PyroGenesis Canada Inc.
Consolidated Financial Statements
December 31, 2021 and 2020
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Report of Independent Registered Public Accounting Firm – Current Firm (PCAOB ID Number | 4 | |
Report of Independent Registered Public Accounting Firm – Predecessor Firm (PCAOB ID Number KPMG | 5 | |
Financial Statements |
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2
PyroGenesis Canada Inc.
Management’s Responsibility
Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.
The Board of Directors and Audit Committee are composed primarily of Directors who are neither management nor employees of the Company. The Board of Directors is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Board fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and the external auditor. The Audit Committee has the responsibility of meeting with management and the external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit Committee is also responsible for recommending the appointment of the Company's external auditor.
Raymond Chabot Grant Thornton LLP, an Independent Registered Public Accounting Firm, is appointed by the shareholders to audit the financial statements and report directly to them; their report follows. The external auditor has full and free access to, and meets periodically and separately with, both the Audit Committee and management to discuss their audit findings.
March 31, 2022
[Signed by P. Peter Pascali] |
| [Signed by Andre Mainella] |
P. Peter Pascali, Chief Executive Officer |
| Andre Mainella, Chief Financial Officer |
3
Grant Thornton LLP
Suite 2000
National Bank Tower
600 De La Gauchetière Street West
Montréal, Quebec
H3B 4L8
T 514-878-2691
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of PyroGenesis Canada Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of PyroGenesis Canada Inc. (the Company) as of December 31, 2021, the related consolidated statements of comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021, and its consolidated operations and its consolidated cash flows for the year ended December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2021.
March 31, 2022
4
Tour KPMG, Suite 1500
600 de Maisonneuve Blvd. West
Montréal (Québec) H3A 0A3
Tel. 514-840-2100
Fax 514-840-2187
www.kpmg.ca
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of PyroGenesis Canada Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of PyroGenesis Canada Inc. (the Company) as of December 31, 2020, the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
We served as the Company’s auditor from 2015 to 2021.
March 31, 2021 |
5
PyroGenesis Canada Inc.
Consolidated Statements of Financial Position
December 31, 2021 and 2020
| December 31, |
| December 31, | |
2021 | 2020 | |||
$ | $ | |||
Assets |
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Current assets |
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Cash and cash equivalents [note 7] | |
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Accounts receivable [note 8] | |
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Costs and profits in excess of billings on uncompleted contracts [note 9] | |
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Inventory [note 24] | | — | ||
Investment tax credits receivable [note 10] | |
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Income taxes receivable | | — | ||
Current portion of deposits [note 13] | |
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Current portion of royalties receivable [note 12] | | — | ||
Contract assets | |
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Prepaid expenses | |
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Total current assets | |
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Non-current assets |
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Deposits [note 13] | |
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Strategic investments [note 11] | |
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Property and equipment [note 14] | |
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Right-of-use assets [note 15] | |
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Royalties receivable [note 12] | |
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Investment tax credits receivable [note 10] | — |
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Intangible assets [note 16] | |
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Goodwill [note 17] | | — | ||
Total assets | |
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Liabilities |
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Current liabilities |
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Accounts payable and accrued liabilities [note 18] | |
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Billings in excess of costs and profits on uncompleted contracts [note 19] | |
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Current portion of term loans [note 20] | |
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Current portion of lease liabilities [note 15] | |
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Balance due on business combination [note 5] | | — | ||
Income taxes payable | | — | ||
Total current liabilities | |
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Non-current liabilities |
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Lease liabilities [note 15] | |
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Term loans [note 20] | |
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Balance due on business combination [note 5] | | — | ||
Deferred income taxes [note 31] | | | ||
Total liabilities | |
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Shareholders’ equity [note 22] |
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Common shares and warrants | |
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Contributed surplus | |
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Accumulated other comprehensive income | | — | ||
Deficit | ( |
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Total shareholders’ equity | |
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Total liabilities and shareholders’ equity | |
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Contingent liabilities, subsequent events [notes 29 and 33].
The accompanying notes form an integral part of the consolidated financial statements.
Approved on behalf of the Board: | |
[Signed by P. Peter Pascali] P. Peter Pascali | [Signed by Andrew Abdalla] Andrew Abdalla |
6
PyroGenesis Canada Inc.
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31, 2021 and 2020
| 2021 |
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$ | $ | |||
Revenues [note 6] | |
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Cost of sales and services [note 24] | |
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Gross profit | |
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Expenses |
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Selling, general and administrative [note 24] | |
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Research and development, net [note 10] | |
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Net loss from operations | ( |
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Changes in fair value of strategic investments [note 11] | ( |
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Finance costs, net [note 25] | ( |
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Net earnings (loss) before income taxes | ( |
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Income taxes [note 31] | ( |
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Net earnings (loss) | ( |
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Other comprehensive income (loss) | ||||
Items that will be reclassified subsequently to profit of loss | ||||
Foreign currency translation gain on investments in foreign operations | | — | ||
Comprehensive income (loss) | ( | | ||
Earnings (loss) per share [note 26] |
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Basic | ( |
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Diluted | ( |
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The accompanying notes form an integral part of the consolidated financial statements.
7
PyroGenesis Canada Inc.
Consolidated Statements of Changes in Shareholders’ Equity
For the years ended December 31, 2021 and 2020
Accumulated |
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Number of | Common | Equity portion | other |
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common | shares and | Contributed | of convertible | comprehensive |
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| shares |
| warrants |
| Surplus |
| debentures |
| income |
| Deficit |
| Total | |
$ | $ | $ | $ | $ | $ | |||||||||
Balance - December 31, 2020 |
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Shares issued upon exercise of stock options [note 22] |
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Shares issued upon exercise of share purchase warrants and compensation options [note 22] |
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Share redemptions for cancellation [note 22] |
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Share-based payments |
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Other comprehensive income for the year | — | — | — | — | | — | | |||||||
Net loss |
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Balance – December 31, 2021 |
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Balance - December 31, 2019 |
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Shares issued upon public issuance [note 22] | | | — | — | — | — | | |||||||
Share issuance cost | ( | — | — | — | — | ( | ||||||||
Shares issued upon exercise of stock options [note 22] | | | ( | — | — | — | | |||||||
Shares issued upon exercise of share purchase warrants [note 22] | | | — | — | — | — | | |||||||
Issuance of convertible loan – equity component [note 22] |
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Conversion of loan into shares [note 21] |
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Conversion of debentures into shares [note 21] |
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Share redemptions for cancellation [note 22] |
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Equity component of convertible debentures [note 22] | — | — | | ( | — | — | — | |||||||
Share-based payments | — | — | | — | — | — | | |||||||
Net earnings and comprehensive income |
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Balance – December 31, 2020 |
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The accompanying notes form an integral part of the consolidated financial statements.
8
PyroGenesis Canada Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
| 2021 |
| 2020 | |
$ | $ | |||
Cash flows provided by (used in) |
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Operating activities |
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Net earnings (loss) |
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Adjustments for: |
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Share-based payments |
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Depreciation of property and equipment |
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Depreciation of right-of-use assets |
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Amortization and write-off of intangible assets |
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Amortization of contract assets |
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Finance costs |
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Change in fair value of investments |
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Loss on disposal of property and equipment |
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Income taxes | ( | | ||
Unrealized foreign exchange |
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Net change in balances related to operations [note 23] |
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Investing activities |
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Additions to property and equipment |
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Additions to intangible assets |
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Purchase of strategic investments |
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Disposal of strategic investments |
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Business combination, net of cash acquired | | — | ||
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Financing activities |
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Interest paid |
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Repayment of term loans |
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Repayment of scientific research and experimental development loans |
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Repayment of lease liabilities |
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Repayment of promissory notes |
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Repayment of convertible debentures |
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Proceeds from issuance of convertible loans |
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Proceeds from issuance of other term loans |
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Proceeds from issuance of shares upon exercise of warrants |
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Proceeds from issuance of shares upon exercise of stock options |
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Proceeds from issuance of shares [note 22] |
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Share issue costs |
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Shares repurchased for cancellation |
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Effect of exchange rate changes on cash denominated in foreign currencies |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents - beginning of year |
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Cash and cash equivalents - end of year |
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9
| 2021 |
| 2020 | |
$ | $ | |||
Supplemental cash flow disclosure | ||||
Non-cash transactions: | ||||
Purchase of intangible assets included in accounts payable |
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Purchase of property and equipment included in accounts payable |
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Addition to contract assets included in accounts payable |
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Settlement of accounts receivable on business acquisition | | — | ||
Accretion of balance purchase price payable | | — | ||
Accretion interest on royalties receivable | | — | ||
Accretion on term loan | | — | ||
Issuance of common shares upon exercise of convertible debentures | — | | ||
Issuance of common shares upon conversion of loan |
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Initial recognition of contract assets and commissions payables |
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Proceeds from disposal of strategic investments included in other |
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receivables | — | | ||
HPQ shares received in lieu of payment of accounts receivable |
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Fair value of HPQ warrants exercised |
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Initial recognition or modification of lease liabilities and right-of-use assets [note 15]: |
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Right-of-use assets |
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Prepaid rent expense | ( | — | ||
Lease liabilities |
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The accompanying notes form an integral part of the consolidated financial statements
10
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
1. | Nature of operations |
PyroGenesis Canada Inc. and its subsidiaries ( collectively, the “Company”), incorporated under the laws of the Canada Business Corporations Act, was formed on July 11, 2011. The Company owns patents of advanced waste treatment systems technology and designs, develops, manufactures and commercialises advanced plasma processes and sustainable solutions to reduce greenhouse gases. The Company is domiciled at 1744 William Street, Suite 200, Montreal, Quebec. The Company is publicly traded on the TSX Exchange under the Symbol “PYR” on NASDAQ in the USA under the symbol “PYR” and on the Frankfurt Stock Exchange (FSX) under the symbol “8PY”.
2. | Basis of preparation |
(a) | Statement of compliance |
These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These financial statements were approved and authorized for issuance by the Board of Directors on March 31, 2022.
(b) | Functional and presentation currency |
These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency.
