Exhibit 99.1
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TURBO ENERGY, S.A.
Condensed Interim Consolidated Financial Statements
For the six months ended June 30, 2023 and 2022
(Unaudited)
(Expressed in Euro)
F-1
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(Expressed in Euro)
| As at | Note | June 30, 2023 | December 31, 2022 | |||||||||
| (Unaudited) | ||||||||||||
| Assets | ||||||||||||
| Current | ||||||||||||
| Cash | 2 | € | € | |||||||||
| Accounts receivable, net and other receivables | 4 | |||||||||||
| Inventory, net | 5 | |||||||||||
| Amount due from related parties | 10 | |||||||||||
| Prepaid expense | 6 | |||||||||||
| Deferred offering costs | 16 | |||||||||||
| Total Current Assets | ||||||||||||
| Non- Current Assets | ||||||||||||
| Property and equipment, net | 7 | |||||||||||
| Intangible assets, net | 8 | |||||||||||
| Right-of-use assets | 14 | |||||||||||
| Total Assets | € | € | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 9 | € | € | |||||||||
| Amount due to related parties | 10 | |||||||||||
| Lease liabilities - current portion | 14 | |||||||||||
| Bank loans - current portion | 11 | |||||||||||
| Non-Current Liabilities | ||||||||||||
| Lease liabilities | 14 | |||||||||||
| Bank loans | 11 | |||||||||||
| Total Liabilities | € | € | ||||||||||
| Shareholders’ Equity | ||||||||||||
| Share Capital | 12 | |||||||||||
| Reserve | 13 | |||||||||||
| Retained Earnings (Accumulated Deficit) | ( | ) | ||||||||||
| Total Shareholders’ Equity | ||||||||||||
| Total Liabilities and Shareholders’ Equity | € | € | ||||||||||
Subsequent Events (Note 22)
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-2
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Operations
(Unaudited)
(Expressed in Euro)
| Six Months Ended June 30, | ||||||||||
| Note | 2023 | 2022 | ||||||||
| Revenue | 17 | € | € | |||||||
| Revenue - related parties | 10,17 | |||||||||
| Other operating income | ||||||||||
| Total Revenue | ||||||||||
| Cost and Expenses | ||||||||||
| Cost of revenues | 18 | |||||||||
| Cost of revenues - related parties | 10,18 | |||||||||
| Selling and administrative | 19 | |||||||||
| Selling and administrative – related parties | 10,19 | |||||||||
| Salaries and benefits | ||||||||||
| Bad debt expense (recovery) | 4 | ( | ) | |||||||
| Total Cost and Expenses | ||||||||||
| Income (loss) from operations | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||
| Interest expense | ( | ) | ( | ) | ||||||
| Foreign exchange gain (loss) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||
| Net Income (Loss) Before Income Tax | ( | ) | ||||||||
| Income tax | ||||||||||
| - Current | ( | ) | ||||||||
| - Deferred | ||||||||||
| Net Loss (Income) | € | ( | ) | € | ||||||
| € | ( | ) | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-3
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(Expressed in Euro)
Six months ended June 30, 2023
| Note | Number of Outstanding Shares | Share Capital | Reserve | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | ||||||||||||||||
| Balance, January 1, 2023 | € | € | € | € | |||||||||||||||||
| Transfer from retained earnings to reserve | 13 | ( | ) | ||||||||||||||||||
| Net loss for the period | ( | ) | ( | ||||||||||||||||||
| Balance, June 30, 2023 | € | € | € | ( | ) | € | |||||||||||||||
Six months ended June 30, 2022
| Note | Number of Outstanding Shares | Share Capital | Reserve | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | ||||||||||||||||
| *Balance, January 1, 2022 | € | € | € | € | |||||||||||||||||
| Transfer from retained earnings to reserve | 13 | ( | ) | ||||||||||||||||||
| Net income for the period | |||||||||||||||||||||
| *Balance, June 30, 2022 | € | € | € | € | |||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-4
TURBO ENERGY, S.A.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in Euro)
| Six Months Ended June 30, | ||||||||||||
| Note | 2023 | 2022 | ||||||||||
| Cash Provided by (Used in) | ||||||||||||
| Operating Activities | ||||||||||||
| Net income (loss) before income tax | € | ( | ) | € | ||||||||
| Items not affecting cash: | ||||||||||||
| Bad debt expense (recovery) | 4 | ( | ) | |||||||||
| Depreciation of property and equipment | 7 | |||||||||||
