-based payments.
C. Classification of expenses recognized in the statement of income
The classification of expenses recognized in the statement of income is based on the nature of the expense. This method of classification is appropriate for understanding the business of the Company, which provides a wide range of services.
D. Determination of fair value
When determining the fair value of an asset or liability, the Group uses observable market data as much as possible. There are three levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly
Level 3: inputs that are not based on observable market data.
E. Historical cost basis
The consolidated financial statements have been prepared on a historical cost basis, except for the revaluation of financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2.
F. Reporting currency
The financial statements of the Company are presented in CAD", which is the Company's reporting currency, and all values are rounded to the nearest thousand, except when otherwise indicated.
G. Operating cycle
The operating cycle of the Company is one year. Thus, current assets and current liabilities include items the realization of which is intended and anticipated to take place within one year.
- 14 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 2 - Basis of presentation (Cont.)
H. Consolidated financial statements
The consolidated financial statements comprise the financial statements of companies that are controlled by the Company (subsidiaries).
Significant intercompany balances and transactions and gains or losses resulting from intercompany transactions are f eliminated in the consolidated financial statements.
I. Investment in associate joint venture company
Associates join venture company in which the Company has significant influence over the financial and operating policies without having control, are accounted for based on the equity method.
Under the equity method, the investment in the associate joint venture company is presented at cost with the addition of post-acquisition changes in the Company's share in net assets, including other comprehensive income of the associate or the joint venture. Gains and losses resulting from
Transactions between the Company and the associate joint venture are eliminated to the extent of the interest in the associate joint venture.
Losses of an associate in amount exceeding its equity are recognized by the Company to the extent of its investment in the associate plus any losses that the Company may incur as a result of a guarantee or other financial support provided in respect of the associate. For this purpose, the investment includes long-term receivables (such as loans granted) for which settlement is neither planned nor likely to occur in the foreseeable future.
J. Foreign currency transactions
Functional currencies
The New Israel Shekel ("NIS") USA Dollar and the Euro are the currencies of the primary economic environment in which the operations of the Company, the Spanish subsidiary and the USA investee company are conducted, respectively (hereafter: "Functional Currencies"). The consolidated financial statements are presented in CAD (hereafter: "Presentation Currency").
The translation from Functional Currencies to Presentation Currency performed as follow: (1) all assets and liabilities were translated using the closing exchange rate as of the balance sheet date; (2) equity items were translated using historical exchange rates; (3) items of comprehensive income/loss, unless this is not practicable to assess the cumulative effect of the rates prevailing on the transaction dates; were translated at the average exchange of each reported yea; and (4) the resulting translation differences have been reported as foreign currencies translation adjustments within other comprehensive income/loss.
- 15 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 2 - Basis of presentation (Cont.)
J. Foreign currency transactions (Cont.)
Transactions, assets and liabilities in foreign currency
Transactions denominated in foreign currencies are initially recognized functional currency at the exchange rate at the date of the transaction. Following the initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured to the functional currency at the exchange rate of each reporting date. Exchange rate differences are recognized in profit or loss.
Non-monetary assets and liabilities denominated in foreign currency and measured at cost are measured at the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are measured into the functional currency using the exchange rate prevailing at the date when the fair value was determined.
Note 3 - Material Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements and have been applied consistently by Company except when otherwise indicated.
A. Cash and cash equivalents
Cash and cash equivalents include cash balances available for immediate use and call deposits. Cash equivalents are considered as highly liquid investments, including unrestricted highly liquid investments and short-term bank deposits with an original maturity of three months or less from the date of acquisition or with a maturity of more than three months, but which are redeemable on demand without penalty and which form part of the Company's cash management. Short-term highly liquid investments (with original maturities of three months or less) consist of readily convertible into known amounts of cash and are exposed to insignificant risks of change in value.