(c) | Basis of measurement |
These financial statements have been prepared on the historical cost basis except for:
(i) | strategic investments which are accounted for at fair value, |
(ii) | stock-based payment arrangements, which are measured at fair value on the grant date pursuant to IFRS 2, Share-based Payment; and |
(iii) | lease liabilities, which are initially measured at the present value of minimum lease payments |
(d) | Basis of consolidation |
For financial reporting purposes, subsidiaries are defined as entities controlled by the Company. The Company controls an entity when it has power over the investee; it is exposed to, or has rights to, variable returns from its involvement with the entity; and it has the ability to affect those returns through its power over the entity.
In instances where the Company does not hold a majority of the voting rights, further analysis is performed to determine whether or not the Company has control of the entity. The Company is deemed to have control when, according to the terms of the shareholder’s and/or other agreements, it makes most of the decisions affecting relevant activities.
These consolidated financial statements include the accounts of the Company and its subsidiaries, Drosrite International LLC and Pyro Green-Gas Inc.and its subsidiaries. Drosrite International LLC is owned by a member of the Company’s key management personnel and close member of the Chief Executive Officer (“CEO”) and controlling shareholder’s family and is deemed to be controlled by the Company. Pyro Green-Gas (formerly AirScience Technologies Inc. until the renaming on September 14, 2021) was acquired by the Company on August 11, 2021 (see note 5). All transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.
11
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
2. | Basis of preparation (continued) |
(d) | Basis of consolidation (continued) |
The accounting policies set out below have been applied consistently in the preparation of the financial statements of all years presented. Finance costs and changes in fair value of strategic investments are excluded from the loss from operations in the consolidated statement of comprehensive income (loss).
3. | Significant accounting policies |
(a) | Business combinations |
Business combinations are accounted for using the acquisition method. Goodwill is measured as the excess of the fair value of the consideration transferred over the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at the acquisition date.
The consideration transferred is measured as the net of the fair values of assets transferred, liabilities assumed, and equity instruments issued by the Company at the acquisition date, including any asset or liability resulting from a contingent consideration arrangement, in exchange of the acquiree.
The obligation to pay the contingent consideration is classified as a liability, and measured as a financial instrument or as a provision. Changes in fair values that qualify as a measurement period adjustments of preliminary purchase price allocations are adjusted in the current period and such changes are applied on a retroactive basis.
Acquisition costs that the Company incurs in connection with a business combination are recognized in profit or loss as incurred, except for costs associated with the issuance of debt or equity securities.
(b) | Revenue recognition |
Revenue from contracts is recognized for each performance obligation either over a period of time or at a point in time, depending on which method reflects the transfer of control of the goods and services underlying the particular performance obligation.
i) | Long-term contracts |
Long-term contracts involve made-to-order customized equipment and machines and are generally priced on a fixed fee basis. Under these contracts, the equipment or machines are made to a customer’s specifications and if a contract is terminated by the customer, the Company is entitled to the greater of the amounts invoiced at the termination date and the reimbursement of the costs incurred to date of termination, including a reasonable margin. Agreements that contain multiple deliverables require the Company to determine whether they contain separately identifiable performance obligations and to allocate the consideration received to each performance obligation.
Revenue relating to long-term contracts is recognized over time based on the measure of progress determined by the Company’s efforts or inputs towards satisfying the performance obligation relative to the total expected inputs. The degree of completion is assessed based on the proportion of total costs and/or hours incurred to date, compared to total costs and/or hours anticipated to provide the service under the entire contract, excluding the effects of inputs that do not depict performance, e.g. uninstalled materials. For long-term contracts with uninstalled materials, the Company adjusts the transaction price and recognizes revenue on uninstalled materials to the extent of those costs incurred, i.e. at a zero percent profit margin, when certain conditions are met.
Estimates are required to determine anticipated costs and/or hours on long-term contracts. A provision is made for the entire amount of expected loss, if any, in the period in which they are first determinable.
12
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(b) | Revenue recognition (continued) |
i) | Long-term contracts (continued) |
Contract modifications are changes in scope and/or price that are approved by the parties to the contract. Approval may be written, oral or implied by customary business practices, and are legally enforceable. The Company accounts for modifications as a separate contract if the modifications add distinct goods or services that are priced commensurate with stand-alone selling prices or if the remaining goods or services are distinct from those already transferred, otherwise modifications are accounted for as part of the original contract.
Costs and profits in excess of billings on uncompleted contracts and trade receivables are both rights to consideration in exchange for goods or services that the Company has transferred to a customer, however the classification depends on whether such right is only conditional on the passage of time (trade receivables) or if it is also conditional on something else (costs and profits in excess of billings on uncompleted contracts), such as the satisfaction of further performance obligations under the contract. Billings in excess of costs and profits on uncompleted contracts is the cumulative amount received and contractually receivable by the Company that exceeds the right to consideration resulting from the Company’s performance under a given contract.
The costs to obtain long-term contracts such as sale commissions are recognized as Contract assets and recognized as selling expenses over time based on degree of completion of the related contract.
ii) | Sales of goods |
Revenue related to sales of goods, which may include powders and spare parts are measured based on the consideration specified in contracts with customers. The Company recognizes revenue at a point in time when it transfers control of the goods to the buyer. This is generally at the time the customer obtains legal title to the product and when it is physically transferred to the custody transfer point agreed with the customer.
iii) | Sale of intellectual property |
Sale of intellectual property is recognized at the date the recipient obtains control of the asset. Variable consideration related to the sale of intellectual property is recognized to the extent that it is highly probable that a reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
(c) | Foreign currency translation |
i) | Foreign currency transactions |
Revenue and expense transactions in foreign currencies are translated into Canadian dollars using the average exchange rates prevailing at the time of the transaction. Foreign currency balances are translated into Canadian dollars at year end exchange rates for monetary items and at historical rates for non-monetary items. Translation gains or losses are included in the determination of net earnings.
ii) | Foreign operations |
The assets and liabilities of foreign operations are translated into Canadian dollars using exchange rates prevailing at the end of the reporting period. Revenue and expense items are translated at the average exchange rates for the period. Exchange differences arising from the translation process of foreign operations are recognized as foreign currency translation adjustments in other comprehensive income and accumulated in equity.
13
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(d) | Cash and cash equivalents |
Cash and cash equivalents are financial instruments readily convertible to a known amount of cash and not subject to a significant risk of changes in value. Cash equivalents include instruments with a maturity of three months or less from the date of acquisition and instruments with an original term longer than three months if there is no significant penalty for withdrawal within a three-month period from the date of acquisition.
(e) | Inventory |
Inventory is composed of spare parts for resale. Inventory is valued at the lower of cost and net realizable value. The cost of inventory is based on the first-in, first-out principle and comprises all costs of purchases. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling costs.
(f) | Deferred income taxes |
i) | Current tax |
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the date of the statements of financial position.
ii) Deferred tax
Deferred tax is provided using the liability method, providing for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The temporary difference is not provided for if it arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date and whose implementation is expected over the period in which the deferred tax is realized or recovered. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be used.
Deferred tax assets and liabilities are presented as non-current. Assets and liabilities are offset where the entity has a legally enforceable right to offset current tax assets and liabilities or deferred tax assets and liabilities, and the respective assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity or different taxable entities which intend to settle the liabilities and assets on a net basis.
(g) | Earnings (loss) per share |
The Company presents basic earnings (loss) per share data for its common shares. Basic loss per share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the year. Diluted loss per share is computed similarly to basic earnings per share, except that the weighted average number of shares outstanding is increased to include shares from the assumed exercise of stock options and share purchase warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding share options and warrants were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the year. Potential shares from all outstanding stock options and share purchase warrants are excluded from the calculation of diluted loss per share as their inclusion is considered anti-dilutive in years when a loss is incurred.
14
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(h) | Property and equipment |
Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses if applicable. Cost includes expenditures that are directly attributable to the acquisition of the asset and bringing the asset into operation. Borrowing costs capitalized to asset under development represents the interest expense calculated under the effective interest method and does not include any fair value adjustments of investments designated at fair value through profit and loss. Government assistance and investment tax credits related to the purchase or development of property and equipment are recorded in reduction of the cost. When major parts of an item of property and equipment have different useful lives, they are accounted for separately. Property and equipment are depreciated from the acquisition date over their respective useful life. Depreciation of an asset under construction begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by the Company.
Depreciation is calculated using the following methods and rates:
Computer equipment |
| Straight line over |
Machinery and equipment | Straight line over | |
Automobiles | Straight line over | |
Leasehold improvements | Lesser of the lease term or the useful life ( |
Impairment – non-financial assets
The carrying amounts of the Company’s non-financial assets are assessed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Impairment losses recognized in prior periods are assessed at each reporting date as to whether there are any indications that the previously recognized losses may no longer exist or may be decreased. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively if appropriate.
(i) | Leases |
Under IFRS 16, at inception, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease, i.e. the date the underlying asset is available for use.
Right-of-use assets
Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. Cost of right-of-use assets is comprised of:
-the initial measurement amount of the lease liabilities recognized.
-any lease payments made at or before the commencement date, less any lease incentives received; and
15
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(i) | Leases (continued) |
Right-of-use assets (continued)
-any initial direct costs incurred; and
-an estimate of costs to dismantle and remove the underlying asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease contract.
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset based on periods detailed above. The depreciation starts at the commencement date of the lease. Right-of-use assets are assessed for impairment whenever there is an indication that the right-of-use assets may be impaired.
Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date over the lease term. The present value of the lease payments is determined using the lessee’s incremental borrowing rate at the commencement date if the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate is a function of the lessee’s incremental borrowing rate, the nature of the underlying asset, the location of the asset, the length of the lease and the currency of the lease contract. Generally, the Company uses the lessee’s incremental borrowing rate for the present value. At the commencement date, lease payments generally include fixed payments, less any lease incentives receivable, variable lease payments that depend on an index (e.g. based on inflation index) or a specified rate, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising the option to terminate the lease. Lease payments also include amounts expected to be paid under residual value guarantees and the exercise price of a purchase option if the Company is reasonably certain to exercise that option.
