Novra Technologies : Audited consolidated financial statements - Year 2023

CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2023 and 2022

(Expressed in Canadian Dollars)

Novra Technologies Inc.

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Table of Contents
Independent Auditor's Report	3
Consolidated Statements of Financial Position	6
Consolidated Statements of Operations and Comprehensive Income (Loss)	7
Consolidated Statements of Changes in Shareholders' Equity	8
Consolidated Statements of Cash Flows	9
Notes to Consolidated Financial Statements:
Note 1 - General Information	10
Note 2 - Material Accounting Policies	10
Note 3 - Critical Accounting Estimates and Judgments	19
Note 4 - Business Acquisitions	20
Note 5 - Financial Risk Management	20
Note 6 - Capital Management	22
Note 7 - Inventories	23
Note 8 - Financial Instruments	24
Note 9 - Equipment	26
Note 10 - Intangible Assets	27
Note 11 - Borrowings	28
Note 12 - Warranty Provision	29
Note 13 - Shareholders' Equity	30
Note 14 - Income Taxes	32
Note 15 - Revenue	33
Note 16 - Related Party Transactions	34
Note 17 - Depreciation and Amortization	36
Note 18 - Commitments and Contingent Liabilities	36
Note 19 - Finance Income and Finance Costs	37
Note 20 - Right-of-use Assets	37
Note 21 - Employee Benefits	37

Novra Technologies Inc.

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	Baker Tilly HMA LLP
	701 - 330 Portage Avenue
INDEPENDENT AUDITOR'S REPORT	Winnipeg, MB R3C 0C4
	T: 204.989.2229
To the Shareholders of Novra Technologies Inc.	TF: 1.866.730.4777
F: 204.944.9923
Opinion	[e-mail]
www.bakertilly.ca

We have audited the consolidated financial statements of the Company, which comprise the consolidated statements of financial position as at December 31, 2023 and December 31, 2022, and the consolidated statements of operations and comprehensive income, changes in shareholders' equity and cash flows for the years December 31, 2023 and 2022, and notes to the financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023 and December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the year ended December 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to the key audit matters to be communicated in our auditor's report.

Valuation of inventory

The provision for obsolescence of inventory requires the application of significant judgement by the Company, particularly in the identification of slow moving and obsolete inventory and the quantification of the provision to apply to the inventory applied. The discussion on the assessment of the estimate and the underlying assumptions is included in Note 3 of the consolidated financial statements

To address this key audit matter, we analyzed inventory trends including turnover rates, completed substantive procedures on net realizable value, reviewed the reasonableness of assumptions used in the Company's inventory valuation process and completed an examination for any unexpected transactions or changes in inventory levels.

(continued.....)

AUDIT • TAX • ADVISORY

Baker Tilly HMA LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly International Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities.

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Valuation of Intangible Assets

The valuation of intangible assets requires the application of significant judgment by the Company, particularly in the identification of intangibles, valuation, and impairment testing. The discussion on the assessment, estimate and the underlying assumptions that form the valuation of intangible assets is included in Note 2 and 3 of the consolidated financial statements.

To address this key audit matter, we reviewed the Company's asset development policy, analyzed the changes in the carrying amounts of intangible assets and ensured that the calculation methodology was consistently applied. We evaluated the Company's impairment assessment including a review of the reasonableness of assumptions applied, considered possible changes in the business environment and market conditions that could impact the fair value of the intangible assets and performed procedures to identify potential impairment including a multi-year margin analysis and examination of subsequent sales and forecasts.

Other Information

Management is responsible for other information. The other information comprises of the information contained in the Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained the information included in the Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

(continued.....)

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As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Michael P. Angers.