B. Share based payments transactions
Share-based payment transactions of the Company equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 15.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
C. Earnings (loss) per share
Earnings per share are calculated by dividing the net income (loss) attributable to equity holders of the Company by the weighted average number of Ordinary Shares outstanding during the period. The Company’s share of earnings of investees is included based on the earnings per share of the investees multiplied by the number of shares held by the Company.
If the number of Ordinary Shares outstanding increases as a result of a capitalization, bonus issue, or share split, the calculation of earnings per share for all periods presented are adjusted retrospectively.
Potential Ordinary shares are included in the computation of diluted earnings per share when their conversion decreases earnings per share from continuing operations. Potential Ordinary shares that are converted during the period are included in diluted earnings per share only until the conversion date and from that date in basic earnings per share.
D. Revenue recognition
Revenue from contracts with customers is recognized when the control over the goods or services is transferred to the customer generally upon delivery of the goods to the customer. The transaction price is the amount of consideration that is expected to be collected based on the contract terms, excluding amounts collected on behalf of third parties (such as taxes).
Income derived from contracts of granting license for distribution, trademark and technology of the Company are recognized ratably over the duration of the contracts.
E. Inventory
Inventories is valued at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and direct costs incurred in bringing the inventories to their present location and condition.
Products being processed and finished products are valued based on average cost that includes materials, work and other direct and indirect expenses.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.
The Company periodically evaluates the condition and age of inventories and accordingly recognize an adequate valuation allowance for slow moving of dead inventories.
During 2023 and 2022, the financial statements do not include a valuation allowance that was recognized in respect of slaw moving inventory.
- 17 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
F. Intangible assets
Research and development expenditures
Research expenditures are recognized in profit or loss when incurred. Costs incurred in an internal development project are recognized as an intangible asset only if the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale; the Company's intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the ability to measure reliably the expenditures attributable to the intangible asset during its development. These assets is measured at cost less any accumulated amortization and any accumulated impairment losses. Amortization of the asset begins when development is completed, and the asset is available for use.
For all the reporting periods, the above criteria have not been met and therefore all development costs have been recognized as an expense in profit or loss.
G. Financial instruments
(1) Financial assets
Financial assets are measured upon initial recognition at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss.
The Company classifies and measures debt instruments in the financial statements based on the following criteria:
- The Company's business model for managing financial assets; and
- The contractual cash flow terms of the financial asset.
Debt instruments are measured at amortized cost when:
The Company's business model is to hold the financial assets in order to collect their contractual cash flows, and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, the instruments in this category are measured according to their terms at amortized cost using the effective interest rate method, less any provision for impairment.
(2) Impairment of financial assets
The Company evaluates at the end of each reporting period the loss allowance for financial debt instruments which are not measured at fair value through profit or loss. The Company distinguishes between two types of loss allowances:
a) Debt instruments whose credit risk has not increased significantly since initial recognition, or whose credit risk is low - the loss allowance recognized in respect of this debt instrument is measured at an amount equal to the expected credit losses within 12 months from the reporting date (12-month ECLs); or
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
b) Debt instruments whose credit risk has increased significantly since initial recognition, and whose credit risk is not low - the loss allowance recognized is measured at an amount equal to the expected credit losses over the instrument's remaining term (lifetime ECLs).
An impairment loss on debt instruments measured at amortized cost is recognized in profit or loss with a corresponding loss allowance that is offset from the carrying amount of the financial asset.
The Company has short-term financial assets such as trade receivables in respect of which the Company applies a simplified approach and measures the loss allowance in an amount equal to the lifetime expected credit losses.
Derecognition of financial assets:
A financial asset is derecognized only when:
- The contractual rights to the cash flows from the financial asset has expired; or
- The Company has transferred substantially all the risks and rewards deriving from the contractual rights to receive cash flows from the financial asset or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset; or
- The Company has retained its contractual rights to receive cash flows from the financial asset but has assumed a contractual obligation to pay the cash flows in full without material delay to a third party.