Variable lease payments that do not depend on an index or a specified rate are not included in the measurement of lease liabilities but instead are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
After the commencement date, the carrying amount of lease liabilities is increased to reflect the accretion of interest and reduced to reflect lease payments made. In addition, the carrying amount of lease liabilities is remeasured when there is a change in future lease payments arising from a change in an index or specified rate, if there is a modification to the lease terms and conditions, a change in the estimate of the amount expected to be payable under residual value guarantee, or if the Company changes its assessment of whether it will exercise a termination, extension or purchase option. The remeasurement amount of the lease liabilities is recognized as an adjustment to the right-of-use asset, or in the profit and loss statement when the carrying amount of the right- of-use asset is reduced to zero.
Classification and presentation of lease-related expenses
Depreciation charge for right-of-use assets, expenses related to variable lease payments not included in the measurement of lease liabilities and loss (gain) related to lease modifications are allocated in the Company’s profit and loss statement based on their function within the Company, while interest expense on lease liabilities is presented within finance costs.
16
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(i) | Leases (continued) |
Cash flow classification
Lease payments related to the principal portion of the lease liabilities are classified as cash flows from financing activities while lease payments related to the interest portion of the lease liabilities are classified as interest paid within cash flows from financing activities. Lease incentives received are classified as cash flows from investing activities. Variable lease payments not included in the measurement of lease liabilities are classified as cash flows from operating activities.
(j) | Government assistance and investment tax credits |
Investment tax credits are comprised of scientific research and experimental development tax credits. Government assistance and investment tax credits are recognized when there is reasonable assurance of their recovery and recorded as a reduction of the related expense or cost of the asset acquired, as applicable. Investment tax credits are subject to the customary approvals by the pertinent tax authorities. Adjustments required, if any, are reflected in the year when such assessments are received.
(k) | Intangible assets and Goodwill |
Intangible assets acquired separately are measured at cost on initial recognition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.
Identifiable intangible assets acquired in a business combination are recognized separately from goodwill if they meet the definition of an intangible asset and if their fair value can be measured reliably. The cost of these intangible assets equals their acquisition-date fair value.
Subsequent to initial recognition, identifiable intangible assets acquired in a business combination are recorded at cost less accumulated amortization and impairment losses, if they are amortizable, otherwise only at cost net of accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful life of the asset and assessed for impairment whenever there is an indication of impairment. Amortization expense on the intangible assets with finite lives is recognized in the statements of comprehensive loss.
Research costs are charged to comprehensive loss in the year they are incurred, net of related investment tax credits. Development costs are charged to comprehensive loss in the year they are incurred net of related investment tax credits unless they meet specific criteria related to technical, market and financial feasibility in order to be recognized as intangible assets which include:
Costs to establish patents for internally developed technology are considered development costs and are charged to comprehensive loss in the year they are incurred unless they meet specific criteria related to technical, market and financial feasibility. Patent costs include legal and other advisor fees to obtain patents, and patent application fees.
17
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3 | Significant accounting policies (continued) |
(k) | Intangible assets and Goodwill (continued) |
Amortization of the development costs is calculated on a straight-line basis over the remaining useful life of the related patent and begins when development is complete. During the period of development, the asset is tested annually for impairment. Residual values and useful lives are reviewed at each reporting date.
Amortization is calculated on a straight-line basis:
| Useful life | |
Production backlog | ||
Patents and development costs |
|
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognized. Goodwill is carried at cost less accumulated impairment losses. Goodwill is not amortized, but is tested for impairment annually or if there is an indication of impairment. Impairment losses recognized for goodwill cannot be reversed.
Impairment testing of goodwill, other intangible assets, property and equipment and right-of-use assets
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represents the lowest level within the Company at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.
The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. 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 the purposes of testing non-financial assets for impairment, management has identified
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss. Impairment losses recognized in respect of the CGU are allocated first to reduce the carrying amount of goodwill allocated to the units, and then to reduce the carrying amounts on a pro-rata basis of the other assets in the unit.
(l) | Employee benefits |
Share-based payments
The Company applies a fair value-based method of accounting to all share-based payments. Employee and director stock options are measured at their fair value of each tranche on the grant date and recognized in its respective vesting period. Non-employee stock options are measured when the services are rendered by the consultant at the fair value of the services received, if the fair value can be measured reliably. In the case the fair value of the services cannot be measured reliably, the services are measured indirectly using the fair value of the equity instruments granted. If there are unidentifiable services, then they are measured at grant date. The cost of stock options is presented as share-based payment expense. On the exercise of stock options, share capital is credited for the consideration received and for the fair value amounts previously credited to contributed surplus. The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based payments.
18
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(l) | Employee benefits (continued) |
Deferred profit-sharing plan
The Company established a yearly Deferred Profit-Sharing Plan (“DPSP”) for all eligible employees who have materially and significantly contributed to the prosperity and profits of the Company. The significance of any contribution of any employee to the prosperity and profits of the Company for purposes of eligibility in the DPSP is determined by the Board of Directors of the Company upon such relevant information as the Board, in its sole discretion, may find relevant. All related persons to the Company are excluded from participating in the DPSP.
For all eligible employees, the Company is required to contribute to the DPSP out of the profits of the Company. The amount of the Company’s contribution will be such amount which, in the opinion of its Board of Directors, is warranted by the profits and overall financial position of the Company. During the year, the Company contributed $
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under the short-term incentive plan if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
(m) | Equity Instruments |
Issuance of equity instruments
Incremental costs directly attributable to the issue of equity-classified shares are recognized as a deduction from the common shares and warrants, net of any tax effects.
Extinguishing financial liabilities with equity instruments
When equity instruments issued to a creditor to extinguish all or part of a financial liability are recognized initially, the Company measures them at the fair value of the equity instruments issued, unless that fair value cannot be reliably measured. If the fair value of the equity instruments issued cannot be reliably measured, then the equity instruments shall be measured to reflect the fair value of the financial liability extinguished.
Contributed surplus
Contributed surplus includes amounts related to equity-settled share-based payments until such equity instruments are exercised or settled, in which case the amounts are transferred to common shares or reversed upon forfeiture if not vested. It also includes the unexercised conversion option at the maturity of the convertible debentures.
(n) | Financial Instruments |
Financial assets are classified at amortized cost, fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVOCI”) based on the Company’s business model for managing the financial assets and the contractual cash flow characteristics of these assets. Assessment and decision on the business model approach used is an accounting judgment.
19
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(n) | Financial Instruments (continued) |
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company includes in this category cash and cash equivalents, trade accounts receivable, other receivables, royalties receivable and deposits.
A financial asset is measured at fair value through profit or loss (“FVTPL”) if:
(a) | Its contractual terms do not give rise to cash flows on specified dates that are solely payments of principal and interest (SPPI) on the principal amount outstanding; or |
(b) | It is not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell; or |
(c) | At initial recognition, it is irrevocably designated as measured at FVTPL when doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. |
The Company includes in this category strategic investments in equity instruments.
Changes in fair value of financial liabilities attributable to changes in the entity’s own credit risk are to be presented in other comprehensive income unless they affect amounts recorded in income. All financial liabilities, other than those measured at fair value through profit or loss, are included in the financial liabilities measured at amortized cost. The Company includes in this category accounts payable and accrued liabilities, term loans, and convertible debentures. The balance due on business combination is measured at FVTPL.
Recognition:
The Company recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument.
Purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e. the date that the Company commits to purchase or sell the asset.
Initial measurement
Financial assets and liabilities (other than financial assets at FVTPL) are measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue.
Financial assets and financial liabilities at FVTPL are recorded in the statement of financial position at fair value. All transaction costs for such instruments are recognized directly in profit or loss.
Subsequent measurement
Financial assets (other than financial assets at FVTPL) are measured at amortized cost using the effective interest method less any allowance for impairment. Gains and losses are recognized in profit or loss when the debt instruments are derecognized or impaired, as well as through the amortization process.
20
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(n) | Financial Instruments (continued) |
Subsequent measurement (continued)
Financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL. Gains and losses are recognized in profit or loss when the liabilities are derecognized, as well as through the amortization process.
Fair value measurement principles
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.
Where financial assets and financial liabilities measured at fair value though profit or loss have a quoted price in an active market at the reporting date, the fair value is based on this price. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from a stock exchange and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Securities traded on stock exchanges are stated at market price based on the closing price on the relevant valuation day.
Derecognition
A financial asset is derecognized where the rights to receive cash flows from the asset have expired, or the Company has transferred its rights to receive cash flows from the asset. The Company derecognizes a financial liability when the obligation under the liability is discharged, cancelled or expired.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
Impairment of financial instruments
The Company applies the “expected credit loss” (“ECL”) model to financial assets measured at amortized cost. The Company’s financial assets subject to this impairment model are cash and cash equivalents, trade and other receivables,royalties receivable and deposits.
The trade accounts receivable have no financing component and have maturities of less than 12 months at amortized cost and, as such, the Company applies the simplified approach for expected credit losses (ECLs) to all its trade accounts receivable. Therefore, the Company recognizes a loss allowance based on lifetime ECLs at each reporting date.
The Company’s approach to ECLs reflects a probability-weighted outcome, the time value of money and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The Company uses the provision matrix as a practical expedient to measure ECLs on trade receivables, based on days past due for groupings of receivables with similar loss patterns. The provision matrix is based on historical observed loss rates over the expected life of the receivables and is adjusted for forward-looking estimates.
Impairment losses are recognized in profit or loss and reflected in an allowance account presented in reduction of receivables.
21
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(n) | Financial Instruments (continued) |
Write-off
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.
Compound Financial Instruments
Compound financial instruments issued by the Company comprise convertible debentures that can be converted into common shares at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.
The component parts of the compound instrument issued by the Company are initially classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. The conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is an equity instrument.
At the date the convertible debentures are issued, the liability component is initially recognized at the fair value of similar debt instruments which do not have an equity conversion option. The initial amount of the liability component is determined by discounting the face value of the convertible debentures using a rate of interest prevailing for similar non-convertible instruments at the date of issue for instruments of similar terms and risks. The conversion option classified as the equity component is determined by deducting the amount of the liability component from the gross proceeds. The equity component is recognized net of income tax effects within the other equity account.
