Aduro Clean Technologies Inc.
Consolidated Financial Statements
For the Year Ended May 31, 2025
(Expressed in Canadian Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Aduro Clean Technologies Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Aduro Clean Technologies Inc. (the "Company") as of May 31, 2025 and 2024, and the related consolidated statements of loss and comprehensive loss, changes in equity and cash flows for each of the years in the two-year period ended May 31, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended May 31, 2025, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
CHARTERED PROFESSIONAL ACCOUNTANTS
We have served as the Company's auditor since 2018.
August 27, 2025
Aduro Clean Technologies Inc.
Consolidated Statements of Financial Position
Expressed in Canadian Dollars
| May 31, 2025 | May 31, 2024 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Deposits and prepaid expenses (Note 5) | ||||||
| Other receivables (Note 6) | ||||||
| Deferred transaction costs | ||||||
| Non-current | ||||||
| Property and equipment (Note 7) | ||||||
| Right of use assets (Note 8) | ||||||
| Total Assets | $ | $ | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current | ||||||
| Trade payables and other current liabilities (Note 12) | $ | $ | ||||
| Lease liability - current portion (Note 9) | ||||||
| Non-current | ||||||
| Lease liability - non-current portion (Note 9) | ||||||
| Derivative financial liability (Note 10) | ||||||
| Shareholders' equity (Note 11) | ||||||
| Share capital | ||||||
| Warrant reserve | ||||||
| Contributed surplus | ||||||
| Accumulated deficit | ( |
) | ( |
) | ||
| Total Liabilities and Shareholders' Equity | $ | $ |
Nature and continuance of operations (Note 1)
Subsequent events (Note 22)
Approved on behalf of the Board of Directors on August 27, 2025:
| "Ofer Vicus" , Director | "Peter Kampian" , Director |
The accompanying notes are an integral part of these audited consolidated financial statements.
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Aduro Clean Technologies Inc.
Consolidated Statements of Loss and Comprehensive Loss
Expressed in Canadian Dollars
| |
Year ended May 31, 2025 |
Year ended May 31, 2024 |
||||
| Revenue (Note 13) | $ | $ | ||||
| Expenses | ||||||
| Research and development (Note 16) | ||||||
| General and administrative (Note 15) | ||||||
| Depreciation and amortization (Note 7 and 8) | ||||||
| Finance costs (Note 14) | ||||||
| Foreign exchange | ||||||
| Loss before other items | ( |
) | ( |
) | ||
| Other items | ||||||
| Change in fair value of derivative financial liability (Note 10) | ( |
) | ||||
| Other income | ||||||
| Loss on sale of vehicle | ( |
) | ||||
| Loss and comprehensive loss | $ | ( |
) | $ | ( |
) |
| Basic and diluted loss per share | $ | ( |
) | $ | ( |
) |
| Weighted average number of common shares outstanding |
The accompanying notes are an integral part of these audited consolidated financial statements.
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Aduro Clean Technologies Inc.
Consolidated Statements of Changes in Equity
Expressed in Canadian Dollars
| Share Capital | |||||||||||||||||||
| Number of Shares |
Amount |
Warrant Reserve |
Contributed Surplus |
Deficit |
Total |
||||||||||||||
| Balance, May 31, 2023 | ( |
) | $ | ||||||||||||||||
| Shares issued on exercise of warrants (Note 11) | ( |
) | ( |
) | |||||||||||||||
| Shares issued on exercise of options (Note 11) | ( |
) | |||||||||||||||||
| Shares issued on RSU vesting (Note 11) | ( |
) | |||||||||||||||||
| Share-based compensation expense (Note 17) | |||||||||||||||||||
| Net loss for the year | - | ( |
) | ( |
) | ||||||||||||||
| Balance, May 31, 2024 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||
| Shares issued on exercise of Class B Special Warrants (Note 11) | |||||||||||||||||||
| Shares and warrants issued - June 17, 2024 (Note 11) | |||||||||||||||||||
| Shares and warrants issued - US Public Offering (Note 11) | |||||||||||||||||||
| Derivative financial liability (Note 10) | - | ( |
) | ( |
) | ||||||||||||||
| Shares issued on exercise of warrants (Note 11) | ( |
) | ( |
) | |||||||||||||||
| Shares issued on exercise of options (Note 11) | ( |
) | |||||||||||||||||
| Share-based compensation expense (Note 17) | - | ||||||||||||||||||
| Net loss for the year | - | ( |
) | ( |
) | ||||||||||||||
| Balance, May 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
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Aduro Clean Technologies Inc.