(3) Financial liabilities
Financial liabilities are initially recognized at fair value with less transaction costs that are directly attributable to the issue of financial liability. After initial recognition, the Company measures all financial liabilities at amortized cost.
(4) Derecognition of financial liabilities
Financial liability is derecognized only when it is extinguished, that is when the obligation specified in the contract is discharged or cancelled or expires. Financial liability is extinguished when the debtor discharges the liability by paying in cash, other financial assets, goods or services; or is legally released from the liability.
(5) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are recognized as an asset in deferred expenses in the statement of financial position. The costs are deducted from equity upon the initial recognition of the equity instruments or are amortized as financing expenses in the statement of income when the issuance is no longer expected to take place.
- 19 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
H. Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group has the intention and sufficient resources to complete development and to use or sell the asset. The expenditure capitalized in respect of development activities includes the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use, and capitalized borrowing costs. Other development expenditure is recognized in profit or loss as incurred.
In subsequent periods, capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses.
As of December 31, 2024, the consolidated financial statements do not include development costs that were capitalized.
I. Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received, and the amount of receivable can be measured reliably.
Onerous contracts
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Payments to defined contributions to retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit plans are accounted for as payments to defined contribution plans where the Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
J. Retirement and termination benefit costs
All of the Company's employees have subscribed to Section 14 of Israel's Severance Pay Law, 5723-1963 ("Section 14"). Pursuant to Section 14, the Company's employees, covered by this section, are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf by the Company.
Payments in accordance with Section 14 release the Company from any future severance liabilities in respect of those employees. Neither severance pay liabilities nor severance pay funds under Article 14 for such employees are recorded in the Company's balance sheet. For the years 2023 and 2022, the Company recognized CAD 33 and CAD 40 respectively related to defined contribution retirement benefit plans.
K. Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date.
L. Taxes
Unrecognized deferred tax assets are reassessed by Management at each reporting date and are recognized to the extent that is probable that future taxable profits will allow the deferred income tax asset to be recovered.
As of December 31, 2024, Management believed that the deferred tax assets is not likely to be realizable in the foreseeable future and therefore has provided a valuation allowance against the deferred tax asset.
- 21 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 3 - Material Accounting Policies (Cont.)
M. New and revised standards and interpretations not yet adopted
| Standard | Disclosure | Effective date and transition | Effects |
|---|---|---|---|
| IFRS 18, | |||
| Presentation and | |||
| Disclosure in | |||
| Financial Statements | This standard replaces IAS 1, Presentation of Financial Statements. The purpose of the standard is to provide improved structure and content to the financial statements, particularly the income statement. The standard includes new disclosure and presentation requirements that were taken from IAS 1, Presentation of Financial Statements, with small changes. As part of the new disclosure requirements, companies will be required to present two subtotals in the income statement: operating profit and profit before financing and taxes. Furthermore, for most companies, the results in the income statements will be classified into three categories: operating profit, profit from investments and profit from financing. In addition to the changes in the structure of the income statements, the standard also includes a requirement to provide separate disclosure in the financial statements regarding the use of management-defined performance measures (non-GAAP measures). Furthermore, the standard adds specific guidance for aggregation and disaggregation of items in the financial statements and in the notes. The standard will encourage companies to avoid classifying items as ‘other’ (for example, other expenses), and using this classification will lead to additional disclosure requirements. | The standard is effective from annual reporting periods beginning on or after January 1, 2027, with earlier application being permitted. | The Company is examining the effects of the standard on its financial statements with no plans for early adoption. |
- 22 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 4 - Other accounts receivable
| December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Consist of: | ||
| Government institute | 20 | 19 |
| Prepaid expenses | 128 | 76 |
| Other | 8 | 19 |
| Total | 156 | 114 |
Note 5 - Investment in associate companies
A. Joint Venture Stick-it USA.
(1) On January 2022 Stickit LTD entered into investment agreement with Hempacco CO. whereby, the Company invest CAD 101 thousand in Stick-It USA, Inc (out of CAD 319 thousand agreed investment in share capital) and Hempacco invested CAD 255 thousands; for the issuance of 50% of the outstanding and issued share capital for each of the joint parties. According to the investment agreement the Company and Hempacco have joint control over the Stick-it USA.
