Carbon Streaming : MD&A (499KB)

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Notice of no auditor review of condensed consolidated interim financial statements

The accompanying unaudited condensed consolidated interim financial statements of Carbon Streaming Corporation (the "Company" or "Carbon Streaming") have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

Consolidated financial statements | Page 2

CARBON STREAMING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

		As at		As at
	March 31, 2024 December 31, 2023
Assets
Current assets	$	49,008
Cash	$	51,416
Carbon credit inventory (Note 5)		61		201
Prepaid expenses		678		814
Early deposit interest receivable (Note 8)		307		307
Other receivables		1,075		994
Non-current assets		51,129		53,732
	26,980
Carbon credit streaming and royalty agreements (Note 6)			60,122
Preferred Shares (Note 7)		2,558		2,558
Investment in associate (Note 9)		152		177
Finance lease receivable (Note 10)		327		372
Other non-current assets		450		150
Total assets	$	81,596	$	117,111
Liabilities and shareholders' equity
Current liabilities	$	1,764
Accounts payable and accrued liabilities	$	1,686
Warrant liabilities (Note 11)		496		830
Current portion of share unit liabilities (Note 14)		879		652
Current portion of lease liability (Note 10)		158		157
Non-current liabilities		3,297		3,325
Derivative liabilities (Note 15)		680		680
Non-current portion of share unit liabilities (Note 14)		201		178
Non-current portion of lease liability (Note 10)		178		225
Total liabilities		4,356		4,408
Shareholders' equity		194,605
Share capital (Note 12)			194,433
Share-based compensation reserve		7,618		7,482
Deficit	(124,983)		(89,212)
Total shareholders' equity		77,240		112,703
Total liabilities and shareholders' equity	$	81,596	$	117,111

Condensed interim consolidated financial statements | Page 3

CARBON STREAMING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

	Three months	Three months
		ended	ended
	March 31, 2024	March 31, 2023
Revaluation of carbon credit streaming and royalty	$	(33,136)	$ 711
agreements (Note 6)
Revenue from sale of purchased carbon credits		488	21
Cost of purchased carbon credits sold (Note 5)		(399)	(12)
Other operating expenses		(933)
Salaries and fees		(1,158)
Share-based compensation (Note 14)		(611)	(1,037)
Marketing		(109)	(120)
Professional & regulatory fees		(79)	(346)
Consulting fees		(183)	(323)
Insurance		(184)	(227)
Office and general		(73)	(127)
Foreign exchange loss		(164)	(41)
Amortization of right-of-use asset		-	(26)
Corporate restructuring (Note 4)		(1,373)	-
Other operating expenses		(3,709)	(3,405)
Operating loss		(36,756)	(2,685)
Other items
Loss from investment in associate (Note 9)		(25)	(121)
Revaluation of warrant liabilities (Note 11)		334	1,181
Finance income		676	653
Net loss and comprehensive loss		(35,771)	(972)
Basic and diluted loss per share ($/share)		(0.75)	(0.02)
Weighted average number of Common Shares outstanding -		47,628,505	46,952,032
basic and diluted

Condensed interim consolidated financial statements | Page 4

CARBON STREAMING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

	Three months	Three months
	ended	ended
	March 31, 2024	March 31, 2023
Operating activities	$ (35,771)
Net loss	$ (972)
Settlements from carbon credit streaming agreements (Note 6)	406	4
Cash paid in settlement of share-unit liabilities	(117)	-
Items not affecting cash
Revaluation of carbon credit streaming and royalty agreements	33,136	(711)
(Note 6)
(334)
Revaluation of warrant liabilities (Note 11)	(1,181)
Other non-cash adjustments (Note 18)	866	1,249
Changes in non-cash operating working capital items (Note 18)	262	(1,368)
Net cash used in operating activities	(1,552)	(2,979)
Investing activities
Additions to carbon credit streaming and royalty agreements (Note 6)	(400)	(1,541)
Lease payments received from finance lease	47	-
Other investment	(300)	(100)
Net cash used in investing activities	(653)	(1,641)
Financing activities	(47)
Lease payments	-
Net cash used in financing activities	(47)	-
Net change in cash	(2,252)	(4,620)
Effect of foreign exchange on cash	(156)	31
Cash, beginning of period	51,416	70,345
Cash, end of period	49,008	65,756

Condensed interim consolidated financial statements | Page 5

CARBON STREAMING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Amounts expressed in thousands of United States dollars, unless otherwise indicated)