Consolidated Statement of Cash Flows
Expressed in Canadian Dollars
| Year ended May 31, 2025 |
Year ended May 31, 2024 |
|||||
| Operating Activities | ||||||
| Net loss for the year | $ | ( |
) | $ | ( |
) |
| Items not affecting cash: | ||||||
| Depreciation and amortization | ||||||
| Share-based compensation expense (Note 17) | ||||||
| Interest expense accrued | ||||||
| Loss on sale of vehicle | ||||||
| Change in fair value of derivative financial liability (Note 10) | ||||||
| Other income | ( |
) | ||||
| Changes in non-cash working capital (Note 21) | ( |
) | ||||
| Cash used in operating activities | ( |
) | ( |
) | ||
| Financing Activities | ||||||
| Issue of common shares, net of issuing costs (Note 11) | ||||||
| Finance lease repayments (Note 9) | ( |
) | ( |
) | ||
| Term and working capital loan repayments | ( |
) | ||||
| Deferred transaction costs | ( |
) | ( |
) | ||
| Cash provided by financing activities | ||||||
| Investing activities | ||||||
| Property and equipment acquired | ( |
) | ( |
) | ||
| Sale of vehicle | ||||||
| Cash used by investing activities | ( |
) | ( |
) | ||
| Change in cash during the year | ( |
) | ||||
| Cash and cash equivalents, start of year | ||||||
| Cash and cash equivalents, end of year | $ | $ | ||||
| Supplementary disclosure of non-cash activities: | ||||||
| Property and equipment additions in accounts payable at year-end | ||||||
| New right of use asset and related lease liability recognised at start of lease | ||||||
| Deferred transaction costs in accounts payable at year-end |
The accompanying notes are an integral part of these audited consolidated financial statements.
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| Aduro Clean Technologies Inc. Notes to the Consolidated Financial Statements For the year ended May 31, 2025 Expressed in Canadian Dollars |
1. NATURE AND CONTINUANCE OF OPERATIONS
Aduro Clean Technologies Inc. (the "Company") was incorporated in the Province of British Columbia on January 10, 2018, under the Business Corporations Act of British Columbia. On February 12, 2019, the Company's shares commenced trading on the Canadian Securities Exchange ("CSE") under the symbol "DFT." On April 23, 2021, the Company changed its name to "Aduro Clean Technologies Inc." from Dimension Five Technologies Inc. and the Company's shares were re-listed under the symbol ACT. On July 28, 2021, the Company's shares commenced trading on the Frankfurt Exchange in Germany under the symbol "9D50". On November 7, 2024, the Company's common shares commenced trading on the Nasdaq Capital Market under the ticker symbol "ADUR".
The Company's primary business is the holding company of Aduro Energy Inc. ("Aduro"). Aduro is an early-stage business focusing on developing environmentally responsible technology for converting end-of-life plastics and tire rubber to specialty chemicals and fuels that replace petroleum, upgrading of heavy crude oils and the transformation of renewable oils into renewable fuels and specialty chemicals. The water based chemical recycling platform features three sector focus applications, Hydrochemolytic Plastics Upcycling ("HPU"), Hydrochemolytic Renewables Upgrading ("HRU") and Hydrochemolytic Bitumen Upgrading ("HBU"). As at May 31, 2025, the Company has developed and owns ten patents, seven granted and three pending.
The registered and records office of the Company is located at Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, Canada V6C 2B5, and the head office of the Company is located at 542 Newbold Street, London, ON, Canada N6E 2S5.
During the year ended May 31, 2025 the Company closed a non-brokered private placement and an underwritten U.S. public offering (Note 11) that realized net proceeds of $
2. BASIS OF PREPARATION
a) Statement of compliance
These consolidated financial statements (the "Financial Statements") have been prepared based on the principles of IFRS Accounting Standards ("IFRS"). Preparation of these Financial Statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity and areas where assumptions and estimates are significant to these Financial Statements are disclosed in Note 4.
These Financial Statements were authorized for issue by the Board of Directors on August 27, 2025.
b) Basis of consolidation
The Financial Statements of all entities controlled by the Company, including Aduro Energy Inc. and Aduro Clean Technologies Europe B.V., are included in the Financial Statements from the date control commenced. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Company's subsidiaries have the same reporting date as the Company. Intra-group balances and transactions are eliminated on consolidation.