(2) Stickit LTD committed to provide Stick-it USA a license to the Company IP and license to distribute CBD Sticks within USA and Mexico.
(3) Stickit LTD and Stick-it US will enter into a manufacturing and supply agreement, whereby Stick-it USA will pay CAD 319 for service rendered by the Stickit LTD, manufacturing equipment of CBD Sticks, training, and material for producing 30,000 Stickit products.
(4) As of the date of the financial position the Stickit LTD has fulfilled all the above commitment to Stick-it USA, however Stick-it USA has not yet commenced business activities, in the USA and Mexico.
(5) Pursuant to the investment agreement, upon the execution date of the investment agreement, Green Globe International, Inc. (hereafter: "GGII") the parent company of Hempacco Co.Incs.. issued to each of Mr. Asher Holzer, President of the Company and Mr. Eli Ben Harosh, CEO of the Company the following executed warrants: (i) 12,500,000 5- year warrants of GGII common shares, at an exercise price of $0.01 per share. 100% of such warrants will be exercisable on their issuance date; (ii) 12,500,000 5- year warrants of GGII common shares, at an exercise price of $0.01 per share. 100% of such warrants will be exercisable upon Stickit Ltd. achieves gross revenues of $5,000,000 or above in total and for 5 years thereafter; and (iii) 25,000,000 5-years warrants of GGII common shares, at an exercise price of $0.01 per share. 100% of such warrants will be exercisable upon Stickit Ltd. achieves gross revenues of $10,000,000 or above in total and for 5 years thereafter. At warrant granting date, the exercise price of the warrants was out of the money, in relation to the stock price of GGII, and meeting the exercise conditions by GGII was considered remote.
Accordingly, the Company estimated the warrant's fair value as immaterial amounts for recognition of stock-based compensation.
(6) Due to certain regulatory changes in the USA and reorganization in the Company's operations effective from December 31, 2024, the activity of the associated joint venture Stick-it USA has been discontinued, see Note 1 A.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 5 - Investment in associate companies (Cont.)
B. Joint Venture Stickit - Thailand Ltd.
on January 30, 2023, Stickit LTD entered into a joint venture agreement with for the purpose of forming a private company for Extra-C sticks manufacturing at the industrial facilities of those individuals in Bangkok, Thailand.
Following the initial set-up costs the ownership of the joint venture shall be 50% StickIt and 50% local partner.
Stickit Thailand LTD will recruit a team of business development and marketing executives who will aim to (i) locate the right network of distributors in each region, map the point of sale and carry out market research to gauge local demand; (ii) sign sub-service agreements with licensed distributors in each territory if required; (iii) and work closely to support points of sale with a view to maximizing sales and create pull marketing where such point of sale will drive demand from the distributors for increasing volumes of product.
During 2023 the Company granted Stickit Thailand LTD: productions rights, use of trademark rights, use of patents and distribution rights in total consideration of CAD 74 and sold raw material in total consideration of CAD 37.
Due to certain regulatory changes in Thailand and reorganization in the Company's operations effective from December 31, 2024, the activity of the associated joint venture Stick-it Thailand has been discontinued, see Note 1 A.