| Amortization of intangible assets | 8 | |||||||||||
| Amortization of right-of-use assets | 14 | |||||||||||
| Accretion of lease liabilities | 14 | |||||||||||
| Changes in non-cash working capital items: | ||||||||||||
| Inventory | ( | ) | ||||||||||
| Accounts receivable | 5 | |||||||||||
| Due from related parties | 10 | ( | ) | |||||||||
| Due to related parties | 10 | ( | ) | ( | ) | |||||||
| Prepaid expense | 6 | ( | ) | ( | ) | |||||||
| Deferred offering costs | 16 | ( | ) | |||||||||
| Deferred tax assets | ||||||||||||
| Accounts payable and accrued liabilities | 9 | ( | ) | ( | ) | |||||||
| Income tax payable | ( | ) | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||||
| Investing Activities | ||||||||||||
| Purchase of equipment | 7 | ( | ) | ( | ) | |||||||
| Purchase of intangible assets | 8 | ( | ) | ( | ) | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Financing Activities | ||||||||||||
| Proceeds (Repayment) of bank loans | 11 | ( | ) | ( | ) | |||||||
| Net proceeds from lines of credit | 11 | ( | ) | |||||||||
| Repayment of lease liabilities | 14 | ( | ) | ( | ) | |||||||
| Dividend paid to related party | 10 | ( | ) | |||||||||
| Payments to related parties | 10 | ( | ) | ( | ) | |||||||
| Proceeds from related parties | 10 | |||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||||
| Net change in cash | ( | ) | ( | ) | ||||||||
| Cash - beginning of period | ||||||||||||
| Cash - end of period | € | € | ||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
F-5
TURBO ENERGY, S.A.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
Six Months Ended June 30, 2023 and 2022
(Expressed in Euro)
NOTE 1 – ENTITY INFORMATION
Turbo Energy, S.A. (the “Company), was incorporated under the name of Distritech Solutions S.L. on September 18, 2013 under the laws of the Kingdom of Spain. The company then changed its name to Solar Rocket S.L. on October 7, 2013. On April 8, 2021, Solar Rocket S.L. merged with a Spanish corporation Turbo Energy S.L.U. Turbo Energy S.L.U then became a wholly owned subsidiary of Solar Rocket S.L. This merger was approved by the Board of Directors of both companies. Following the merger, the company changed its name to Turbo Energy S.L. on April 8, 2021. On February 8, 2023, we transformed the company from a Spanish unipersonal limited company to a Spanish limited stock company. As such, our company’s name was changed to Turbo Energy S.A.
The corporate purpose of the Company, in accordance with its bylaws, consists of the acquisition, distribution and sale of electrical and electronic material for the development of renewable energy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. We design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages. Currently, we primarily sell inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers located in Spain.
The Company is part of the Umbrella Solar Investment Group, whose main shareholder is Crocodile Investment, S.L.U, (hereinafter, the ultimate partner), with registered office in Valencia. The majority shareholder of the Turbo Energy, S.A is Umbrella Solar Investment, S.A (hereinafter, the majority shareholder), which is part of the Umbrella Solar Investment Group.
On November 8, 2022, Turbo Energy S.A. with the
purpose to develop a new business in the field of self-consumption of electricity, acquired the
Merger by absorption process
On April 8, 2021, the merger of Solar Rocket, S.L. (absorbing company) and Turbo Energy, S.L.U. (absorbed company) was formalized in a public deed, being registered in the Mercantile Registry of Valencia on August 9, 2021. The merger process, approved by the respective shareholders’ meetings on June 30, 2020, consisted of the extinction without liquidation of the absorbed company, transferring its assets and liabilities en bloc to the absorbing company, which acquired, by universal succession, the rights and obligations of the absorbed company. The Company recorded the assets and liabilities contributed by the absorbed companies at the values established in the accounting regulations in force at that time. The consolidated financial statements for the year 2021 include the information required by the regulations in relation to the aforementioned merger process.