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c) Basis of measurement
The Financial Statements have been prepared using the historical cost basis except as detailed in the Company's accounting policies in Note 3.
d) Functional and presentation currency
These Financial Statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries.
3. MATERIAL ACCOUNTING POLICY INFORMATION
The material accounting policy information set out below has been applied consistently to all periods presented in these Financial Statements, unless otherwise indicated.
a) Foreign currency transaction
The Canadian dollar is the functional and presentation currency of the Company and its subsidiary. Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates in effect on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated to the functional currency at the exchange rate in effect on the statement of financial position date with any resulting foreign exchange gain or loss recognized in net income (loss).
Non-monetary items measured in terms of historical cost in a foreign currency are translated using the exchange rate in effect on the date of the transaction. Foreign currency gains and losses on transactions are reported on a net basis and recognized in foreign exchange under Expenses within Statements of Loss and Comprehensive Loss.
b) Financial instruments
All financial instruments are measured at fair value upon initial recognition of the transaction.
Measurement
Measurement in subsequent periods is dependent on whether the instrument is classified as "amortized cost", "fair value through profit or loss" or "fair value through other comprehensive income".
The Company derecognizes a financial asset when the contractual right to the cash flows from the asset expire or it transfers the right to receive the contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.
Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
All of the Company's financial assets and liabilities are classified as amortized cost, except for the derivative financial liability, which is measured at fair value through profit or loss.
Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value, adjusted for any directly attributable transaction costs. Subsequent to initial recognition, trade and other receivables are measured at amortized cost using the effective interest method, less any impairment losses.
Financial liabilities are recognized initially at fair value net of any directly attributable transaction costs. Financial liabilities (except for the derivative financial liability) are subsequently measured at amortized cost using the effective interest method.
c) Property and equipment
Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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The cost of replacing a part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.
The costs of day-to-day servicing of property and equipment (i.e., repairs and maintenance) are recognized under Expenses in the Statements of Loss and Comprehensive Loss as incurred.
A summary of the expected life and residual values for the Company's property and equipment as at May 31, 2025 and 2024 was as follows:
| Expected Life | Residual Values | |||
| Computer equipment | ||||
| Leasehold improvements | ||||
| Laboratory | ||||
| Motor vehicle | ||||
| Office equipment | ||||
| Research equipment | ||||
Depreciation is calculated based on the cost of the asset, less its estimated residual value. Depreciation is recognized in the Statements of Loss and Comprehensive Loss on a straight-line basis over the estimated useful lives of each class of asset.
An item of property and equipment is derecognized when it is either disposed of or when it is determined that no further economic benefit is expected from the item's future use or disposal. Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal, less associated costs of disposal, with the carrying amount of property and equipment, and are recognized in Other Items within the Statements of Loss and Comprehensive Loss.
d) Identifiable intangible assets
Intangible assets are recorded at cost less accumulated amortization and impairment losses. Cost includes the purchase price and the directly attributable costs to bring the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. Finite life intangible assets are amortized on a straight-line basis over their useful lives. Intangible assets with an indefinite useful life are not amortized. Amortization commences when an asset is ready for its intended use. Estimates of remaining useful lives are reviewed annually.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date that the Company can demonstrate all of the following: (i) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (ii) its intention to complete the intangible asset and use or sell it; (iii) its ability to use or sell the intangible asset; (iv) how the intangible asset will generate probable future economic benefits; (v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and (vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development. Until these criteria are met, expenditures are expensed as incurred.
A summary of the expected life and residual values for the Company's intangible assets as at May 31, 2025 and 2024 was as follows:
| Expected Life | Residual Values | ||
| Investor relations videos | |||
| Patents |
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e) Right-of-use assets and lease liability
Where the Company has entered a lease, the Company has recognized a right-of-use asset representing its rights to use the underlying assets and a lease liability representing its obligation to make lease payments. The right-of-use asset, where it relates to an operating lease, has been presented net of accumulated amortization and is disclosed under right-of-use assets on the statement of financial position. The right of use assets are depreciated over the shorter of the lease term and their estimated useful lives unless it is reasonably certain that the Company will obtain ownership at the end of the lease term, in which case, the estimated useful life of the asset is used. The lease liability has been disclosed as a separate line item, allocated between current and non-current liabilities. The lease liability associate with all leases is measured at the present value of the expected lease payments at inception and discounted using the interest rate implicit in the lease. If the rate cannot be readily determined, the Company's incremental borrowing rate is used to discount the lease liability. Judgement is required to determine the incremental borrowing rate.