Changes in Investment in associate joint venture company:
Stick-it USA
| 2024 | 2023 | |
|---|---|---|
| Balance at the beginning of the year | (78) | (85) |
| Investment | - | 7 |
| Equity in net loss allocated to discontinued operations | 78 | - |
| Balance at the end of the year | - | (78) |
Stick-it Thailand LTD
| 2024 | 2023 | |
|---|---|---|
| Balance at the beginning of the year | (68) | - |
| Investment | - | - |
| Equity in net loss allocated to discontinued operations | 68 | (68) |
| Balance at the end of the year | - | (68) |
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 6 - Other accounts payable
| December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Consist of: | ||
| Employees for salaries and related social benefits | 7 | 12 |
| Related parties, Note 15 | 470 | 281 |
| Deferred income | 24 | 22 |
| Other | 43 | 53 |
| Total | 544 | 368 |
Note 7 - Shareholder's equity
| 31.12.2024 | 31.12.2023 | |||
|---|---|---|---|---|
| Authorized | Issued and paid up | Authorized | Issued and paid up | |
| Ordinary Shares | 127,547,356 | 127,547,356 | 127,547,356 | 127,547,356 |
(1) Ordinary Shares of 0.01 NIS par value provide its owners voting rights, participants in the shareholder's meetings, earnings participant rights, and retained earnings participants in case of company liquidation.
(2) During 2020, 50,092 Ordinary Shares were issued for total consideration of CAD 579 (1,459 NIS thousand).
(3) During 2021, 131,997 Ordinary Shares were issued for a total consideration of CAD 2,231 (5,897 NIS thousand, out of which 65,835 Ordinary Shares were issued upon exercising stock options for an aggregated exercise price of CAD 499 (1,278 NIS thousand), see Note 15.
(4) During 2022, 10,001 Ordinary Shares were issued upon exercising stock options for an aggregated exercise price of CAD 256 (405 NIS thousand), see Note 15. of options.
(5) As part of the share issuances during 2020-2021, 65,441 warrants were issued to investors. The warrants determine an additional exercise of NIS 40.5 per share and are for a period of 18 months. On October 2022, the Company's Board of Directors approved extension exercise date of the warrants through July 1, 2023 or the company become public with 45 day announcement advanced to the investors.
(6) On January 2023, 6,365 options were issued to service providers that were fully vested upon issuance for a total consideration of CAD 88 thousand.
(7) On January 2023, Mr. Eli Ben Harosh, the CEO and a founder of the Company, exercised 100,500 stock options to 100,500 Ordinary Shares of the Company for their nominal payment.
(8) On August 17, 2023, 3,704 Ordinary shares were issued for total consideration of CAD 53 thousand (150 NIS thousands).
- 25 -
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 8 - Revenues
A. Technology license and distribution agreement with Alta Inc.
On May 5, 2023, the Stickit Ltd. entered into an agreement with Alta Inc., outlining the terms of collaboration. Pursuant to the agreement, the company will grant Alta Inc. a license to utilize its raw materials and engage in the manufacturing of its products. In consideration of these rights, Alta Inc. has agreed to provide the following:
(1) Set-up Fee: Alta Inc. will pay a set-up fee of 25,000 Canadian dollars upon the execution of the agreement. This fee covers initial access to raw materials and operational resources necessary for manufacturing.
(2) Additional Training Fee: Alta Inc. has the option to request additional training. For each additional week of training provided by the company, Alta Inc. will pay an extra fee of 15,000 Canadian dollars.
(3) Exclusive Distribution Rights: Alta Inc. has the opportunity to acquire exclusive distribution rights for the company's products within a specified territory. This exclusivity can be obtained by paying 125,000 Canadian dollars to the company, granting Alta Inc. sole distribution privileges within the designated area.
(4) According to the agreement, to maintain the exclusivity rights, Alta Inc is committed, commencing on January 1, 2024, to comply with certain annual minimum volume of purchasing from Stickit LTD.
The financial statements include CAD 29 deferred income from technology, trademark and distribution rights.