On the same date of the merger described above, the absorbing company (Solar Rocket, S.L.) changed its corporate name to Turbo Energy, S.L.U. as described above.
F-6
NOTE 2 – MATERIAL ACCOUNTING POLICIES
Basis of presentation
The notes presented in our condensed unaudited interim consolidated financial statements include only significant events and transactions and are not fully inclusive of all matters normally disclosed in our annual audited financial statements; thus, our unaudited interim consolidated financial statements are referred to as condensed. Our unaudited condensed interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 202, included in the Company’s F-1/A as filed with the Securities and Exchange Commission on September 18, 2023.
The unaudited condensed interim consolidated financial statements of Turbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial statements comply with IFRS as issued by the International Accounting Standards Board (“IASB”). Our condensed interim consolidated financial statements comply with International Accounting Standard 34, Interim Financial Reporting and reflect all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary for a fair statement of the results for the interim periods presented.
These consolidated financial statements were approved by the board of directors of the Company on December 22nd, 2023.
The consolidated financial statements of the Company were prepared on a historical cost basis except where certain financial instruments that are required to be measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated financial statements are presented in Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded in accordance with the policies stated under Foreign Currency Transaction in note 2.
Reclassification
Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.
Revenue recognition
The Company design, develop, and distribute equipment for the generation, management, and storage of photovoltaic energy. Our energy storage products are managed, from the cloud and through the inverter of the installation, by an advanced software system which is optimized by artificial intelligence (“AI”). The key advantage is that our products, comparing to conventional battery storage systems, reduce electricity bill and protect the installation from power outages.
The Company’s revenue is primarily generated from sales of the inverters, batteries, and photovoltaic modules to installers and other distributors for residential consumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing the product sales.
The Company recognizes such revenue at the point in time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable, taking into account the customer’s rights to unit rebates, and rights to return unsold product.
Transfer of control occurs either when products are shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if the Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred. For most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing whether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to 60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.
F-7
Since payment terms are less than a year, the Company has elected the practical expedient and does not assess whether a customer contract has a significant financing component.
A five-step approach is applied in the recognition of revenue: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when the Company satisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts with the customer for purposes of applying the five-step approach.
Returns under the Company’s general assurance warranty of products have not been material historically and warranty-related services are not considered a separate performance obligation under the customer orders.
Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer. Although customers may place orders for products to be delivered on multiple dates that may be in different quarterly reporting periods, all of the orders are scheduled within one year from the order date. The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset that would have been recognized is less than one year.
Concentration of Revenue by Customer
For the six months ended June 30, 2023 and 2022,
there was one customer who comprised greater than
Cash and Cash Equivalents
Cash consist of highly liquid instruments purchased
with an original maturity of three months or less. As of June 30, 2023 and December 31, 2022, the Company had cash of €
The Company minimizes the concentration of credit
risk associated with its cash by maintaining its cash with high-quality insured financial institutions. However, cash balances in excess
of the Spanish government insured limit (Fondo de Garantía de Depósitos (FDG)) of €
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.
The Company will run credit checks on all customers that request term payment.
Inventory
Inventories are valued at their acquisition cost, production cost or net realizable value, whichever is lower. Discounts for prompt payment are included as a lower price, whether or not they appear on the invoice and assigning value to its inventories. The Company adopts the weighted average price method.
Net realizable value represents the estimated sales price less all estimated costs that will be incurred in the process of commercialization, sales and distribution.
The Company makes the appropriate valuation adjustments, recording impairment expense when the net realizable value of the inventories is less than their acquisition cost.
F-8
Property and equipment
Property and equipment is recognized and subsequently
measured at cost less accumulated depreciation and any accumulated impairment losses, if any. When components of property and equipment
have different useful lives they are accounted for separately.
| Furniture | ||
| Tools and machinery | ||
| Right-of-use assets |
Intangible assets
Acquired intangible assets are initially measured at cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment losses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are amortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible asset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes in accounting estimates and applied prospectively.
Computer application and webpage are amortized over estimated useful lives of three years and Software is amortized over estimated useful lives of five years.