A summary of the expected life and residual values for the Company's right-of-use assets as at May 31, 2025 and 2024 was as follows:
| Expected Life | Residual Values | ||
| Property leases |
f) Impairment
Financial assets
Financial assets are assessed at each reporting date to determine whether there is objective evidence that they are impaired. A financial asset is impaired if objective evidence indicates a loss event has occurred after the initial recognition of the asset and the loss event had a negative effect on the estimated future cash flows of the asset that can be estimated reliably.
Non-financial assets
The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is an indication of impairment. If an indication exists, then the asset's carrying amount is assessed for impairment. An impairment loss is recognized in net income (loss) if the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing fair value less costs to sell, the Company must estimate the price that would be received to sell the asset less any incremental costs directly attributable to the disposal. In assessing value in use, the estimated cash flows are discounted to their present value using an appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses recognized in prior periods are assessed at each reporting date for indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and the decrease in impairment loss can be objectively related to an event occurring after the impairment was recognized. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Such reversal is recognized in net income (loss).
g) Share based compensation
Share based compensation expense relates to stock options and restricted share units. Stock-based compensation expense relates to the fair value of the awards being expensed over their respective vesting periods.
Stock Options
The grant date fair value of stock options is measured using the Black-Scholes option pricing model and is recognized as an expense, with a corresponding increase in contributed surplus in equity, over the vesting period. The amount recognized as an expense is based on the estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Upon exercise of stock options, the consideration paid by the holder is included in share capital and the related contributed surplus associated with the stock options exercised is reclassified into share capital. Where the terms of a stock option are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the share-based compensation arrangement or is otherwise beneficial to the employee as measured at the date of modification over the remaining vesting period. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received.
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Restricted share units ("RSUs")
The fair value of RSUs is measured based on the closing price of the Company's common shares on the date of grant. The fair value of each tranche of RSUs is recognized as expense on a straight-line basis over its vesting period. The fair value of RSUs is charged to profit or loss with a corresponding increase in contributed surplus within equity. The amount recognized as an expense is based on the estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Upon vesting of equity settled RSUs, the related contributed surplus associated with the RSU is reclassified into share capital.
h) Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost within the Statements of Loss and Comprehensive Loss. As at May 31, 2025, the Company did not have any provisions.
i) Share capital
Share capital represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. If shares are issued when options and warrants are exercised, the share capital account also comprises the compensation costs previously recorded as contributed surplus and the fair value recorded under warrant reserve. If shares are issued within the conversion option on convertible securities' exercise, the share capital account also comprises the equity component of any of the convertible securities. Common shares issued for consideration other than cash are valued based on the fair value at the date the common shares are issued.
j) Share purchase warrants
Share purchase warrants when issued were initially measured at fair value using a Black Scholes model and the fair value is recognized in Warrants Reserve. When the share purchase warrants are exercised, the fair value attributable to the warrants exercised are added to the proceeds received and shown under share capital.
k) Derivative financial liability
When the Company issues warrants with exercise prices denominated in currencies other than in the Canadian dollar, the warrants are classified and presented as derivative financial liabilities and measured at fair value. The fair values of such warrants are determined using the Black‐Scholes option pricing model. At the end of each reporting period, the derivative financial liability is re‐measured at fair value with changes in fair value recognized in profit and loss. Derivative financial liabilities have been disclosed in Note 10.
l) Revenue from contracts with customers
Revenue is recognized at the point in time when the customer obtains control of the product and/or service. Control is achieved when a product is delivered to or the service is performed for the customer, the Company has a present right to payment for the product and/or service, significant risks and rewards of ownership have transferred to the customer according to contract terms and there is no unfulfilled obligation that could affect the customer's acceptance of the product and/or service. For contract services that last over a year, revenue is recognized over the duration of the contract.
m) Government grants
Research and experimental development tax credits are recognized using the cost reduction method in the year that they are received by the Company. Investment tax credits are subject to the customary approvals by the pertinent tax authorities. Adjustments, if required, are reflected in the year when such assessments are received.