B. Revenue consists as follows:
| Year ended 31 December, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Revenue from sales and services to associated companies (U.S) | - | - | 370 |
| Revenue from sales and services to associated company (Thailand) | - | 138 | - |
| Revenue from sales (Europe) | 7 | 9 | 194 |
| Revenue from technology, trademark and distribution (Canada) | 29 | 56 | - |
| Total | 36 | 203 | 564 |
*See Note 1 A for a reverse acquisition
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 9 - Cost of revenue
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Consist of: | |||
| Raw material | - | 13 | 60 |
| payroll | - | 23 | 102 |
| Rent and maintenance | 17 | 42 | 51 |
| Depreciation | 5 | 10 | 16 |
| Import and export cost | - | - | 76 |
| Professional services | - | 36 | 57 |
| Operating and other expenses | 28 | 30 | 58 |
| Total | 50 | 154 | 420 |
*See Note 1 A for a reverse acquisition
Note 10 - Research and development expenses
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Consist of of: | |||
| Professional fees, Note 16 | 120 | 33 | 212 |
| Raw material | - | 6 | 19 |
| Share-based payments | - | 49 | - |
| Other expense | - | 13 | 22 |
| Total | 120 | 101 | 253 |
*See Note 1 A for reverse acquisition
Note 11 – General and administrative expenses
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | *2023 | *2022 | |
| Consist of of: | |||
| Payroll and officers services (1) | 191 | 511 | 249 |
| Share-based payments | - | 40 | 186 |
| Marketing and advertising | 3 | 21 | 11 |
| Professional fees | 107 | 339 | 44 |
| Other expense | 6 | 93 | 101 |
| Total | 307 | 1,004 | 591 |
(1) for balances with related parties, see Note 16
*See Note 1 A for a reverse acquisition
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 12 - Taxes on income
A. Tax rate
The Company and its subsidiary are assessed for tax purposes on an unconsolidated basis.
The Canadian, Israeli and Spanish corporate tax rate applicable to the taxable income are 27%, 23% and 25%, respectively.
B. Tax assessment
The Company and its Israeli subsidiary company have not been assessed for tax purposes since incorporation.
C. Losses carry forward
As of December 31, 2024, the Company has accumulated net operating losses, of CAD 1,769 which may be carried forward and offset against taxable income in the future for an indefinite period.
Additionally, the Israeli subsidiary company has for tax purposes a temporarily deferred research and development cost in approximate amount of CAD 114 to be realize to expenses during 2025 and 2026.
The Company has not recognized a deferred tax asset for losses carry forwards and temporarily deferred research and development cost, as it is not likely to be realized against taxable income in the foreseeable future.
With respect to deferred taxes, see Note 3 N.
D. Tax ruling for a reverse acquisition.
For the Israeli Income Tax Authority ruling, see Note 1 A.
Note 13 – Earnings per share
Details of the number of Ordinary Shares and losses attributable to the Company's shareholders used in the computation of loss per share:
| Year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | ||
| Weighted number of shares | Loss attributable to equity holders of the Company | Weighted number of shares | Loss attributable to equity holders of the Company |
| CAD | CAD | ||
| 104,121,000 | (441) | 104,121,000 | (48,916) |
*See Note 1 A for a reverse acquisition
Diluted net loss per Ordinary Share does not include the effect of exercise of stock options granted under share-based payment plans since their exercise in non-dilutive and will potentially decrease the loss per Ordinary Share.
STICKIT TECHNOLOGIES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 14 - Share-based payments
On January 2022, the Company’s Board of Directors approved a share option plan (the “2022 ESOP”) to grant certain employees and service providers of the Company options to purchase 33,790 Ordinary shares of the Company, at nominal value of 0.01 NIS par value.
Options granted under 2022 ESOP shall expired following 1.5 years from granting date.
On June 2021, the Company’s Board of Directors approved a share option plan (the “2021 ESOP”) to grant certain employees and service providers of the company options to purchase 180,000 Ordinary shares of the Company at nominal value of 0.01 NIS par value.
Options granted under 2021 ESOP shall be expired following 2 years from granting date.