Subsequently, the liability component is accounted for at amortized cost and is accreted using the effective interest method, up to the face value of the convertible debentures during the period they are outstanding. Interest expense on the convertible debentures is composed of the interest calculated on the face value of the convertible debentures and a non-cash notional interest representing the accretion of the carrying value of the convertible debentures. The equity component is not remeasured.
The conversion option classified as equity remains in the other equity account until the conversion option is exercised, in which case, the balance recognized in other equity is transferred to share capital. When the conversion option remains unexercised at the maturity date of the convertible debentures, the balance recognized in other equity will be transferred to contributed surplus.
Transaction costs related to the issuance of convertible debentures are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in other equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the term of the convertible debentures using the effective interest method.
Effective Interest Method
The effective interest method is a method of calculating the amortized cost of a financial asset/financial liability and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or (when appropriate) a shorter period, to the net carrying amount on initial recognition.
22
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
3. | Significant accounting policies (continued) |
(o)Future Changes and Amendments to Accounting Standards and Interpretations
i)IAS 1 Presentation of Financial Statements - Accounting Policies
In 2021, the IASB amended IAS 1, Presentation of Financial Statements, to require entities to disclose their material accounting policy information rather than their significant accounting policies. Additional amendments to IAS 1 are made to explain how an entity can identify a material accounting policy. The amendments are effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.
ii)IAS 1 Presentation of Financial Statements - Classification of Liabilities
The IASB released Classification of Liabilities as Current or Non-current (Amendments to IAS 1), which clarifies the guidance in IAS 1 Presentation of Financial Statements on whether a liability should be classified as either current or non-current relating to the right to defer settlement of the liability for at least twelve months after the reporting date. The amendment is effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.
iii)IAS 12 Income Taxes
The IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The amendment is effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.
iv)IAS 37 Provisions, Contingent Liabilities and Contingent Assets
The IASB released Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37). The amendments specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous. Costs to be included comprise the costs that relate directly to the contract, which include both incremental costs of fulfilling the contract and an allocation of other costs that relate directly to fulfilling the contract. The amendment is effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.
The Company is currently assessing the impact of these future changes and amendments on its consolidated financial statements.
4. | Significant accounting judgments, estimates and assumptions |
The preparation of financial statements requires management to make judgments, estimates and assumptions based on currently available information that affect the reported amounts of assets, liabilities and contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual results could differ from those estimated. By their very nature, these estimates are subject to measurement uncertainty and the effect of any changes in estimates on the financial statements of future periods could be material.
In the process of applying the Company’s accounting policies, management has made the following judgments, estimates, and assumptions which have the most significant effect on the amounts recognized in the financial statements.
23
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
4. | Significant accounting judgments, estimates and assumptions (continued) |
Critical judgments in applying accounting policies
(a) | Assessment of whether there is any indication that property and equipment, right-of-use assets and intangible asset may be impaired |
At each reporting date, the Company reviews the carrying amounts of its property and equipment, right-of-use assets and intangible assets with a finite useful life to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Management’s judgment is required in assessing whether there is any indication that an asset may be impaired.
(b) | Intangible assets |
The recognition of development costs as intangible assets requires judgments to determine whether the required criteria for recognition are met including management estimates of future economic benefits.
(c) | Sale of intellectual property |
The recognition of variable consideration related to the sale of intellectual property requires management’s judgments to determine whether it is highly probable that a reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
(d) | Assessment of investment tax credits |
The investment tax credits are estimated by management based on quantitative and qualitative analysis and interpretation of various government programs, related restrictions, limitations, definitions, and eligibility conditions. Uncertainty over the eligibility and final assessment by taxation authorities of investment tax credits requires judgment. Management involves its technical staff and external specialists in determining if the expenditures meet the requirements of the different tax credit claims.
Key sources of estimation uncertainty
(e) | Revenue recognition |
Revenue recognition for long-term contracts completion requires the use of estimates to determine the recorded amount of revenues, costs in excess of billings and billings in excess of costs and profits on uncompleted contracts.
The determination of anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors, including the cost of materials, labour and sub-contractors, as well as potential claims from customers and subcontractors.
As risks and uncertainties are different for each project, the sources of variations between anticipated costs and actual costs incurred will also vary by project. The determination of estimates is based on the Company’s business practices as well as its historical experience. Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised.
Given this estimation process, it is possible that changes in future conditions could cause a material change in the recognized amount of revenues and costs and profits in excess of billings on uncompleted contracts and accrued expenses.
24
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
4. | Significant accounting judgments, estimates and assumptions (continued) |
Key sources of estimation uncertainty (continued)
(e) | Revenue recognition (continued) |
Agreements that contain multiple deliverables require the use of judgment to determine whether they contain separately identifiable performance obligations and to allocate the consideration received to each performance obligation.
(f) | Stock-based payments |
The Company uses the fair value method of valuing compensation cost associated with the Company’s stock option plan. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option and volatility. The assumptions and models are discussed in note 22.
(g) | Useful lives of property and equipment and intangible assets |
The Company estimates the useful lives of property and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of property and equipment are based on management’s experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. Useful lives, depreciation rates and residual values are reviewed at least annually.
(h) | Impairment of non-financial assets and goodwill |
In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 3 (k)).
(i) | Fair value of investments |
Where the fair values of investments recorded in the statement of financial position cannot be derived from active markets, they are determined using valuation techniques including the Black-Scholes models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing the fair values. The judgments include considerations of inputs such as the expected volatility and the initial allocation of the consideration paid between the fair value of the common shares and warrants received. Should any of the inputs to these models or changes in assumptions about these factors occur, this could affect the reported fair value of the investments.
(j) | Right-of-use assets and lease liabilities |
In determining the carrying amount of the right-of-use asset and corresponding lease liabilities, assumptions include the non-cancellable term of the lease plus periods covered by an option to renew or purchase the leases, estimated useful lives of the related assets, and incremental borrowing rate. Renewal and purchase options are only included in the lease term if management is reasonably certain to renew. Management considers factors such as market conditions, comparable rental rates and similar property values. The Company is also required to estimate the incremental borrowing rate specific to each portfolio of leased assets with similar characteristics if the interest rate in the lease is not readily determined. Management determines the incremental borrowing rate using base rate for similar loans plus a risk premium.
25
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
4. | Significant accounting judgments, estimates and assumptions (continued) |
Key sources of estimation uncertainty (continued)
(k) | Income taxes |
The Company has unused available tax losses, deductible temporary differences and investment tax credits. The Company recognizes deferred income tax assets for these unused tax losses and deductible temporary differences only to the extent that, in management’s opinion, it is probable that future taxable profit will be available against which these available tax losses and temporary differences can be utilized. The Company recognizes investment tax credits when it has reasonable assurance that it has complied with the conditions of the program and that the amounts will be realized (i.e. that it will generate future federal income taxes payable against which the tax credits can be applied). The Company’s projections of future taxable profit involve the use of significant assumptions and estimates with respect to a variety of factors, including future sales and operating expenses. There can be no assurance that the estimates and assumptions used in our projections of future taxable income will prove to be accurate predictions of the future, and in the event that our assessment of the recoverability of these deferred tax assets and investment tax credits changes in the future, a material increase or reduction in the carrying value of these deferred tax assets and investment tax credits could be required, with a corresponding charge to net earnings.
(l)Business combinations
Fair value of assets acquired and liabilities assumed in a business combination is estimated based on information available at the date of acquisition and involves considerable judgment in determining the fair values assigned to the identifiable assets acquired and liabilities assumed on acquisition. Among other things, the determination of these fair values involves the use of discounted cash flow analyses and estimated profit margins on contracts in progress. In addition, the determination of the contingent consideration due on the business combination is based on the estimations of the probability and timing of completing the predetermined milestones (see note 5);
(m) | COVID-19 pandemic |
The COVID-19 pandemic continues to cause significant financial market and social dislocation. The situation is dynamic with various cities and countries around the world responding in different ways to address the outbreak. While the Company has experienced the impact of the outbreak of the Coronavirus (COVID 19) on its operations, it had continued to operate during the current pandemic. During the year ended December 31, 2020, the Company recognized payroll subsidies totaling $
5. | Business combination |
On August 11, 2021, the Company completed the acquisition of Pyro Green-Gas Inc. and its subsidiaries (formerly AirScience Technologies Inc. prior to its renaming on September 14, 2021), a Montreal-based company which offers technologies, equipment, and expertise in the area of biogas upgrading, as well as air pollution controls, for a maximum purchase price consideration of $
26
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
5. | Business combination (continued) |
The acquisition was accounted for using the purchase method and the final allocation of the purchase price is as follows:
| December 31, 2021 | |
Final | ||
$ | ||
Total consideration |
|
|
Consideration paid at closing | ||
Contingent consideration | | |
Consideration paid at closing and continent consideration | | |
Settlement of pre-existing loan receivable from Pyro Green-Gas | | |
| ||
Net assets acquired |
| |
Current assets1 | | |
ROU asset | | |
Property and equipment | | |
Intangible assets and Goodwill2 | | |
Deferred income tax asset | | |
Current liabilities | ( | |
Non-current liabilities | ( | |
|
1 | Includes $ |
2 | The goodwill of $ |
During the period ended December 31, 2021, the Company recognized revenue of $
In connection with this acquisition, the Company incurred acquisition-related costs of $
The maximum purchase price consideration of $
27
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
6. | Revenues |
Revenues by product line:
The company’s revenues are generated primarily from the following:
| 2021 | 2020 | ||
$ | $ | |||
Revenue from contracts with customers by product line: |
|
|
| |
PUREVAP™ | |
| | |
DROSRITE™ | |
| | |
Development and support related to systems supplied to the U.S. Navy | |
| | |
Torch related sales | |
| | |
Biogas upgrading and pollution controls | |
| — | |
Other sales and services | |
| | |
| |
The following is a summary of the Company’s revenues by revenue recognition method:
| 2021 |
| 2020 | |
$ | $ | |||
Revenue from contracts with customers: |
|
| ||
Sales of goods under long-term contracts recognized over time | | | ||
Sales of goods at a point of time |
| |
| |
Other revenue: | ||||
Sale of intellectual properties (i) |
| |
| |
| |
| |
See note 32 for sales by geographic area.