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n) Finance costs
Finance costs comprise interest expense on borrowings, costs associated with securing debt instruments and unwinding of the discount on provisions.
o) Research and development
Research costs are expensed as incurred. Development costs are only capitalized when the product or process is clearly defined; the technical feasibility has been established; the future market for the product or process is clearly defined; and the Company is committed, and has the resources, to complete the project. During the year ended May 31, 2025 and 2024, no development costs were deferred and accounted for as identified intangible assets.
p) Income tax
Income tax expense is comprised of current and deferred income taxes. Income tax is recognized in net income (loss) and other comprehensive income (loss) except to the extent that it relates to items recognized in equity on the consolidated statements of financial position. Current income tax is calculated using tax rates which are enacted or substantively enacted at the end of the reporting period. Deferred income taxes are recognized, using the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the Financial Statements. Deferred income taxes are determined using tax rates which are enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent it is probable that taxable profits will be available against which the deductible balances can be utilized. All deferred tax assets are analyzed at each reporting period and reduced to the extent that it is no longer probable that the asset will be recovered.
q) Earnings (loss) per share
Earnings (loss) per share is computed by dividing the income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Under this method, the weighted average number of common shares used to calculate the dilutive effect in the Statements of Loss and Comprehensive Loss assumes that the proceeds that could be obtained upon exercise of options, warrants and similar instruments would be used to purchase common shares at the average market price during the period.
In periods where a net loss is incurred, basic and diluted loss per share is the same as the effect of outstanding stock options and warrants would be anti-dilutive.
r) Operating segment reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other operating segments. All operating segments' results are reviewed regularly by senior management to make decisions about resources to be allocated to the operating segment and assess its performance. Operating segment results that are reported to senior management include items directly attributable to an operating segment as well as those that can be allocated on a reasonable basis. The Company has one reportable operating segment.
s) Standards adopted in the year
The Company did not adopt any new accounting standards during the year ended May 31, 2025.
t) New interpretations and amendments not yet adopted
The are no new interpretations or amendments not yet adopted that the Company expects will have a material impact on the consolidated financial statements.
4. CRITICAL ACCOUNTING ESTIMATES
The preparation of the Financial Statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
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Certain of the Company's accounting policies and disclosures require key assumptions concerning the future and other estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities or disclosures within the next fiscal year. Where applicable, further information about the assumptions made is disclosed in the notes specific to that asset or liability. The critical accounting estimates and judgments set out below have been applied consistently to all periods presented in these Financial Statements.
a) Ability to continue as a going concern
Evaluation of the ability of the Company to realize its strategy for funding its future needs for working capital involves making judgments.
b) Property and equipment
Property and equipment are depreciated/amortized over the estimated useful life of the asset to the asset's estimated residual value as determined by management. Assessing the reasonableness of the estimated useful life, residual value and the appropriate depreciation/amortization methodology requires judgment and is based on management's experience and knowledge of the industry.
c) Impairment
An evaluation of whether or not an asset is impaired involves consideration of whether indicators of impairment exist. Factors which could indicate impairment exists include: significant underperformance of an asset relative to historical or projected operating results, significant changes in the manner in which an asset is used or in the Company's overall business strategy, the carrying amount of the net assets of the Company being more than its market capitalization or significant negative industry or economic trends. In some cases, these events are clear. However, in many cases, a clearly identifiable event indicating possible impairment does not occur. Instead, a series of individually insignificant events occur over a period of time leading to an indication that an asset may be impaired. Events can occur in these situations that may not be known until a date subsequent to their occurrence. When there is an indicator of impairment, the recoverable amount of the asset is estimated to determine the amount of impairment, if any. If indicators conclude that the asset is no longer impaired, the Company will reverse impairment losses on assets only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Similar to determining if an impairment exists, judgment is required in assessing if a reversal of an impairment loss is required.
d) Warrants, stock options, restricted share units, and derivative financial liability
Share purchase warrants, stock options, and derivative financial liabilities are initially valued at fair value, based on the application of the Black-Scholes option pricing model. This pricing model requires management to make various assumptions and estimates which are susceptible to uncertainty, including the volatility of the share price, expected dividend yield, expected term of the warrant or stock option and expected risk-free interest rate.
The fair value of RSUs is measured based on the closing price of the Company's common shares on the date of grant. The fair value of each tranche of RSUs is recognized as expense on a straight-line basis over its vesting period. The fair value of RSUs is charged to profit or loss with a corresponding increase in contributed surplus within equity. The amount recognized as an expense is based on the estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Upon vesting of equity settled RSUs, the related contributed surplus associated with the RSU is reclassified into share capital.