Following is a summary of the status of the stock options plan as of December 31, 2020 and 2021, and the changes during the years ended on these dates:
| Year ended December 31 | ||||
|---|---|---|---|---|
| 2024 | * 2023 | |||
| Number | Average exercise price | Number | Average exercise price | |
| Options outstanding at beginning of year | 180,027 | 4.01 | 153,957 | 4.202 |
| Changes during the year: | ||||
| Granted | - | - | 26,070 | 2.84 |
| Exercised | - | - | - | - |
| Forfeited | - | - | - | - |
| Options outstanding at end of year | 180,027 | 4.01 | 180,027 | 4.01 |
| Options exercisable at year-end (fully vested) | 153,286 | 3.61 | 153,286 | 3.61 |
*See Note 1 A for a reverse acquisition
As of June 2021, the Company granted 173,957 share options to its employees. The fair value of the share options granted is approximately CAD 1,628 (4,430 thousand NIS).
Of the above options, 60,673 matured during 2021, 78,284 matured in equal quarterly installments commencing the first quarter of 2021 and 35,000 matured in equal quarterly installments over 12 quarters starting from the 2nd quarter of 2021.
Also, a total of 55,000 of these options, with a vesting period of 8 quarters equal in installments worth 1,423 thousand NIS, were granted to Eli Ben Harosh, CEO and founder of the Company.
On November 16, 2021, the Company granted 45,000 share options to Eli Ben Harosh, CEO and founder of the Company. The fair value of the 45,000 share options is approximately CAD 429 (1,167 thousand NIS). The share options granted are fully vested.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 14 – Share-based payments (Cont.)
The following table specifies the inputs used for the fair value measurement of stock options granted:
| Ordinary share fair value | 25.847 NIS |
|---|---|
| Risk-free interest rate | 0.31%-0.54% |
| Expected term (in years) | 3.5164-5.0178 |
| Dividend yield | - |
| Volatility | 90% |
In January 2023, the Company granted 100,500 stock options to Mr. Eli Ben Harosh, CEO and the founder of the Company, that are immediately exercisable to 100,500 Ordinary Shares of the Company.
The exercise price under the option is 0.01 NIS represents the nominal (par) value of an Ordinary Share. In January 2023 100,500 stock options were exercised to 100,500 Ordinary Shares of the Company.
Note 15 - Balances and transactions with related parties
A. The Company's related parties consist principally, Mr. Eli Ben Harosh, CEO of the Company, and Dr. Asher Holzer, President of the Company and Directors.
See Note 7 with respect to warrants granted to Mr. Eli Ben Harosh and Dr. Asher Holzer, under investment agreement in Stick-it USA.
B. In January 2021, Dr. Asher Holzer transferred the patent application to the Company in exchange for 1 USD. See Note 1.
C. On September 28, 2023, following the completion of the reverse merger, see Note 1 the Company and its CEO Mr. Eli Ben Harosh entered into a new service agreement for a period of 5 years. According to the agreement Mr. Eli Ben Harosh will work part time at 50% capacity for a payment of CAD 10 per month. Additionally, the Company will pay the CEO a monthly car allowance and reimbursement for other travel expenses totaling CAD 2.2 per month.
The CEO is entitled to payments for pension and severance pay and disability compensation of 17.33% of his salary.
Pursuant to the service agreement, upon the Company reaching profitability, the CEO is entitled to 0.5% out of the annual income of the Company and Stickit Ltd. will recommend the Company to grant restricted stock units (RSUs) to the CEO an amount equal to up to 500,000 shares of Stickit Ltd. according to the merger exchange ratio. The RSUs will vest over 3 years in 3 equal portions and further subject to certain milestone as shall be determined by The Company's board.
As of December 31, 2023, the RSUs were not granted to the CEO under the agreement.
The agreement provided that the terms and conditions shall be applied with retroactive effect to March 1, 2021.
D. On September 28, 2023, following the completion of the reverse merger, see Note 1, the Company and Dr. Asher Holzer entered into a new service agreement for a period of 5 years. According to the agreement Dr. Asher will work part time at 50% capacity for a payment of CAD 10 per month. The agreement provided that the terms and conditions shall be applied with retroactive effect to October 1, 2019.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 15 - Balances and transactions with related parties (Cont.)