	Share Capital		Share-based
	Number	Amount	payment		Deficit		Total
				reserve
Balance, December 31,	46,952,032	$	193,899	$	6,452	$	(53,711)	$	146,640
2022
Share-based	-		-		332		-		332
compensation (Note 14)
Net loss and	-		-		-		(972)		(972)
comprehensive loss
Balance, March 31, 2023	46,952,032	$	193,899	$	6,784	$	(54,683)	$	146,000

	Share Capital		Share-based
	Number	Amount	payment		Deficit	Total
				reserve
Balance, December 31,	47,421,219	$	194,433	$	7,482	$	(89,212)	$	112,703
2023
Share-based	-		-		136		-		136
compensation (Note 14)
Restricted share units	319,713		172		-		-		172
converted (Note 14)
Net loss and	-		-		-		(35,771)		(35,771)
comprehensive loss
Balance, March 31, 2024	47,740,932	$	194,605	$	7,618	$	(124,983)	$	77,240

Condensed interim consolidated financial statements | Page 6

CARBON STREAMING CORPORATION

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

1. Nature of operations

Carbon Streaming Corporation was incorporated on September 13, 2004, under the Business Corporations Act (British Columbia).

Carbon Streaming is a carbon credit streaming and royalty company focused on creating shareholder value primarily through the acquisition and sale of carbon credits. We provide capital to carbon projects globally, primarily by entering into or acquiring streaming, royalty or royalty-like arrangements for the purchase of carbon credits from the underlying project and then generate cash flow from the sale of these carbon credits. Through the use of these financing arrangements, our strategic interests are aligned with our project partners so we are able to source high-integrity projects that advance global climate action and additional United Nations Sustainable Development Goals. This helps position us as a trusted source for buyers seeking high quality carbon credits. Our aim is to accelerate a net-zero future by making an impact with our capital and facilitating immediate climate action.

The Company's common shares ("Common Shares") are listed on Cboe Canada (formerly the Neo Exchange) under the symbol "NETZ", common share purchase warrants, exercisable at Canadian dollar ("C$") 7.50 until March 2, 2026 (the "March 2026 Warrants") are listed on Cboe Canada under the symbol "NETZ.WT" and the common share purchase warrants exercisable at $7.50 until September 19, 2026 ("September 2026 Warrants") are listed on Cboe Canada under the symbol "NETZ.WT.B". The Common Shares are also listed on the Frankfurt Stock Exchange under the symbol "M2Q" and trade on the OTCQB Markets under the symbol "OFSTF".

The Company's registered address is Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8.

All financial information in this document is presented in thousands of United States dollars ("$" or "US$") unless otherwise indicated. The Company has one operating segment, being the acquisition of carbon credit streaming and royalty arrangements focused on projects located globally.

These unaudited condensed interim consolidated financial statements (the "Interim Financial Statements") of the Company for the three months ended March 31, 2024, were approved and authorized for issue by the Board of Directors on May 15, 2024.

Condensed interim consolidated financial statements | Page 7

CARBON STREAMING CORPORATION

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

2. Statement of compliance and basis of presentation

Statement of compliance

These Interim Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting ("IAS 34"). The accounting policies applied in these Interim Financial Statements are based on International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and have been prepared using the same material accounting policies and methods of application as disclosed in Note 3 to the audited consolidated financial statements for the year ended December 31, 2023 (the "Annual Financial Statements") and were consistently applied to all the periods presented unless otherwise stated below.

These Interim Financial Statements do not include all the information and note disclosures required by IFRS for annual consolidated financial statements and therefore should be read in conjunction with the Annual Financial Statements.

Basis of presentation

These Interim Financial Statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value. In addition, these Interim Financial Statements have been prepared using the accrual basis of accounting except for cash flow information.

Basis of consolidation

These Interim Financial Statements include the financial position, financial performance and cash flows of the Company and its subsidiary and associate. Intercompany balances, transactions, income and expenses, profits and losses, including gains and losses relating to its subsidiary and associate have been eliminated on consolidation. The Company's subsidiary and interest in an associate are as follows:

		Geographic	Economic	Basis of
Entity	Relationship	location	interest	accounting
1253661 B.C. Ltd.	Subsidiary	Canada	100%	Consolidation
Carbon Fund Advisors Inc.	Associate	United States	50%	Equity method

New and revised accounting standards and interpretations effective for the current reporting period

During the three months ended March 31, 2024, the Company has applied the following new amendments to IFRS that are mandatorily effective for reporting periods beginning on or after January 1, 2024:

• Amendments to IFRS 16, Leases changes the requirement of sale and leaseback arrangement allowing the seller-lessee to recognize gain or loss relating to the partial or full termination of a lease. Management assessed no impact on these Interim Financial Statements on account of this amendment as the Company currently does not have any sale and leaseback arrangements.
• Amendments to IAS 1, Presentation of Financial Statements clarifies the classification of liabilities as current or non-current. The first amendment to IAS 1 clarifies that a liability can be classified as non- current if the Company has the right to defer settlement of the liability for at least twelve months after the reporting period. The right must have substance and exist at the end of the reporting period

Condensed interim consolidated financial statements | Page 8

CARBON STREAMING CORPORATION

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

and the classification of the liability must be unaffected by the likelihood that the Company will exercise that right. The second amendment to IAS 1 clarifies that if the Company is required to comply with covenants on or before the end of the reporting period, these covenants will affect whether such a right exists at the end of the reporting period. Management assessed no impact on these Interim Financial Statements on account of this amendment.

• Amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures requires disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity's liabilities, cash flows and exposure to liquidity risk. Management assessed no impact on these Interim Financial Statements on account of this amendment.

In addition to the above, the Company has not applied the following amendments to IFRS that have been issued but are not yet effective:

• Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates (effective January 1, 2025) provides guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. Management is currently assessing the impact of this amendment.

3. Significant accounting estimates, judgments and assumptions

Significant accounting estimates, judgments and assumptions used or exercised by management in the preparation of these Interim Financial Statements for the three months ended March 31, 2024, are consistent with those included in Note 4 to the Annual Financial Statements, except as noted below:

Valuation of the Rimba Raya Stream

Management has applied significant judgment in the determination of fair value of the Rimba Raya Stream as at March 31, 2024. The Company was informed that the local concession license holder at the Rimba Raya project has had its Forest Utilization Business License (the "Concession License") revoked by the Indonesian Government's Ministry of Environment and Forestry (the "MOEF"). As a result, the Company has determined the fair value of the Rimba Raya Stream to be nil as at March 31, 2024. The Company will re-evaluate the fair value of the Rimba Raya Stream in the event there is a change in the facts and circumstances surrounding the Rimba Raya project, the revocation of the Concession License and the Indonesian national carbon emission regulations. Please refer to Note 6 for further information.

4. Corporate restructuring

In 2023, the Company initiated an ongoing corporate restructuring plan, focused on cash flow optimization that resulted in personnel reductions. For the three months ended March 31, 2024, the Company recognized corporate restructuring charges of $1,373 (three months ended March 31, 2023 - $nil) primarily related to severance and other termination benefits.

5. Carbon credit inventory

The Company holds carbon credit inventory which are carbon credits purchased and acquired separately

Condensed interim consolidated financial statements | Page 9

CARBON STREAMING CORPORATION

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Unaudited; amounts expressed in thousands of United States dollars, unless otherwise indicated)

and apart from its carbon credit streaming agreements. For the three months ended March 31, 2024, the Company recognized $399 in cost of purchased carbon credits sold (three months ended March 31, 2023

• $12). Carbon credit inventory does not include any carbon credits delivered under the Company's carbon credit streaming agreements.
  6. Carbon credit streaming and royalty agreements

The following table is a summary of the changes in carbon credit streaming and royalty agreements for the three months ended March 31, 2024 and the year ended December 31, 2023:

	Balance				Balance
	December			Fair value	March 31,
	31, 2023	Additions	Settlements	adjustments	2024
Rimba Raya Stream	33,728	-	-	(33,728)	-
Magdalena Bay Blue Carbon Stream	3,227	-	-	80	3,307
Cerrado Biome Stream	456	-	-	-	456
Waverly Biochar Stream	2,460	-	-	60	2,520
Sustainable Community Stream	2,972	-	-	85	3,057
Community Carbon Stream (i)	7,672	-	(406)	214	7,480
Nalgonda Rice Farming Stream	1,212	400	-	-	1,612
Enfield Biochar Stream	822	-	-	-	822
Sheep Creek Reforestation Stream	1,435	-	-	65	1,500
Feather River Reforestation Stream	280	-	-	-	280
Baccala Ranch Reforestation Stream (ii)	-	-	-	-	-
Waverly Biochar Royalty	600	-	-	-	600
Bonobo Peace Forest Royalty	1,519	-	-	-	1,519
Amazon Portfolio Royalty	3,464	-	-	88	3,552
Enfield Biochar Royalty	275	-	-	-	275
Total	60,122	400	(406)	(33,136)	26,980

Condensed interim consolidated financial statements | Page 10