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5. DEPOSITS AND PREPAID EXPENSES
| |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| Prepaid Insurance | ||||||
| Prepaid Equipment | ||||||
| Prepaid Investor Relations | ||||||
| Prepaid Conferences | ||||||
| Prepaid Consulting Fees | ||||||
|
Prepaid Marketing and Events |
||||||
| Deposits | ||||||
| Other | ||||||
| Total |
6. OTHER RECEIVABLES
| |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| HST receivable | ||||||
| Due from related party | ||||||
| Services receivable | ||||||
| Other | ||||||
| Total |
The Company's exposure to credit risk related to other receivables is disclosed in Note 19.
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Aduro Clean Technologies Inc.
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7. PROPERTY AND EQUIPMENT
The following table summarizes the Company's property and equipment as at May 31, 2025 and 2024:
| Motor Vehicle $ |
Furniture & Fixtures $ |
Leasehold Improvement $ |
Computer Equipment $ |
Research Equipment $ |
Capital Work in Progress $ |
Total $ |
|||||||||||||||
| Cost: | |||||||||||||||||||||
| Balance at May 31, 2023 | |||||||||||||||||||||
| Additions | |||||||||||||||||||||
| Disposals | ( |
) | ( |
) | |||||||||||||||||
| Transfers | ( |
) | |||||||||||||||||||
| Balance at May 31, 2024 | |||||||||||||||||||||
| Additions | |||||||||||||||||||||
| Balance at May 31, 2025 | |||||||||||||||||||||
| Accumulated depreciation: | |||||||||||||||||||||
| Balance at May 31, 2023 | |||||||||||||||||||||
| Charge for the year | |||||||||||||||||||||
| Disposals | ( |
) | ( |
) | |||||||||||||||||
| Balance at May 31, 2024 | |||||||||||||||||||||
| Charge for the year | |||||||||||||||||||||
| Balance at May 31, 2025 | |||||||||||||||||||||
| Carrying amounts: | |||||||||||||||||||||
| At May 31, 2023 | |||||||||||||||||||||
| At May 31, 2024 | |||||||||||||||||||||
| At May 31, 2025 |
As at May 31, 2025, the Company had not identified any impairment indicators.
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Aduro Clean Technologies Inc.
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8. RIGHT OF USE ASSETS
The following table summarizes the Company's right of use assets as at May 31, 2025 and 2024:
| Total $ | |||
| Cost: | |||
| Balance at May 31, 2023 | |||
| Additions | |||
| Balance at May 31, 2024 | |||
| Additions | |||
| Disposal | ( |
) | |
| Balance at May 31, 2025 | |||
| Accumulated Depreciation: | |||
| Balance at May 31, 2023 | |||
| Charge for the year | |||
| Balance at May 31, 2024 | |||
| Charge for the year | |||
| Disposals | ( |
) | |
| Balance at May 31, 2025 | |||
| Carrying amounts: | |||
| At May 31, 2023 | |||
| At May 31, 2024 | |||
| At May 31, 2025 |
The property leases are for Aduro's research office located at 542 Newbold Street, London, Ontario and a leased vehicle.
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Aduro Clean Technologies Inc.
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9. LEASE LIABILITY
| |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| Gross lease obligations | ||||||
| Deferred finance charges | ( |
) | ( |
) | ||
| Total lease liability | ||||||
| Less: Current portion | ||||||
| Non-current portion | ||||||
| Interest on lease liabilities included in finance costs (Note 14) | ||||||
| Incremental borrowing rate at Initial Application date | ||||||
| Total cash outflow for the lease liability |
The Company's exposure to liquidity risk related to lease liability is disclosed in Note 19.
10. DERIVATIVE FINANCIAL LIABILITY
During the year-ended May 31, 2025, the Company issued a total of
|
Risk-free interest rate |
From |
|
Expected life |
|
|
Expected volatility |
|
|
Dividend rate |
|
The derivative financial liability is remeasured at fair value at each reporting date, with any changes in fair value recognized in the statement of loss and comprehensive loss. For the year-ended May 31, 2025, the Company recorded an increase in the fair value of the derivative financial liability of $
The following table summarizes the continuity of the derivative liability for the year-ended May 31, 2025:
| Financial Liability $ |
|||
| Balance at May 31, 2024 | |||
| Fair value of the derivative financial liability on the date of issuance | |||
| Fair value changes of the derivative financial liability | |||
| Balance at May 31, 2025 |
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Aduro Clean Technologies Inc.