Mr. Eli Ben Harosh CEO of the Company and Mr. Asher Holzer the President of the Company has undertaken to defer the payment of their consulting fees under consulting agreements, As of December 31, 202,4 the Company owe the CEO and the President aggregate amount of 245 and 226, respectively, which is considered overdue under the provisions of the consulting agreements. The debt does not bear interest.
Management of the Company believe that the carrying amount is approximate fair vale of the debt, accordingly no contribution was recognized.
E. Ms. Sophie Galper entered into a consulting service agreement, whereby Ms. Sophie Galper shall act Chief Finance Officer of the Company. According to the agreement Ms. Sophie Galper entitled to a monthly renumeration of CAD 3.
F. The Company is committed for a renumeration of stock-based payment to 4 directors serving the Company. As of the statement of financial position the shareholders of the Company have not yet resolve the stock-based payment plan and gratings. Accordingly, the financial statements do not include measurement and disclosure of the related compensation to these directors.
A. Balances with related parties:
| December 31 | ||
|---|---|---|
| 2024 | 2023 | |
| Accounts payable | ||
| consulting fees and related expenses -CEO | 245 | 191 |
| consulting fees and related expenses - President | 225 | 90 |
| Accounts receivable Stick-it Thailand, Note 5 | - | 42 |
B. Transactions with related parties:
| For the year ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | *2022 | |
| Consist of: | |||
| Sales to associates, Note 8 | - | 183 | 370 |
| Compensation for services-CEO | 141 | 378 | 201 |
| Compensation for services - President | 120 | 90 | 90 |
| Compensation for services - CFO | 36 | 12 | - |
*See Note 1 A for a reverse acquisition
Note 16 – Disclosure of geographical segments
For details regarding revenue generated in different territories as reviewed by CODM, see Note 8.
STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 17 - Financial instruments
Financial risk management objectives and policies:
The Company's principal financial liabilities are comprised of trade and other payables, and convertible loans. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets include trade and other receivables, cash and short-term deposits that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The financial risk is managed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and objectives. The Board reviews and approves the policies for each of the risks summarized below.
market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risks, such as share price risk and commodity risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign currency exchange rates.
The Company's exposure to foreign currency risk relates primarily to the Company's continuing operation (when revenue or expense is recognized in a different currency from the Company's functional currency).
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations as a customer or under a financial instrument leading to a loss to the Group. The Company is exposed to credit risk from its operating activity (primarily trade receivables) and from its financing activity, including deposits with banks and other financial institutions.
Liquidity risk
The Company's exposure to liquidity risk is dependent on the Company ability to meet the factors of the business plan designed by Management, forecasts and related key assumption, and cash flow projection.
As part of their ongoing responsibilities, the Company's Board of Directors and Management are undertaking a thorough review of the Company's cash flow forecast and potential liquidity risks. Forecasts of operating results and cash flow projections were prepared for the period of 12 months from the date of approval of the financial statements.
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STICKIT TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CAD in thousands (except for number of shares and share price)
Note 18 - Management of capital
Capital is comprised of the Company's shareholders' equity (deficiency). The Company's objectives when managing capital are to maintain financial strength and to protect its ability to meet its ongoing liabilities, to continue as a going; concern, to maintain creditworthiness and to maximize returns for shareholders over the long term. Protecting the ability to pay current and future liabilities includes maintaining capital above minimum regulatory levels, current financial strength rating requirements and internally determined capital guidelines and calculated risk management levels.
The Company manages its capital structure to maximize its financial flexibility by making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital but rather relies on the expertise of the Company's management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
The total shareholders' equity on December 31, 2024 is CAD 9 (deficit of - CAD 452 at December 31, 2023). As of December 31, 2024, the Company is not subject to any externally imposed capital requirements.
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