Deferred Offering Costs
Deferred offering costs
represent legal, accounting and other direct costs related to the IPO, which will be completed on September 22, 2023. Upon the completion
of IPO, direct offering costs of will be reclassified to additional paid-in capital along with underwriters’ fees paid, net against
IPO proceeds received. The Company recorded €
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement on the inception date.
As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the statements of financial position on a present-value basis at the date when the leased asset is available for use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized in finance cost in the statements of income and comprehensive income. The right of-use assets are depreciated over the shorter of its estimated useful life and the lease term on a straight-line basis.
Lease obligations are initially measured at the net present value of the following lease payments:
| ● | fixed payments (including in-substance fixed payments), less any lease incentives; |
| ● | variable lease payment that are based on an index or a rate; |
| ● | amounts expected to be payable under residual value guarantees; |
| ● | the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and |
| ● | payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option. |
F-9
Lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot be determined, the Company’s incremental borrowing rate. Right-of-use assets are initially measured at cost comprising the following:
| ● | the amount of the initial measurement of the lease obligation; |
| ● | any lease payments made at or before the commencement date less any lease incentives received; and |
| ● | any initial direct costs and rehabilitation costs. |
Payments associated with short-term leases and leases of low-value assets are recognized on a straight- line basis as an expense in the statements of income and comprehensive income. Short-term leases are leases with a lease term of 12 months or less.
Share capital
Ordinary shares are classified as equity, net of transaction costs directly attributable to the issue of ordinary shares.
Ordinary shares issued for consideration other than cash are based on their market value at the date the ordinary shares are issued.
Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability, if material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognize as an expense on the statements of income and comprehensive income.
Foreign currency transactions
The functional currency used by the Company is the euro. Consequently, operations in currencies other than the euro are considered to be denominated in foreign currency and are recorded at the exchange rates in force on the dates of the operations.
At year-end, monetary assets and liabilities denominated in foreign currency are converted by applying the exchange rate on the balance sheet date. The profits or losses revealed are charged directly to the profit and loss account for the year in which they occur.
On each balance sheet date, monetary assets and liabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured in terms of historical cost are converted at the exchange rate on the date of the transaction.
The exchange differences of the monetary items that arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year, except those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time of its disposal.
Income per share
Basic income per share is calculated by dividing the income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the period. For all periods presented, the income attributable to ordinary shareholders equals the reported income attributable to owners of the Company.
Diluted income per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of ordinary shares outstanding for the calculation of diluted income per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase ordinary shares at the average market price during the period.
F-10
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding, as of June 30, 2023 and December 31, 2022.
Impairment of non-financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate.
Financial instruments
Financial assets
Financial assets are classified as either financial assets at fair value through profit and loss (“FVTPL”), amortized cost, or fair value through other comprehensive income (“FVTOCI”). The Company determines the classification of its financial assets at initial recognition.
Classification and measurement
Classification determines how financial assets and financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS 9 Financial Instruments approach for the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces prior rule-based requirements. The model also results in a single impairment model being applied to all financial instruments.
Financial assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of income and comprehensive income. Realized and unrealized gains and income arising from changes in the fair value of the financial asset held at FVTPL are included in the statements of income and comprehensive income in the period in which they arise. The Company has classified cash as FVTPL.
Financial assets at FVTOCI
Financial assets at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. There are no financial assets classified as FVTOCI.
Financial assets at amortized cost
Financial assets at amortized cost are initially recognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. They are classified as current assets or non- current assets based on their maturity date. The Company has classified accounts receivable and amounts due from related parties at amortized cost.
Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred.
F-11
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial recognition.
Financial liabilities are classified as measured at amortized cost, net of transaction costs unless classified as FVTPL. The Company’s accounts payable and accrued liabilities, amounts due to related parties, lease liabilities and bank loans are classified as measured at amortized cost.
The Company’s bank loans were classified
as measured at amortized cost at June 30, 2023 and December 31, 2022. During the six months ended June 30, 2023 and 2022, the Company
incurred €
Fair value measurement
Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:
| ● | Level 1 – defined as observable inputs such as quoted prices in active markets; |
| ● | Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| ● | Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. Fair value is based on estimated cash flows, discounted at interest rates for similar instruments.