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The fair value at May 31, 2025 was estimated using the Black-Scholes pricing model, based on the following assumptions:
|
Risk-free interest rate |
|
|
Expected life |
|
|
Expected volatility |
|
|
Dividend rate |
|
11. SHARE CAPITAL
Common and Preferred Shares:
Authorized:
i. Unlimited common shares without par value
ii. Unlimited preferred shares without par value
On August 20, 2024, the Company consolidated its common shares on a 3.25:1 basis. All references to the number of shares, options, RSUs, warrants, finder’s warrants and their exercise prices are restated to reflect the consolidation.
Issued and outstanding:
As at May 31, 2025, the issued and outstanding common shares of the Company consisted of
On June 17, 2024, the Company completed a non-brokered private placement pursuant to which it has issued an aggregate of
On November 8, 2024, the Company closed an underwritten U.S. public offering of
During the year ended May 31, 2025,
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Aduro Clean Technologies Inc.
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During the year ended May 31, 2024,
Stock Options:
As at May 31, 2025, the following table details the stock options outstanding:
| Number of Options | Weighted Average Exercise Price |
Weighted Average Life (years) |
Expiry Date |
| $ |
April 30, 2031 | ||
| $ |
February 20, 2032 | ||
| $ |
June 20, 2032 | ||
| $ |
December 29, 2027 | ||
| $ |
September 11, 2028 | ||
| $ |
November 29, 2028 | ||
| $ |
January 29, 2026 | ||
| $ |
August 6, 2029 | ||
| $ |
January 15, 2030 | ||
| $ |
A continuity schedule of the incentive stock options is as follows:
| May 31, 2025 | May 31, 2024 | |||||||||||
| Number of Options |
Weighted Average Exercise Price |
Number of Options |
Weighted Average Exercise Price |
|||||||||
| Outstanding beginning of year | $ | $ | ||||||||||
| Granted | ||||||||||||
| Exercised | ( |
) | ( |
) | ||||||||
| Cancelled | ( |
) | ( |
) | ||||||||
| Outstanding, end of year | $ | $ | ||||||||||
| Exercisable, end of year | $ | $ | ||||||||||
| Weighted average life (years) | ||||||||||||
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Aduro Clean Technologies Inc.
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The fair value of the stock options granted were estimated using the Black-Scholes option pricing model based on the following assumption ranges:
|
Risk-free interest rate |
from |
|
Expected life |
from |
|
Expected volatility |
from |
|
Dividend rate |
|
For the year ended May 31, 2025, an expense of $
Share Purchase Warrants:
As at May 31, 2025, the following table details the share purchase warrants issued by the Company:
| Description | Expiry Date | Outstanding at May 31, 2025 |
Exercise price |
Term (years) |
| June 2024 Share Warrants | June 17, 2026 | $ |
||
| June 2024 Finder Warrants | June 17, 2026 | $ |
||
| November 2024 Share Warrants | November 7, 2029 | US $ |
||
| Total outstanding and exercisable | ||||
| Weighted average exercise price and remaining term (in years) | $ |
|||
A continuity schedule of the number of share purchase warrants is as follows:
| Total | |||
| Outstanding and exercisable, May 31, 2023 | |||
| Cancelled/Expired/Exercised | ( |
) | |
| Outstanding and exercisable, May 31, 2024 | |||
| Issued | |||
| Cancelled/Expired/Exercised | ( |
) | |
| Outstanding and exercisable, May 31, 2025 |
The carrying amounts of the June 2024 Finder Warrants are recognized as part of contributed surplus while the carrying amount of the other share purchase warrants are included in warrant reserve.
During the year ended May 31, 2025,
During the year ended May 31, 2024,
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Aduro Clean Technologies Inc.
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The fair value of the warrants issued were estimated using the Black-Scholes option pricing model based on the following assumption ranges:
|
Risk-free interest rate |
from |
|
Expected life |
from |
|
Expected volatility |
from |
|
Dividend rate |
|
Special Warrants
On the closing of the transaction with Aduro Energy Inc. and Aduro's security holders whereby the Aduro's security holders sold their shares to the Company such that all of the issued and outstanding common shares of Aduro are now wholly owned by the Company (the "Transaction"), the Company issued
Restricted Share Units
On September 11, 2023, the Company awarded
12. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
Key management personnel are those persons that have authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include all the directors and officers of the Company.
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Aduro Clean Technologies Inc.