Chartered Professional Accountants

Winnipeg, Manitoba

April 27, 2024

NOVRA TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Canadian dollars)

	NOTES	December 31, 2023	December 31, 2022
ASSETS
Current Assets
Cash		$	2,448,436	$	1,965,537
Restricted non-redeemable GIC's			-		1,354,400
Trade and other receivables	5(c)		755,982		698,435
Sub-lease receivable - current portion	2		59,013		61,896
Inventories	7		1,338,035		2,031,288
Prepayments and other	2		36,608		90,845
Total Current Assets			4,638,074		6,202,401
Non-Current Assets
Sub-lease receivable	2		47,627		111,907
Equipment	9		9,062		21,915
Right-of-use assets	2, 20		1,317,292		1,453,962
Intangible assets	10		1,299,830		1,022,912
Total Non-Current Assets			2,673,811		2,610,696
TOTAL ASSETS		$	7,311,885	$	8,813,097
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade and other payables		$	1,618,232	$	1,710,834
Borrowings	11		170,195		217,610
Lease liabilities	2, 18(a)		268,847		240,472
Customer deposits			62,898		1,142,541
Deferred revenue - current portion	15		947,539		795,936
Advances from related parties	16(c)		1,673,037		1,589,701
Total Current Liabilities			4,740,748		5,697,094
Non-Current Liabilities
Borrowings	11		2,268,989		2,397,621
Lease liabilities	2, 18(a)		1,448,864		1,660,221
Deferred revenue	15		198,083		699,047
Promissory notes from related party	16(d)		1,272,197		1,200,000
Total Non-Current Liabilities			5,188,133		5,956,889
TOTAL LIABILITIES		$	9,928,881	$	11,653,983
Equity
Share capital	13(a)	$	7,372,749	$	7,372,749
Contributed surplus			500,576		500,576
Accumulated other comprehensive gain (loss)			13,900		(73,753)
Accumulated deficit			(10,713,049)		(10,613,436)
TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF NOVRA			(2,825,824)		(2,813,864)
Non-Controlling Interests			208,828		(27,022)
TOTAL EQUITY			(2,616,996)		(2,840,886)
TOTAL LIABILITIES AND EQUITY		$	7,311,885	$	8,813,097

The accompanying notes are an integral part of these Consolidated Financial Statements

Novra Technologies Inc.

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NOVRA TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Canadian dollars, except share data)

Year Ended December 31,

		NOTES		2023			2022
	REVENUE	15	$	7,445,587	$	7,603,077
	COST OF REVENUE	7		3,363,378			3,468,002
	GROSS PROFIT			4,082,209			4,135,075
	OPERATING EXPENSES
	General and administrative			1,459,808			1,346,993
	Sales and marketing			831,842			946,572
	Research and development			1,457,102			2,260,045
	Total operating expenses			3,748,752			4,553,610
	OPERATING INCOME (LOSS)			333,457			(418,535)
	Other Income (Expenses)
	Foreign exchange gain (loss)			(52,508)			97,957
	Finance income	19(a)		55,796			12,766
	Finance costs	19(b)		(200,508)			(166,157)
	INCOME (LOSS) BEFORE INCOME TAXES			136,237			(473,969)
	Income tax recovery (expense)	14		-			-
	NET INCOME (LOSS)		$	136,237	$	(473,969)
	OTHER COMPREHENSIVE INCOME, NET OF TAXES
	Foreign Currency Translation Adjustments on Wegener Consolidation		87,653			(180,028)
	Total other comprehensive income (loss), net of taxes			87,653			(180,028)
	COMPREHENSIVE INCOME (LOSS)		$	223,890	$	(653,997)
	EARNINGS (LOSS) PER SHARE:
	Basic		$	(0.0030)	$	(0.0271)
	Diluted		$	(0.0030)	$	(0.0271)
	Weighted average number of shares outstanding - basic			33,420,293			33,420,293
	Weighted average number of shares outstanding - diluted			33,420,293			33,420,293
	NET INCOME (LOSS) ATTRIBUTABLE TO :
	Shareholders of Novra		$	(99,613)	$	(907,170)
	Non-controlling interest		$	235,850	$	433,201
				136,237			(473,969)
	COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
	Shareholders of Novra		$	(11,960)	$	(1,087,198)
	Non-controlling interest		$	235,850	$	433,201
				223,890			(653,997)
	The accompanying notes are an integral part of these Consolidated Financial Statements
Novra Technologies Inc.						Page 7