The carrying amounts shown of the Company’s financial instruments including cash, accounts receivable, inventories, accounts payable and accrued liabilities approximate their fair value (Level 1) due to the short-term maturities of these instruments.
Impairment of financial assets
The Company assesses at each statements of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired.
The Company recognizes expected credit losses (“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the account receivable.
The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are a probability-weighted estimate of credit losses.
ECLs are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement of the ECLs associated with its assets carried at amortized cost.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
F-12
New Accounting Pronouncements
The following accounting standards and amendments have been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the date of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective date.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
The amendments to IAS1 provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments are effective for reporting periods beginning on or after January 1, 2023. The Company is evaluating the impact of the above amendments on its consolidated financial statements.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of these consolidated financial statements in accordance with IFRS requires management to make estimates and judgments that affect the recognition, measurement and disclosure of amounts reported in these consolidated financial statements and accompanying notes. The reported amounts and note disclosures are determined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results may differ from such estimates. These judgments, estimates and assumptions are reviewed regularly.
The following are significant management judgments, estimates and assumptions used in applying the accounting policies of the Company that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses:
Leases
The Company exercises judgment in determining the approximate lease term on a lease by lease basis. The Company considers all facts and circumstances that may create an economic incentive to exercise renewal options and also evaluated the economic incentive related to continuation of existing leaseholds. The Company is also required to estimate specific criteria in order to estimate the carrying amount of right-of-use assets and lease liabilities including the incremental borrowing rate and effective interest rate.
Valuation of accounts receivable
Management monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses, if required.
Valuation of inventory
Management makes estimates of future customer demand for products when establishing appropriate provisions for inventory obsolescence. In making these estimates, management considers the aged of inventory and profitability of recent sales.
Recoverability of income taxes
The measurement and assessment of income tax assets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws and estimates of the Company’s abilities to utilize losses carried forward to offset taxes payable on future taxable income. The actual amount of income taxes only becomes final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the financial statements.
F-13
Useful life of property and equipment
Changes in the intended use of property and equipment as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the depreciation expense and carrying value of property and equipment.
Useful life of intangible assets
Changes in the intended use of intangible assets with determinable useful lives as well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in useful lives could impact the amortization expense and carrying value of intangible assets.
NOTE 4 – ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
| June 30, 2023 | December 31, 2022 | |||||||
| Customers by sales provision of services | € | € | ||||||
| VAT receivable | ||||||||
| Others | ||||||||
| € | € | |||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| € | € | |||||||
As of June 30, 2023 and December 31, 2022, the
allowance for doubtful accounts of €
NOTE 5 – INVENTORIES
As of June 30, 2023 and December 31, 2022, the
Company had finished goods of €
The Company outsourced the management of inventories to a third party with all the inventories located in warehouse owned by the third parties. The Company pays a monthly fee to the warehouse company for insurance coverage of the inventories, as stated in the agreement between both parties.
NOTE 6 – PREPAID EXPENSE
| June 30, 2023 | December 31, 2022 | |||||||
| Advancement to suppliers for inventory | € | € | ||||||
| Advancement for PP&E under construction | ||||||||