(i) | Sale of intellectual properties |
During the year, the Company sold intellectual property to a subsidiary of a company in which it holds a strategic investment for a non-refundable fee of $
In September 2020, the Company sold intellectual property to a subsidiary of a company in which it holds a strategic investment for a non-refundable fee of $
28
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
6. | Revenues (continued) |
The Company only recognizes variable consideration, including minimum royalties, arising from these agreements in the period(s) when it is highly probable that a reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Minimum royalties are recognized for the period the Company evaluates the collectability of the minimum royalties is probable, which the Company has estimated over four years.
Transaction price allocated to remaining performance obligations
As at December 31, 2021, revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) at the reporting date is $
7. | Cash and cash equivalents |
As at December 31, 2021 and 2020, there are
| 2021 |
| 2020 | |
$ | $ | |||
Cash |
| |
| |
Guaranteed investment certificates |
| |
| |
Cash and cash equivalents |
| |
| |
Guaranteed investment certificates are instruments issued by Canadian financial institutions and include $
8. | Accounts receivable |
Details of accounts receivable were as follows:
December 31, | December 31, | |||
2021 | 2020 | |||
$ | $ | |||
1 – 30 days |
| |
| |
31 – 60 days |
| |
| |
61 – 90 days |
| |
| |
Greater than 90 days |
| |
| |
Total trade accounts receivable |
| |
| |
Unbilled trade receivables |
| — |
| |
Other receivables1 |
| |
| |
Sales tax receivable |
| |
| |
| |
| |
1 | At December 31, 2020 comprised mainly of an amount of $ |
As at December 31, 2021 the allowance for expected credit loss is $
29
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
30
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
9. | Costs and profits in excess of billings on uncompleted contracts |
As at December 31, 2021, the Company had
Changes in costs and profits in excess of billings on uncompleted contracts during the year are explained by $
10. | Investment tax credits |
An amount recognized in 2021 included $
Eligible scientific research and experimental development (“SR&ED”) expenses for the year amounted to $
11. | Strategic investments |
| December 31, |
| December 31, | |
2021 | 2020 | |||
$ | $ | |||
Beauce Gold Fields (“BGF”) shares – level 1 |
| |
| |
HPQ Silicon Resources Inc. (“HPQ”) shares - level 1 |
| |
| |
HPQ warrants – level 3 |
| |
| |
| |
| |
The change in the strategic investments is summarized as follows:
(“BGF”) shares – level 1 | (“HPQ”) shares - level 1 | HPQ warrants – level 3 | ||||||||||
Quantity | $ | Quantity | $ | Quantity | $ | |||||||
Balance, December 31, 2019 |
| |
| |
| |
| |
| |
| |
Additions |
| |
| |
| |
| |
| |
| |
Received in lieu of payment of services rendered |
| |
| |
| |
| |
| |
| |
Exercised | | | | | ( | ( | ||||||
Disposed | | | ( | ( | | | ||||||
Change in the fair value |
| |
| ( |
| |
| |
| |
| |
Balance, December 31, 2020 |
| |
| |
| |
| |
| |
| |
Additions |
| |
| |
| |
| |
| |
| |
Exercised |
| |
| |
| |
| |
| ( |
| ( |
Disposed |
| |
| |
| ( |
| ( |
| |
| |
Change in the fair value |
| |
| |
| |
| ( |
| |
| ( |
Balance, December 31, 2021 |
| |
| |
| |
| |
| |
| |
31
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
11. | Strategic investments (continued) |
The Company owns
The following table sets out the details and activity of the HPQ warrants:
Number of | Number of | |||||||||
warrants | warrants | |||||||||
|
|
|
|
| Exercise | |||||
Expiry date | Dec. 31, 2020 | Additions | Exercised | Dec. 31, 2021 | price ($) | |||||
August 21, 2021 |
| |
| |
| ( |
| |
| |
April 29, 2023 |
| |
| |
| |
| |
| |
June 2, 2023 |
| |
| |
| |
| |
| |
September 3, 2023 |
| |
| |
| |
| |
| |
| |
| |
| ( |
| |
2021 Transactions
2020 Transactions
At inception, the fair value of the HPQ warrants purchased in 2020 was measured using the Black-Scholes option pricing model using the following assumptions:
Number of warrants |
| |
| |
| |
Date of issuance | April 29, 2020 | June 2, 2020 |
| Sept. 3, 2020 | ||
Exercise price ($) | | |
| | ||
Assumptions under the Back Sholes model: |
|
|
|
| ||
Fair value of the shares ($) | | |
| | ||
Risk free interest rate (%) | | |
| | ||
Expected volatility (%) | | |
| | ||
Expected dividend yield |
| |||||
Contractual remaining life (number of months) | | |
| |
32
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
11. | Strategic investments (continued) |
2020 Transactions (continued)
As at December 31, 2021 and 2020, the fair value of the HPQ warrants was measured using the Black-Scholes option pricing model using the following assumptions:
2021 | 2020 | |||||||||||
Number of warrants |
| |
| | |
| | | | |||
Date of issuance |
| April 29, 2020 | June 2, 2020 | Sept. 3, 2020 | April 29, 2020 | June 2, 2020 | Sept. 3, 2020 | |||||
Exercise price ($) |
| | | | | | | |||||
Assumptions under the Back Sholes model: |
|
|
|
| ||||||||
Fair value of the shares ($) |
| | | | | | | |||||
Risk free interest rate (%) |
| | | | | | | |||||
Expected volatility (%) |
| | | | | | | |||||
Expected dividend yield |
| |||||||||||
Contractual remaining life (in months) |
| | | | | | |
As at December 31, 2021, a gain from initial recognition of the warrants of $
12. | Royalties receivable |
December 31 | December 31 | |||
2021 | 2020 | |||
| $ |
| $ | |
Opening balance | | | ||
Accretion interest | | | ||
Royalties recognized during the year |
| |
| |
Discounting |
| ( |
| ( |
Amounts received during the year |
| ( |
| ( |
Balance at end of the year | | | ||
Current portion | | | ||
Non-current portion | | | ||
| |
| |
The Company sold intellectual property to HPQ Silicon Resources Inc. (“HPQ”) in 2016 (“HPQ 2016 contract”) and its wholly owned subsidiary, HPQ Nano Silicon Powders Inc. in 2020 (“HPQ Nano contract”). In addition, in 2021 the Company sold intellectual property to HPQ Silica Polvere Inc. (“HPQ Polvere contract”), a wholly owned subsidiary of HPQ. The terms of those sales contracts include, in addition to the purchase price amounts already received of $
HPQ 2016 contract:
Royalties are
33
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
12. | Royalties receivable (continued) |
HPQ Nano contract:
Royalties are
HPQ Polvere contract:
Royalties are
During the year ended December 31, 2021, the Company recognized an additional $
During the year ended December 31, 2020, the Company recognized $
The HPQ Nano contract and the HPQ Polvere contract each provide the Company with the option to convert, at any time, the future royalties that would be owed to it into a 50% equity stake in HPQ Nano Silicon Powders Inc. and HPQ Silica Polvere Inc., respectively. Each option is considered an embedded derivative that is initially measured at fair value and subsequently remeasured at fair value at each reporting period. The Company determined that the embedded derivatives had a fair value of $Nil at the inception of the contracts and $Nil at each of the reporting dates.
13. | Deposits |
December 31 | December 31 | |||
2021 | 2020 | |||
| $ |
| $ | |
Current portion: |
|
| ||
Suppliers |
| |
| |
Security deposit on leased premises | | — | ||
Total current | | | ||
Non-current portion: |
|
|
|
|
Suppliers |
| |
| |
Security deposit on leased premises |
| |
| |
Total non-current |
| |
| |
Total Deposits |
| |
| |
14. | Property and equipment |
34
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
Machinery | Equipment | |||||||||||
Computer | and | Leasehold | under | |||||||||
equipment | equipment | Automobiles | improvements | construction | Total | |||||||
$ | $ | $ | $ | $ | $ | |||||||
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| |
| |
| |
| |
| |
| |
Additions |
| |
| — |
| |
| |
| |
| |
Impairment |
| — |
| — |
| ( |
| — |
| — |
| ( |
Balance at December 31, 2020 |
| |
| |
| |
| |
| |
| |
Acquired through business combination | | | — | — | — | | ||||||
Additions |
| |
| |
| |
| |
| |
| |
Balance at December 31, 2021 |
| |
| |
| |
| |
| |
| |
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| |
| |
| |
| |
| — |
| |
Depreciation |
| |
| |
| |
| |
| — |
| |
Impairment |
| — |
| — |
| ( |
| — |
| — |
| ( |
Balance at December 31, 2020 |
| |
| |
| |
| |
| — |
| |
Depreciation |
| |
| |
| |
| |
| — |
| |
Balance at December 31, 2021 |
| |
| |
| |
| |
| — |
| |
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
| |
| |
| |
| |
| |
| |
Balance at December 31, 2021 |
| |
| |
| |
| |
| |
| |
Equipment under construction includes the leasehold improvements of a clean room and the costs related to building the new Plasma Powder Production equipment.
15. | Leases |
The Company has entered into lease contracts mainly for buildings and computer equipment, which expire at various dates through the year 2036. Some leases have extension or purchase options for various terms. Some lease payments are based on changes in price indices. The lease contracts do not impose any financial covenants.