NOVRA TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Canadian dollars, except share data)

								Accumulated
		Number of						Other				Non-		Total
		Common		Common	Contributed	Comprehensive		Accumulated		Controlling	Shareholders'
	NOTES	Shares		Shares		Surplus		Loss		Deficit		Interest		Equity
At January 1, 2023
Total		35,420,293	$	7,632,749	$	500,576	$	(73,753)	$	(10,613,436)	$	(27,022)	$	(2,580,886)
Less: common shares held by subsidiary	(2,000,000)	$	(260,000)										(260,000)
		33,420,293		7,372,749		500,576		(73,753)		(10,613,436)		(27,022)		(2,840,886)
Net income (loss)		-		-		-		-		(99,613)		235,850		136,237
Change in foreign currency translation		-		-		-		87,653		-		-		87,653
Share based compensation	13(b)	-		-		-		-		-		-		-
Options Exercised	13(b)	-		-		-		-		-		-		-
Cancellation of common shares	13(b)	-		-		-		-		-		-		-
At December 31, 2023		33,420,293	$	7,372,749	$	500,576	$	13,900	$	(10,713,049)	$	208,828	$	(2,616,996)

							Accumulated
	Number of						Other				Non-		Total
	Common		Common	Contributed	Comprehensive		Accumulated	Controlling	Shareholders'
NOTES	Shares		Shares		Surplus		Loss		Deficit		Interest		Equity
At January 1, 2022
Total	35,420,293	$	7,632,749	$	500,576	$	106,275	$	(9,706,266)	$	(460,223)	$	(1,926,889)
Less: common shares held by subsidiary	(2,000,000)	$	(260,000)	$	-	$	-	$	-	$	-		(260,000)
	33,420,293		7,372,749		500,576		106,275		(9,706,266)		(460,223)		(2,186,889)
Net income (loss)	-		-		-		-		(907,170)		433,201		(473,969)
Change in foreign currency translation	-		-		-		(180,028)		-		-		(180,028)
Share based compensation	-		-		-		-		-		-		-
Options exercised	-		-		-		-		-		-		-
Cancellation of common shares	-		-		-		-		-		-		-
At December 31, 2022	33,420,293	$	7,372,749	$	500,576	$	(73,753)	$	(10,613,436)	$	(27,022)	$	(2,840,886)

The accompanying notes are an integral part of these Consolidated Financial Statements

Novra Technologies Inc.

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NOVRA TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Canadian dollars)

				Year Ended December 31,
		NOTES		2023		2022
OPERATING ACTIVITIES
Net income (loss)		$	136,237	$	(473,969)
Add items not affecting cash:
Depreciation and amortization	17		455,431		1,289,602
Share based compensation	13(b)		-		-
Interest expense	19(b)		200,508		166,157
Changes in non-cash working capital items
Trade and other receivables			108,154		476,215
Provision for trade and other receivables			(165,701)		(50,474)
Sub-lease receivable			67,163		-
Inventories			693,253		(354,731)
Other assets			54,237		652,105
Additions to right-of-use asset	20		(73,023)		-
Trade and other payables and accrued liabilities			(92,602)		154,065
Customer deposits			(1,079,643)		(949,287)
Deferred revenue	15		(349,361)		179,247
Advances from Related Party	16(c)		83,336		253,290
Changes in promissory notes	16(d)		72,197		-
Interest paid			-		(4,757)
Net cash provided by (applied to) operating activities			110,186		1,337,463
INVESTING ACTIVITIES
Purchase of restricted non-redeemable GIC's			-		(1,354,400)
Redemption of restricted non-redeemable GIC's			1,354,400
Purchase of capital assets	9		(5,617)		-
Intangible assets	10		(615,009)		(521,515)
Net cash provided by (applied to) investing activities			733,774		(1,875,915)
FINANCING ACTIVITIES
Payments on lease liabilities	18(a)		(353,301)		(593,574)
Payments on WEDC repayable contribution	11(c)		(51,480)		(51,480)
Payments on Chymiak loan	11(b)		(80,046)		-
Payments on disaster assistance funding	11(d)		(12,826)		-
Payments on IMT promissory notes	16(d)		-		(57,132)
Net cash provided by (applied to) financing activities			(497,653)		(702,186)
Effect of exchange rates on cash and cash equivalents			136,592		240,875
Net increase/(decrease) in cash			482,899		(999,763)
Cash,	beginning of year			1,965,537		2,965,300
CASH,	end of year		$	2,448,436	$	1,965,537
	The accompanying notes are an intergral part of these Consolidated Financial Statements