| Conference | ||||||||
| Security deposits and others | ||||||||
| € | € | |||||||
As of June 30, 2023 and December 31, 2022, the
Company has advancement to suppliers for purchase of inventory of €
F-14
NOTE 7 – PROPERTY AND EQUIPMENT
| June 30, 2023 | December 31, 2022 | |||||||
| Furniture | € | € | ||||||
| Laboratory Photovoltaic Installation | ||||||||
| Tools and Machinery | ||||||||
| Computer | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company acquired property and equipment of €
NOTE 8 – INTANGIBLE ASSETS
| June 30, 2023 | December 31, 2022 | |||||||
| Software development | € | € | ||||||
| Software | ||||||||
| Computer application | ||||||||
| Web page | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| € | ||||||||
As of June 30, 2023 and December 31, 2022, the
Company has intangible assets of €
During the six months ended June 30, 2023 and
2022, the Company recorded amortization expense of €
F-15
NOTE 9 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| June 30, 2023 | December 31, 2022 | |||||||
| Trade payable | € | € | ||||||
| VAT payable | ||||||||
| Payroll taxes payable | ||||||||
| Customer deposits | ||||||||
| € | € | |||||||
NOTE 10 – RELATED PARTY TRANSACTIONS
Due from related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Long-term investment | € | € | € | € | ||||||||||||
| Short-term investment | ||||||||||||||||
| Trade receivables | ||||||||||||||||
| Total | € | € | € | € | ||||||||||||
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Long-term loan | € | € | ( | ) | € | € | ( | ) | ||||||||
| Short-term loan | ( | ) | ( | ) | ||||||||||||
| Credits pending collection | ( | ) | ( | ) | ||||||||||||
| Total | € | € | ( | ) | € | € | ( | ) | ||||||||
All the amount due to and from related parties are unsecured, non-interest
bearing and due on demand, except for the loan agreement from Umbrella Solar of €
Due from related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Credits pending collection | € | € | € | € | ||||||||||||
| Long-term investment | ||||||||||||||||
| Trade receivable | ||||||||||||||||
| Total | € | € | € | € | ||||||||||||
F-16
Due to related parties:
| Ultimate | Senior | Other group | ||||||||||||||
| partner | partner | companies | Total | |||||||||||||
| Credits pending collection | € | € | € | ( | ) | € | ( | ) | ||||||||
| Trade payable to related party | ( | ) | ( | ) | ||||||||||||
| Total | € | € | ( | ) | € | ( | ) | € | ( | ) | ||||||
Amount due to and from related parties are unsecured, non-interest bearing and due on demand.
Six Months Ended June 30, 2023
| Senior | Other group | |||||||||||
| partner | companies | Total | ||||||||||
| Sales | € | € | € | |||||||||
| Services received | ||||||||||||
| € | € | € | ||||||||||
Six Months Ended June 30, 2022
| Senior | Other group | |||||||||||
| partner | companies | Total | ||||||||||
| Sales | € | € | € | |||||||||
| Services received | ||||||||||||
| Purchases | ||||||||||||
| € | € | € | ||||||||||
Our related party transactions during the fiscal year ended December 31, 2021, include sales of products or services made to or purchases of products or services from affiliated group companies that are under common control and to associates of such group companies. These transactions include income accrued from the commercial activities of our company. The purchases relate to merchandise that we sell in its normal course of commercial operations.
Umbrella Solar Investment, as the holding company
of the group, assumes all structural costs such as those related to the human resources, licenses, legal, tax, labor, marketing, and other
generic structural costs. A margin of
During the six months ended June 30, 2023 and
2022, the Company incurred management fees to Umbrella Solar Investment, S.A, of €
No compensation has been paid to the executives under Crocodile Investment SLU. The company expects to continue with the same allocation structure in the future.
F-17
NOTE 11 – BANK LOANS
| June 30, 2023 | December 31, 2022 | |||||||
| Bank loans | € | € | ||||||
| Lines of credit | ||||||||
| less: current portion | ( | ) | ( | ) | ||||
| € | € | |||||||
| Nominal | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Bank Loans | Currency | interest rate | Year of maturity | Face Value | Carrying Amount | Face Value | Carrying Amount | ||||||||||||||||||
| Bankia SA | EUR | % | |||||||||||||||||||||||
| Targobank SA | EUR | % | |||||||||||||||||||||||
| Banco de Sabadell SA | EUR | % | |||||||||||||||||||||||
| Liberbank | EUR | % | |||||||||||||||||||||||
| € | € | € | € | ||||||||||||||||||||||
During the six months ended June 30, 2023 and
2022, the Company incurred bank loan interest expense of €
The Company’s obligations are secured by substantially all of the assets of the Company.