As of January 1, 2020, a lease for rent of a property with a trust whose beneficiary is the controlling shareholder and CEO of the Company was modified to amend the lease term, fix the annual rent increase at a rate of
35
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
15. | Leases (continued) |
a) | Right-of-use assets |
| Land and |
| Computer |
| ||
building | equipment | Total | ||||
$ | $ | $ | ||||
Balance at January 1, 2020 |
| |
| |
| |
Remeasurement of lease liabilities | | — | | |||
Depreciation |
| ( |
| ( |
| ( |
Balance at December 31, 2020 |
| |
| |
| |
Addition - business combination |
| |
| — |
| |
Addition | | — | | |||
Depreciation |
| ( |
| ( |
| ( |
Balance at December 31, 2021 |
| |
| |
| |
b) | The table below summarizes changes to the lease liabilities: |
| $ | |
Balance at January 1, 2020 |
| |
Remeasurement | | |
Payments |
| ( |
Balance at December 31, 2020 |
| |
Addition - business acquisition |
| |
Additions - other | | |
Payments |
| ( |
Balance at December 31, 2021 | | |
Current portion | ||
Non-current portion | ||
c) | Amount recognized in the statement of comprehensive loss: |
| 2021 |
| 2020 | |
$ | $ | |||
Depreciation of right-of-use assets |
| |
| |
Interest on lease liabilities |
| |
| |
Expense related to lease payments not included in the measurement of lease liabilities |
| |
| |
d) | Maturity analysis – contractual undiscounted cash flows of lease liabilities as at December 31, 2021 |
| $ | |
2022 | | |
2023 | | |
2024 | | |
2025 | | |
2026 | | |
Thereafter | | |
|
36
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
16. | Intangible assets |
Production | Development | |||||||
| backlog |
| Patents |
| costs |
| Total | |
$ | $ | $ | $ | |||||
Cost |
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| |
| |
| |
| |
Additions |
| |
| |
| |
| |
Write-off |
| |
| ( |
| |
| ( |
Balance at December 31, 2020 |
| |
| |
| |
| |
Acquired through business combination | | | | | ||||
Additions |
| |
| |
| |
| |
Write-off | | ( | | ( | ||||
Balance at December 31, 2021 |
| |
| |
| |
| |
Accumulated amortization |
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
| |
| |
| |
| |
Amortization |
| |
| |
| |
| |
Balance at December 31, 2020 |
| |
| |
| |
| |
Amortization |
| |
| |
| |
| |
Balance at December 31, 2021 |
| |
| |
| |
| |
Carrying amounts |
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
| |
| |
| |
| |
Balance at December 31, 2021 |
| |
| |
| |
| |
The Company’s development costs have been incurred to develop plasma related technologies and the patents protect the design and specification of these technologies.
17. | Goodwill |
The Company tests goodwill for impairment annually, or more frequently when an indicator of impairment is identified. Goodwill is considered impaired if the recoverable amount is less than the carrying amount.
The recoverable amount of an operating segment is determined based on value-in-use calculations, covering a detailed five-year forecast, followed by an extrapolation of expected cash flows for the remaining useful lives using a declining growth rate determined by management. The present value of the expected cash flows of the operating segment is determined by applying a suitable discount rate reflecting current market assessments of the time value of money and risks specific to the segment.
For the purpose of impairment testing, goodwill is allocated to the sole operating segment, Pyro Green-Gas, which is expected to benefit from the synergies of the business combination in which the goodwill arises, and is compared to its recoverable value.
At December 31, 2021, it was determined that the recoverable amounts exceed the carrying amount, and
37
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
18. Accounts payable and accrued liabilities
| December 31 |
| December 31 | |
2021 | 2020 | |||
$ | $ | |||
Accounts payable |
| |
| |
Accrued liabilities |
| |
| |
Sale commissions payable¹ |
| |
| |
Accounts payable to the controlling shareholder and CEO |
| |
| |
| |
| |
1Sale commissions payable relate to the costs to obtain long-term contracts with clients.
19. | Billings in excess of costs and profits on uncompleted contracts |
The amount to date of costs incurred and recognized profits less recognized losses for construction projects in progress amounted to $
Payments to date received were $
Changes in billings in excess of costs and profits on uncompleted contracts during the year are explained by $
20. | Term loans |
Canada | 2019 SR&ED | 2018 SR&ED | ||||||||||||||
Other Term | Other Term | Emergency Business | Other Term | Tax Credit | Tax Credit | |||||||||||
EDC Loan¹ | Loans² | Loans³ | Account Loan4 | Loans5 | loan6 | loan7 | Total | |||||||||
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ | |
Balance, December 31, 2019 |
| — |
| — |
| — |
| — | | |
| |
| | ||
Addition |
| |
| |
| — |
| — | — | — |
| — |
| | ||
Financing costs |
| ( |
| — |
| — |
| — | — | — |
| — |
| ( | ||
Accretion |
| |
| — |
| — |
| — | | |
| |
| | ||
Payments |
| — |
| ( |
| — |
| — | ( | ( |
| ( |
| ( | ||
Balance, December 31, 2020 |
| |
| |
| — |
| — | — | — |
| — |
| | ||
Assumed through business combination |
|
| — |
| |
| | — | — |
| — |
| | |||
Accretion |
| |
|
| — |
| — | — | — |
| — |
| | |||
Payments |
| — |
| ( |
| ( |
| — | — | — |
| — |
| ( | ||
Balance, December 31, 2021 |
| |
| |
| |
| | — | — |
| — |
| | ||
Less current portion |
| — |
| ( |
| ( | ( | — | — | — |
| ( | ||||
Balance, December 31, 2021 |
| |
| |
| |
| — | — | — |
| — |
| |
1 maturing in 2027, non-interest bearing, payable in equal instalments from July 2023 to June 2027
² maturing October 23, 2023 bearing interest at a rate of
3maturing in May 2023, payable in monthly instalments of $
4 loan bearing
5 bore interest at
6 bore interest at
7 bore interest at
38
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
20. | Term loans (continued) |
EDC Loan
On March 5, 2020, the Company entered into a repayable contribution agreement up to $
Canada Emergency Business Account ("CEBA") Loan
The Company's subsidiary participated in the CEBA program whereby it obtained an interest free and partially forgivable loan. The loan bears
21. | Convertible debentures |
2020 Convertible | 2018 Convertible | |||||
loan | debentures | Total | ||||
$ | ||||||
Balance at December 31, 2019 |
| — |
| |
| |
Liability component at issuance | | — | | |||
Effective interest accretion |
| |
| |
| |
| |
| |
| | |
Repayment of debentures including accommodation fees, in cash |
| — |
| ( |
| ( |
Conversion into common shares |
| ( |
| ( |
| ( |
Balance at December 31, 2020 | — | — | — | |||
Balance at December 31, 2021 |
| — |
| — |
| — |
2020 Convertible loan
On March 18, 2020, the Company closed a $
At the issuance date, the 2020 Convertible loan was recorded as follows:
| $ | |
Liability component |
| |
Conversion option recognized in equity, net of transaction cost of $ |
| |
Net proceeds |
| |
On September 30, 2020, the 2020 Convertible loan was converted into
39
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
21. | Convertible debentures (continued) |
2018 Convertible debentures
On March 30, 2020, the Company reached an agreement to extend the maturity date of its $
At the date of modification, the fair value of the 2018 Convertible debentures was determined using estimated cash flows discounted using a market interest rate of
Upon conversion of the debentures in May and June 2020,
22. | Shareholders’ equity |
Common shares and warrants
Authorized:
The Company is authorized to issue an unlimited number of common shares without par value.
Shares issued upon public issuance
On November 3, 2020, the Company closed a bought-deal short form prospectus offering of
Under the warrant indenture, the Company has the right to accelerate the expiry date of the warrants to the date that is
Shares issued upon exercise of stock options, share purchase warrants and compensation options
During the year ended December 31, 2021,
Conversion of loan into shares
On September 30, 2020, the 2020 Convertible loan with a carrying value of $
40
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
22. | Shareholders’ equity (continued) |
Share redemptions for cancellation
In fiscal 2019, the Company had been authorized to repurchase, for cancellation, on the open market, or subject to the approval of any securities authority by private agreements, between November 1,2019 and October 31, 2020, or at an earlier date if the Company concludes or cancels the offer, up to of its common Shares. In January 2021, the Company announced it had been authorized to repurchase
During the year 2020, the Company repurchased and cancelled
During the year 2021, the Company repurchased and cancelled
The repurchases were made in the normal course of business at market prices through the TSX. The Company was under no obligation to repurchase its Common Shares as at December 31, 2021.
Stock options
The Company has a stock option plan authorizing the Board of Directors to grant options to directors, officers, employees and consultants to acquire common shares of the Company at a price computed by reference to the closing market price of the shares of the Company on the business day before the Company notifies the stock exchanges of the grant of the option. The number of shares which may be granted to any one person shall not exceed
The following table sets out the activity in stock options:
|
| Weighted | ||
Number of | average | |||
options | exercise price | |||
$ | ||||
Balance – December 31, 2019 |
| |
| |
Granted |
| |
| |
Exercised (1) |
| ( |
| |
Forfeited |
| ( |
| |
Balance, December 31, 2020 |
| |
| |
Granted |
| |
| |
Exercised (1) |
| ( |
| |
Forfeited |
| ( |
| |
Balance, December 31, 2021 |
| |
| |
(1) The weighted fair market value of the share price for options exercised in 2021 was $
41
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
22. | Shareholders’ equity (continued) |
Grants in 2021
On December 30, 2021, the Company granted
On December 17, 2021, the Company granted
On October 14, 2021, the Company granted
On June 14, 2021, the Company granted
On June 1, 2021, the Company granted
On April 6, 2021, the Company granted
Grants in 2020
On October 26, 2020, the Company announced that it granted stock options to acquire
On July 16, 2020, the Company granted an aggregate of
The Company also granted an aggregate of
42
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
22. | Shareholders’ equity (continued) |
Grants in 2020 (continued)
On January 2, 2020, the Company granted
The weighted average fair value of stock options granted for the year ended December 31, 2021 was $
Years ended December 31, | 2021 | 2020 | ||
Number of options granted |
| |
| |
Exercise price ($) |
| |
| |
Fair value of each option under the Black Scholes pricing model ($) |
| |
| |
Assumptions under the Black Scholes model: |
|
|
|
|
Fair value of the market share ($) |
| |
| |
Risk free interest rate (%) |
| |
| |
Expected volatility (%) |
| |
| |
Expected dividend yield |
| — |
| — |
Expected life (number of months) |
| |
| |
Forfeiture rate (%) |
| — |
| — |
The underlying expected volatility was determined by reference to historical data of the Company’s share price. No special features inherent to the stock options granted were incorporated into the measurement of fair value.