Novra Technologies Inc.

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NOVRA TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2023 and 2022

(Tabular amounts are in 000's, except share data)

1. General Information
   Novra Technologies Inc. ("Novra" or the "Company") is incorporated under the Canada Business Corporations Act and its corporate office and principal place of business is 210-100 Innovation Drive, Winnipeg, Manitoba, Canada R3T 6G2. Novra is a publicly traded company on the TSX Venture Exchange ("TSX-V") under the symbol NVI.
   Novra has a diverse group composition resulting from strategic acquisitions. Notably, in 2016, Novra expanded its operations significantly through the acquisition of International Datacasting Corporation ("IDC") and its wholly- owned U.S. subsidiary, consolidating their expertise in satellite data distribution. Furthermore, on December 29, 2017, Novra acquired a 51.6% controlling interest in Wegener Corporation ("Wegener"), enhancing its capabilities in digital media management and distribution technologies, including applications in digital signage, radio, and television (refer to Note 4 for further details).
   The consolidated financial statements reflect Novra's comprehensive product portfolio, which encompasses hardware, software, and services, augmented by the combined strengths of its subsidiaries. Notably, Novra's areas of specialization extend beyond core video, radio, and data products to include encryption, next-generation hybrid networks (combining satellite, terrestrial, and cloud technologies), and efficient bandwidth utilization.
   In accordance with IFRS 12, Novra provides disclosure aimed at enabling users of its consolidated financial statements to understand both the composition of the group and the interests held by non-controlling entities within the group. Throughout these Consolidated Financial Statements, terms such as "Novra," "Company," "we," "us," or "our" refer collectively to Novra Technologies Inc. and its subsidiaries.
   The Consolidated Financial Statements were authorized for issue by the Board of Directors on April 27th, 2024.
2. Material Accounting Policies
   The material accounting policies used in the preparation of these Consolidated Financial Statements are summarized below. These policies have been consistently applied to all years presented, unless otherwise noted.
   Basis of Presentation
   The Consolidated Financial Statements of Novra are expressed in Canadian dollars and have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS, as issued by the International Accounting Standards Board ("IASB"). We have prepared the Consolidated Financial Statements under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
   The tabular disclosures herein are presented in thousands, except for share data. Use of Estimates
   In preparing these Consolidated Financial Statements, management has made judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. For areas involving a higher degree of management judgment or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements, refer to Note 3.
   Consolidation

These Consolidated Financial Statements consolidate the accounts of Novra Technologies Inc. and its subsidiaries. Subsidiaries are all entities over which we have control. We control an entity when we are exposed, or have rights, to variable returns from our involvement with the entity and have the ability to affect those returns through our power over the entity. We have power over an entity when we have existing rights that give us the current ability to direct the activities that most significantly affect the entity's returns (relevant activities). Power may be determined on the basis

Novra Technologies Inc.

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