| Year ended December 31, | ||||
| 2023 (excluding the six months ended June 30, 2023) | € | |||
| 2024 | ||||
| 2025 | ||||
| Thereafter | ||||
| Total | € | |||
In addition,
As of June 30, 2023
| June 30, 2023 | ||||||||||||
| Line of credit | Credit Limit | Nominal interest rate | Maturity | Carrying Value | ||||||||
| Caixabank | € | € | ||||||||||
| Sabadell | ||||||||||||
| BBVA | ||||||||||||
| BBVA | ||||||||||||
| Santander | ||||||||||||
| Abanca ICO | ||||||||||||
| Abanca | ||||||||||||
| Bankinter ICO | ||||||||||||
| Bankinter | ||||||||||||
| € | € | |||||||||||
F-18
As of December 31, 2022
| December 31, 2022 | ||||||||||||
| Line of credit | Credit Limit | Nominal interest rate | Maturity | Carrying Value | ||||||||
| Caixabank | € | € | ||||||||||
| Sabadell | ||||||||||||
| BBVA | ||||||||||||
| BBVA | ||||||||||||
| Santander | ||||||||||||
| Abanca ICO | ||||||||||||
| Abanca | ||||||||||||
| Bankinter ICO | ||||||||||||
| Bankinter | ||||||||||||
| € | € | |||||||||||
The Company has €
NOTE 12 – SHARE CAPITAL
Authorized
The Company has authorized
Issuances
During December 2022, we issued
The Company has reflected this issuance of ordinary shares for all periods presented due to their nominal value, relative to the planned Initial Public Offering. The Company accounted for the proceeds as share capital in the year ended December 31, 2022. Earnings per share and ordinary shares outstanding have been retroactively reflected to show this issuance from the earliest period reported.
Stock Split
In February 2023, the Company approved a forward
stock split of the issued and outstanding ordinary shares on a 20-for-1 basis. We increased our issued and outstanding share capital from
NOTE 13 – RESERVE
As of June 30, 2023 and December 31, 2022, reserve
was €
Legal reserve
In accordance with the capital company law, companies
must allocate amount equal to
F-19
Other reserve
The Company maintains unrestricted reserve for
undistributed profits from previous years. As of June 30, 2023 and December 31, 2022, the other reserves were €
NOTE 14 – LEASES
| Discount | June 30, | December 31, | ||||||||||
| Rate | Maturity | 2023 | 2022 | |||||||||
| Current | € | € | ||||||||||
| Non-current | ||||||||||||
| € | € | |||||||||||
| Balance - December 31, 2021 | € | |||
| Lease liability additions | ||||
| Lease liability termination | ( | ) | ||
| Repayment of Lease liability | ( | ) | ||
| Interest expense on lease liabilities | ||||
| Balance - December 31, 2022 | € | |||
| Repayment of Lease liability | ( | ) | ||
| Interest expense on lease liabilities | ||||
| Balance - June 30, 2023 | € |
On September 8, 2020, the Company entered into
a vehicle lease agreement under a four-year term and monthly lease payment of €
On January 1, 2021, the Company entered into an
office lease agreement under a five-year term and monthly lease payment of €
On June 1, 2022, the Company entered into an office
lease agreement under a two-year term extensible for
On September 26, 2022, the Company entered into
a vehicle lease agreement under a three-year term and monthly lease payment of €
On November 15, 2022, the Company entered into
a vehicle lease agreement under a three-year term and monthly lease payment of €
F-20
| 2023 (excluding the six months ended June 30, 2023) | € | |||
| 2024 | ||||
| 2025 | ||||
| Total lease payments | ||||
| Less: financing cost | ( | ) | ||
| Lease liabilities | € |
| Balance - December 31, 2021 | € | |||
| Additions | ||||
| Termination | ( | ) | ||
| Depreciation | ( | ) | ||
| Balance - December 31, 2022 | € | |||
| Depreciation | ( | ) | ||
| Balance - June 30, 2023 | € |
NOTE 15 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
| Financial assets at fair value | June 30, 2023 | December 31, 2022 | ||||||
| Cash | € | € | ||||||
| Financial assets at amortized cost | ||||||||
| Accounts receivable and other receivables | ||||||||
| Amount due from related parties | ||||||||
| Financial liabilities at amortized cost | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Amount due to related parties | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Bank loans | ( | ) | ( | ) | ||||
| € | ( | ) | € | ( | ) | |||
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. Difficulty accessing capital markets could impair the Company’s capacity to grow, execute its business model and generate financial returns. The Company manages its liquidity risk by monitoring its operating requirements to ensure financial resources are available, actively monitoring market conditions and by diversifying its sources of funding and maintaining a diversified maturity profile of its debt obligations.