43
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
22. | Shareholders’ equity (continued) |
As at December 31, 2021, the outstanding options, as issued under the stock option plan to directors, officers, employees and consultants for the purchases of one common share per option, are as follows:
Number of | Number of | Number of | ||||||||||||||
stock | stock | stock | Exercise | |||||||||||||
options | options | options | price | |||||||||||||
| Dec 31, 2020 |
| Granted |
| Exercised |
| Forfeitures |
| Dec 31, 2021 |
| vested (1) |
| per option |
| Expiry date | |
$ | ||||||||||||||||
September 25, 2016 |
| |
|
| ( |
|
| — |
|
| | Sept 25, 2021 | ||||
November 3, 2017 |
| |
|
| ( |
|
| |
| |
| | Nov 3, 2022 | |||
May 10, 2018 |
| |
|
| ( |
|
| — |
|
| | May 10, 2023 | ||||
July 3, 2018 |
| |
|
|
|
| |
| |
| | July 3, 2023 | ||||
October 29, 2018 |
| |
|
| ( |
|
| |
| |
| | Oct 29, 2023 | |||
September 29, 2019 |
| |
|
| ( |
|
| |
| |
| | Sept 29, 2024 | |||
January 2, 2020 |
| |
|
|
|
| |
| |
| | Jan 2, 2025 | ||||
July 16, 2020 |
| |
|
| ( |
| ( |
| |
| |
| | Jul 16, 2025 | ||
October 26, 2020 |
| |
|
|
|
| |
| |
| | Oct 26, 2025 | ||||
April 6, 2021 | — | | | | | Apr 6, 2026 | ||||||||||
June 1, 2021 | — | | | | | June 1, 2026 | ||||||||||
June 14, 2021 | — | | | | | June 14, 2026 | ||||||||||
October 14, 2021 | — | | | | | Oct 14, 2026 | ||||||||||
December 17, 2021 | — | | | | | Dec 17, 2026 | ||||||||||
December 30, 2021 | — | | | | | Dec 30, 2026 | ||||||||||
| |
| |
| ( |
| ( |
| |
| |
| |
(1) At December 31, 2021, the weighted average exercise price for options outstanding which are exercisable was $
For the year ended December 31, 2021, a stock-based compensation expense of $
As at December 31, 2021, an amount of $
44
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
22. | Shareholders’ equity (continued) |
Share purchase warrants
The following table reflects the activity in warrants during the years ended December 31, 2021 and the number of issued and outstanding share purchase warrants at December 31, 2021:
Number of | Number of | |||||||||||||
warrants | warrants | |||||||||||||
Dec 31, | Dec 31, | Price per | ||||||||||||
| 2020 |
| Issued |
| Exercised |
| Expired |
| 2021 |
| warrant |
| Expiry date | |
$ | ||||||||||||||
Issuance of units – September 28, 2018 |
| |
|
| ( |
|
| — |
| | Jan 28, 2021 | |||
Issuance of units – October 19, 2018 |
| |
|
| ( |
|
| — |
| | Feb 13, 2021 | |||
Issuance of units – May 15, 2019 |
| |
|
| ( |
|
| — |
| | May 15, 2021 | |||
Issuance of units – May 28, 2019 |
| |
|
| ( |
|
| — |
| | May 24, 2021 | |||
Issuance of units – June 19, 2019 |
| |
|
| ( |
|
| — |
| | Jun 19, 2021 | |||
Issuance of units – October 25, 2019 |
| |
|
| ( |
|
| — |
| | Oct 25, 2021 | |||
Issuance of units – November 10, 2020 |
| |
|
| ( |
| ( |
| — |
| | Nov 10, 20221 | ||
Issuance of warrants – November 10, 2020 |
| |
|
| ( |
|
| — |
| | Nov 10, 20221 | |||
| |
| — |
| ( |
| ( |
| — |
| |
¹ On March 10, 2021, the Company has delivered the Acceleration Notice to accelerate the expiry date of the warrants to April 14, 2021 issued on November 10, 2020
23. | Supplemental disclosure of cash flow information |
2021 | 2020 | |||
$ | $ | |||
Accounts receivable |
| ( |
| ( |
Costs and profits in excess of billings on uncompleted contracts |
| ( |
| ( |
Inventory | ( | — | ||
Investment tax credits receivable |
| |
| ( |
Royalties receivable | ( | ( | ||
Deposits |
| |
| ( |
Contract assets |
| — |
| ( |
Prepaid expenses | | ( | ||
Accounts payable and accrued liabilities |
| |
| ( |
Billings in excess of costs and profits on uncompleted contracts |
| |
| |
Income taxes | ( | — | ||
| ( |
| ( |
45
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
24. | Supplemental disclosure on comprehensive income statement |
The amount of inventories recognized in cost of sales is $
The aggregate amortization and write-off of intangible assets expense for the year ended December 31, 2021 was $
Depreciation on property and equipment amounted to $
Employee benefits totaled $
The Company has been awarded various grants during the year, which were recognized when they became receivable. The grants, received in 2021, are unconditional and amounted to $
The Company in 2020 applied for an amount of $
25. | Net finance costs |
| 2021 |
| 2020 | |
$ | $ | |||
Financial expenses |
|
|
|
|
Interest and fees on convertible debentures |
| — |
| |
Interest accretion of convertible debentures |
| — |
| |
Interest on term loans |
| |
| |
Interest on lease liabilities |
| |
| |
Interest accretion on promissory notes and on balance due on business combination |
| |
| |
Penalties and other interest expenses |
| |
| |
Capitalized borrowing costs on Equipment under construction |
| — |
| ( |
| | |||
Financial income | ||||
Accretion interest on royalty receivable | ( | — | ||
Net finance costs |
| |
| |
46
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
26. | Earnings (loss) per share |
The following table provides a reconciliation between the number of basic and fully diluted shares outstanding as at December 31, 2021 and 2020:
| 2021 |
| 2020 | |
$ | $ | |||
Weighted daily average of Common shares |
| |
| |
Dilutive effect of stock options |
| — |
| |
Dilutive effect of warrants |
| — |
| |
Weighted average number of diluted shares |
| |
| |
Number of anti-dilutive stock options and warrants excluded from fully diluted earnings per share calculation |
| |
| |
27. | Related party transactions |
During the year ended December 31, 2021 and 2020, the Company concluded the following transactions with related parties:
In 2021, rent and property taxes were charged by a trust whose beneficiary is the controlling shareholder and CEO of the Company in the amount of $
An amount of $Nil (December 31, 2020 - $
A balance due to the controlling shareholder and CEO of the Company amounted to $
An amount of $
The key management personnel of the Company are the members of the Board of Directors and certain officers. Total compensation to key management consisted of the following:
2021 | 2020 | |||
| $ |
| $ | |
Salaries – key management |
| |
| |
Pension contributions |
| |
| |
Fees – Board of Directors |
| |
| |
Share-based compensation – officers |
| |
| |
Share-based compensation – Board of Directors |
| |
| |
Other benefits – key management |
| |
| |
Total compensation |
| |
| |
47
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
28. | Financial instruments |
As part of its operations, the Company carries a number of financial instruments. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments except as otherwise disclosed. The Company's overall risk management program focuses on the unpredictability of the financial market and seeks to minimize potential adverse effects on the Company's financial performance. The Company does not use derivative financial instruments to hedge these risks.
Foreign currency risk
The Company enters into transactions denominated in US dollars for which the related revenues, expenses, accounts receivable and accounts payable and accrued liabilities balances are subject to exchange rate fluctuations.
As at December 31, the Company's exposure to foreign exchange risk for amounts denominated in US dollars is as follows:
2021 |
| 2020 | ||
| $ |
| $ | |
Cash | |
| | |
Accounts receivable | |
| | |
Accounts payable and accrued liabilities | ( |
| ( | |
Total | |
| |
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
Sensitivity analysis
At December 31, 2021, if the US Dollar changes by
Credit risk and credit concentration
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The maximum credit risk to which the Company is exposed as at December 31, 2021 represents the carrying amount of cash and cash equivalents, accounts receivable (except sales tax receivable), deposits and royalties receivable. Cash and cash equivalents, which only comprise guaranteed investment certificates redeemable on relatively short notice by the Company, are held with major reputable financial institutions. The Company manages its credit risk by performing credit assessments of its customers. The Company does not generally require collateral or other security from customers on accounts receivable. The Company believes that there is no unusual exposure associated with the collection of these receivables. During the year ended December 31, 2021,
48
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
28. | Financial instruments (continued) |
| 2021 |
| 2020 | |||||
% of total | % of total | |||||||
Revenues | revenues | Revenues | revenues | |||||
| $ |
| % |
| $ |
| % | |
Customer 1 |
| |
| | |
| | |
Customer 2 |
| |
| | |
| | |
Customer 3 |
| |
| | — |
| — | |
Customer 4 |
| |
| | — |
| — | |
Total |
| |
| | |
| |
The royalties receivables are due from a company in which the Company has a strategic investments. The Company does not have collateral or other security associated with the collection of this receivable.
Fair value of financial instruments
The fair value represents the amount that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. The fair value estimates are calculated at a specific date taking into consideration assumptions regarding the amounts, the timing of estimated future cash flows and discount rates. Accordingly, due to its approximate and subjective nature, the fair value must not be interpreted as being realizable in an immediate settlement of the financial instruments.
There are three levels of fair value that reflect the significance of inputs used in determining fair values of financial instruments:
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 for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 — inputs for the asset or liability that are not based on observable market data.
The fair values of cash and cash equivalents, trade accounts receivable, deposits, accounts payable and accrued liabilities approximate their carrying amounts due to their short-term maturities.
Investments in BGF and HPQ shares are valued at quoted market prices and are classified as Level 1.
Royalties receivable are discounted according to their corresponding agreements and are classified as Level 2.
Investments in HPQ warrants are valued using the Black-Scholes pricing model and are classified as Level 3.
The fair value of the term loans and the balance due on business combination as at December 31, 2021 is determined using the discounted future cash flows method and management's estimates for market interest rates for similar issuances. Given their recent issuance, their fair market values correspond to their carrying amount.