F-21
Credit risk
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 Company’s main credit risk relates to its cash and accounts receivable. The Company’s credit risk is reduced by a broad customer base and a review of customer credit profiles.
The Company’s maximum exposure to credit risk corresponds to the carrying amount for all cash and accounts receivable. Cash is held with prominent financial institutions. Accounts receivable are held with vendors in which the Company has a historically strong relationship with or related to VAT receivable.
The Company mitigates credit risk associated with its trade receivables through established credit approvals, limits and a regular monitoring process. The Company generally considers the credit quality of its financial assets that are neither past due nor impaired to be solid. Credit risk is further mitigated due to the large number of customers and their dispersion across geographic areas.
As of June 30, 2023 and December 31, 2022, there
was one customer and one customer with amount outstanding that exceed
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Currency risk
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. The Company is not exposed to significant currency risk.
Interest risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its lines of credit due to fluctuations in interest rates. The Company’s bank loans and leases have fixed rates of interest resulting in limited interest rate fair value risk for the Company. The Company manages interest rate risk by seeking financing terms in individual arrangements that are most advantageous taking into account all relevant factors, including credit margin, term and basis. The risk management objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the Company.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk.
Capital management
The Company’s capital consists of share capital and reserve. The Company’s capital management is designed to ensure that it has sufficient financial flexibility both in the short and long-term to support its financial obligations and the future development of the business.
F-22
The Company manages its capital with the following objectives:
| (i) | Ensuring sufficient liquidity is available to support its financial obligations and to execute its operating strategic plans; |
| (ii) | Maintaining financial capacity and flexibility through access to capital to support future development of the business; |
| (iii) | Minimizing its cost of capital and considering current and future industry, market and economic risks and conditions; and |
| (iv) | Utilizing short-term funding sources to manage its working capital requirements and long- term funding sources to match the long-term nature of the property, plant and equipment of the business. |
There were no changes to the Company’s approach to capital management during the six months ended June 30, 2023 and year ended December 31, 2022. The Company is not subject to externally imposed capital requirements.
NOTE 16 – DEFERRED OFFERING COSTS
| June 30, 2023 | December 31, 2022 | |||||||
| Independent Professional Services | € | € | ||||||
| Legal and Tax Advice | ||||||||
| Notary, Registry and Others | ||||||||
| Video, Photography, Design and Layout | ||||||||
| € | € | |||||||
NOTE 17 – REVENUE
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Spain | € | € | ||||||
| Europe | ||||||||
| Rest of the world | ||||||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company recognized revenue of €
NOTE 18 – COST OF REVENUE
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Purchase of finished goods | € | € | ||||||
| Purchase of raw materials | ||||||||
| Outsourcing service | ||||||||
| € | € | |||||||
F-23
During the six months ended June 30, 2023 and
2022, the Company incurred cost of sales of €
NOTE 19 – SELLING AND ADMINISTRATIVE EXPENSES
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Professional fees | € | € | ||||||
| Shipping and handling expenses | ||||||||
| Warehouse handling | ||||||||
| Miscellaneous operating expenses | ||||||||
| Marketing and advertising | ||||||||
| Leases and royalties | ||||||||
| Insurance premiums | ||||||||
| Repair and conservation | ||||||||
| Supplies | ||||||||
| Amortization of property and equipment | ||||||||
| Amortization of right-of-use assets | ||||||||
| € | € | |||||||
During the six months ended June 30, 2023 and
2022, the Company incurred selling and administrative expenses of €
NOTE 20 – SUPPLEMENTAL CASH FLOW INFORMATION
Set out below are non-cash investing and financing activities during the six months ended June 30, 2023 and 2022:
| Six Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
| 2023 | 2022 | |||||||
| Reallocation of opening deficit to reserve | € | ( | ) | € | ( | ) | ||
During the six months ended June 30, 2023 and
2022, the Company paid interest of €
NOTE 21 – SUBSEQUENT EVENTS
Between the end of six months ended June 30, 2023 and the date of preparation of these consolidated financial statements, the Company has gone through a main subsequent event, which is its successful debut on the Nasdaq stock exchange on September 22, 2023
The Company announced initial public offering
of
F-24