49
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
28. | Financial instruments (continued) |
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. Changes in market interest rates may have an effect on the cash flows associated with some financial assets and liabilities, known as cash flow risk, and on the fair value of other financial assets or liabilities, known as price risk, and on the fair value of investments or liabilities, known as price risks. The Company is exposed to a risk of fair value on cash equivalents, and term loans as those financial instruments bear interest at fixed rates.
Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market price (other than those arising from foreign currency risk and interest risk), whether those changes are caused by factors specific to the individual financial instrument or its issuers or factors affecting all similar financial instruments traded in the market. The most significant exposure to the price risk for the Company arises from its investments in shares and warrants of public companies quoted on the TSXV Exchange. If equity prices had increased or decreased by
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivery of cash or another financial asset. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities.
The following table summarizes the contractual amounts payable and maturities of financial liabilities and other liabilities as at December 31, 2021:
|
| Total |
|
|
|
| ||||||
Carrying | contractual | Less than | ||||||||||
value | amount | one year | 2-3 years | 4-5 years | Over 5 years | |||||||
$ | $ | $ | $ | $ | $ | |||||||
Accounts payable and accrued liabilities |
| |
| |
| |
| — |
| — |
| — |
Term loans | | | | | | | ||||||
Balance due on business combination | | | | | — | — | ||||||
Lease liabilities |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
A standby letter of credit issued by the Company's subsidiary, in the amount of USD $
50
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
29. | Contingent liabilities |
The Company is currently a party to various legal proceedings. If management believes that a loss arising from these proceedings is probable and can reasonably be estimated, that amount of the loss is recorded. As additional information becomes available, any potential liability related to these proceedings is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these proceedings, individually and in aggregate, will not have a material adverse effect on the Company’s financial position or overall trends in results of operations.
The Company had received a government grant in prior years of approximately $
30. | Capital management |
The Company’s objectives in managing capital are:
a) | To ensure sufficient liquidity to support its current operations and execute its business plan; and |
b) | To provide adequate return to the shareholders |
The Company’s primary objectives when managing capital is to ensure the Company continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders.
The Company currently funds these requirements from cash flows from operations and with financing arrangements with third parties and shareholders.
The Company is not subject to any externally imposed capital requirements. The Company monitors its working capital in order to meet its financial obligations. As at December 31, 2021, the Company’s working capital was $
The management of capital includes shareholders’ equity for a total amount of $
Although there were no significant changes in the Company’s approach during the current and preceding fiscal year, in 2020 the Company was able to retire its term loans and convert its convertible debentures to common shares. In order to maintain or adjust capital structure, the Company may issue new shares, sell portions of its strategic investment and periodically purchase its own shares on the open market.
51
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
31. | Income taxes |
a) | Income tax expenses is comprised of the following: |
| 2021 |
| 2020 | |
$ | $ | |||
Current tax |
|
|
|
|
Current year |
| ( |
| |
Deferred tax |
|
| ||
Origination and reversal of temporary differences |
| ( |
| |
Recognition of previously unrecognized tax assets |
| — |
| ( |
Change in unrecognized deductible temporary differences | | ( | ||
( | | |||
Income tax expense (recovery) |
| ( |
| |
b) | Reconciliation of effective tax rate |
| 2021 |
| 2020 |
| |
$ | $ |
| |||
Income (loss) before income taxes |
| ( |
| | |
Income tax rates |
| | % | | % |
Income tax expense (recovery) at the combined basic Federal and Provincial tax rates |
| ( |
| | |
Permanent differences |
| |
| ( | |
Tax rate changes |
| |
| | |
Prior year adjustment |
| |
| | |
Recognition of previously unrecognized tax assets |
| — |
| ( | |
Change in unrecognized deductible temporary differences |
| |
| ( | |
Other | ( | — | |||
Income tax expense (recovery) |
| ( |
| |
The applicable statutory tax rates are
52
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
31. | Income taxes (continued) |
c) | Deferred tax assets and liabilities |
Recognized deferred tax assets and liabilities:
As at December 31, 2021 and 2020, recognized deferred tax assets and liabilities are attributable to the following:
| Assets | Liabilities | Net | |||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||
$ |
| $ |
| $ |
| $ |
| $ |
| $ | ||
Non-capital losses carried forward |
| |
| |
| — |
| — |
| |
| |
Strategic investments |
| — |
| — |
| ( |
| ( |
| ( |
| ( |
Investment tax credits |
| — |
| — |
| — |
| ( |
| — |
| ( |
Royalty receivable | — | — | ( | ( | ( | ( | ||||||
Property and equipment |
| — |
| — |
| ( |
| ( |
| ( |
| ( |
Intangibles | — | — | ( | — | ( | — | ||||||
Deferred income | — | — | ( | — | ( | — | ||||||
Right-of-use assets net of liabilities |
| — |
| — |
| ( |
| ( |
| ( |
| ( |
Tax assets (liabilities) |
| |
| |
| ( |
| ( |
| ( |
| ( |
Set off of tax |
| ( |
| ( |
| |
| |
| — |
| — |
Net tax assets (liabilities) |
| — |
| — |
| ( |
| ( |
| ( |
| ( |
Deferred taxes from temporary differences and unused tax losses and tax credits are summarized as follows:
Recognized | Recognized | Recognized in | ||||||||||
January 1, | in profit or | December | in profit or | business | December | |||||||
2020 | loss | 31, 2020 | loss | combination | 31, 2021 | |||||||
$ | $ | $ | $ | $ | $ | |||||||
Deferred tax assets (liabilities) |
|
|
|
|
|
| ||||||
Property and equipment |
| — |
| — |
| — |
| |
| ( |
| ( |
Intangible assets |
| — |
| — |
| — |
| |
| ( |
| ( |
Deferred income |
| — |
| — |
| — |
| ( |
| — |
| ( |
Non-capital losses carried forward |
| — |
| — |
| — |
| ( |
| |
| |
Investment tax credit |
| — |
| ( |
| ( |
| |
| — |
| — |
| — |
| ( |
| ( |
| |
| |
| ( |
53
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
31. | Income taxes (continued) |
As at December 31, 2021 and 2020, the amounts and expiry dates of tax attributes and temporary differences for which no deferred tax assets were recognized are as follows:
December 31, 2021 | December 31, 2020 | |||||||
| Federal |
| Provincial |
| Federal |
| Provincial | |
$ | $ | $ | $ | |||||
Research and development expenses, |
|
|
|
|
|
|
|
|
Without time limitation: |
| |
| — |
| |
| |
Federal research and development investment tax credits: |
|
|
|
|
|
|
| |
2029 |
|
| — |
| — |
| — | |
2030 |
| |
| — |
| — |
| — |
2031 |
| |
| — |
| — |
| — |
2032 |
| |
| — |
| — |
| — |
2033 |
| |
| — |
| — |
| — |
2034 |
| |
| — |
| |
| — |
2035 |
| |
| — |
| |
| — |
2036 |
| |
| — |
| |
| — |
2037 |
| |
| — |
| |
| — |
2038 |
| |
| — |
| |
| — |
2039 |
| |
| — |
| |
| — |
2040 |
| |
| — |
| |
| — |
2041 | | — | — | — | ||||
| |
| — |
| |
| — |
December 31, 2021 | December 31, 2020 | |||||||||
| Federal |
| Provincial |
| Italy |
| Federal |
| Provincial | |
$ | $ | $ | $ | $ | ||||||
Tax losses carried forward: |
|
|
|
|
|
|
| |||
2032 |
| |
| — |
| — |
| — |
| — |
2033 |
| |
| |
| — |
| — |
| — |
2034 |
| |
| |
| — |
| — |
| — |
2035 |
| |
| |
| — |
| — |
| — |
2036 |
| |
| |
| — |
| — |
| — |
2037 |
| |
| |
| — |
| — |
| — |
2038 |
| |
| |
| — |
| |
| — |
2039 |
| |
| |
| — |
| |
| |
2040 |
| |
| |
| — |
| — |
| — |
Indefinite | — | — | | — | — | |||||
| |
| |
| |
| |
| |
31. | Income taxes (continued) |
54
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
December 31, 2021 | December 31, 2020 | |||||||
| Federal |
| Provincial |
| Federal |
| Provincial | |
$ | $ | $ | $ | |||||
Other deductible temporary differences, |
|
|
|
|
|
|
|
|
Without time limitation: |
|
|
|
|
|
|
|
|
Financing costs |
| |
| |
| |
| |
Intangible assets |
| |
| |
| |
| |
Capital losses | | | — | — | ||||
| |
| |
| |
| |
Deferred tax assets and investment tax credits have not been recognized in respect to these items because it is uncertain that future taxable profit will be available against which the Company can utilise the benefits therefrom. The generation of future taxable profit depends on the successful commercialisation of the Company’s products and technologies.
32. | Segment information |
The Company operates in
The following is a summary of the Company’s total revenues by geography:
2021 | 2020 | |||
$ | $ | |||
Canada |
| |
| |
United States |
| |
| |
Europe |
| |
| |
Mexico |
| |
| |
Asia |
| |
| — |
Israel |
| |
| |
Saudi Arabia |
| |
| |
China |
| |
| |
South America |
| |
| |
India | | — | ||
Africa |
| — |
| |
| |
| |
Revenue by product line and revenues recognized by revenue recognition method are presented in note 6.
55
PyroGenesis Canada Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
32. | Segment information (continued) |
The following is a summary of selected asset categories by geographic market, at December 31:
2021 | 2020 | |||||||||
$ | $ | $ | $ | $ | ||||||
Canada | Italy | India | Total | Total | ||||||
Property and equipment |
| |
| — |
| |
| |
| |
Right-of-use assets |
| |
| — |
| — |
| |
| |
Intangible assets |
| |
| — |
| — |
| |
| |
Goodwill |
| |
| — |
| — |
| |
| — |
In 2020, the asset categories above were all located in Canada.
33. | Subsequent event |
On February 11, 2022, the Company announced that it has received acceptance from the TSX of its notice of intention for a Normal Course Issuer Bid, enabling it to acquire for cancellation up to
56