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During the years ended May 31, 2025 and 2024, compensation of key management personnel was as follows:
| |
Year ended May 31, 2025 |
Year ended May 31, 2024 |
||||
| Salary and related costs | ||||||
| Professional fees | ||||||
| Share-based compensation expense (Note 17) | ||||||
All transactions with related parties are in the normal course of operations and are measured at the exchange amount, being the amount of consideration established and agreed to by the related parties.
As at May 31, 2025 and 2024, the outstanding balances for related parties was comprised of the following:
| |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| Due to key management personnel | ||||||
| Due from key management personnel |
These amounts are unsecured, non-interest bearing and have no specific terms of repayment.
13. REVENUE
The Company entered into technical evaluation agreements with confidential publicly traded organisations for execution of a proof of concept and evaluation of the Company's HPU and HBU technology. Revenue in the amount of $
14. FINANCE COSTS
Finance costs recognized in the Statements of Loss and Comprehensive Loss are comprised of the following:
| |
Year ended May 31, 2025 |
Year ended May 31, 2024 |
||||
| Lease finance charges | ||||||
| Interest on debt: | ||||||
|
Working capital loan - BDC |
||||||
|
Term loan |
||||||
| Other finance costs | ||||||
| Total Finance Costs |
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Aduro Clean Technologies Inc.
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15. GENERAL AND ADMINISTRATIVE
General and administrative expenses recognized in the Statements of Loss and Comprehensive Loss are comprised of the following:
| |
Year ended May 31, 2025 |
Year ended May 31, 2024 |
||||
| Salary and related costs (Note 17) | ||||||
| Office and general | ||||||
| Investor relations and communication costs (Note 17) | ||||||
| Professional fees (Note 17) | ||||||
| Transfer agent and filing costs | ||||||
| Travel | ||||||
| Conferences | ||||||
| Bank charges | ||||||
| Automobile | ||||||
| Other | ||||||
| Total General and Administrative |
16. RESEARCH AND DEVELOPMENT
Research and development expenses recognized in the Statements of Loss and Comprehensive Loss are comprised of the following:
| |
Year ended May 31, 2025 |
Year ended May 31, 2024 |
||||
| Project related expenses (Note 17) | ||||||
| Salary costs allocated (Note 17) | ||||||
| Payments to research partners | ||||||
| Professional fees - patent development costs | ||||||
| Total research and development |
17. SHARE-BASED COMPENSATION EXPENSE
Share-based payment compensation recognized in the Statements of Loss and Comprehensive Loss is comprised of the following:
| |
Year ended May 31, 2025 $ |
Year ended May 31, 2024 $ |
||||
| Expense recognized for services provided based on vesting conditions of stock options (Note 11) | ||||||
| Expense recognized for services provided based on vesting conditions of restricted share units (Note 11) | ||||||
| Total share-based compensation expense |
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Aduro Clean Technologies Inc.
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Share-based compensation expense is included in the Statement of Loss and Comprehensive Loss as follows:
| |
Year ended May 31, 2025 $ |
Year ended May 31, 2024 $ |
||||
| Salary and related costs (Note 15) | ||||||
| Investor relations and communication costs (Note 15) | ||||||
| Professional fees (Note 15) | ||||||
| Project related expenses (Note 16) | ||||||
| Salary costs allocated (Note 16) | ||||||
| Total share-based compensation expense |
18. INCOME TAXES
The following provides a reconciliation of loss before income taxes to total income taxes recognized in the Statements of Loss and Comprehensive Loss:
| |
Year ended May 31, 2025 $ |
Year ended May 31, 2024 $ |
||||
| Loss before income taxes | ( |
) | ( |
) | ||
| Statutory rate | ||||||
| Expected income tax recovery | ( |
) | ( |
) | ||
| Deductible and non-deductible items | ||||||
| True-up of prior year amounts | ( |
) | ||||
| Unrecognized benefit of non-capital losses | ||||||
| Total income taxes |
As at May 31, 2025 and 2024, the nature of the Company's temporary differences was as follows:
| |
Year ended May 31, 2025 $ |
Year ended May 31, 2024 $ |
||||
| Tax loss carry forwards | ||||||
| Property and equipment and intangible assets | ( |
) | ( |
) | ||
| Other temporary differences | ( |
) | ( |
) | ||
| Finance costs and financing allowance | ||||||
| Valuation allowance | ( |
) | ( |
) | ||
| Total deductible temporary differences not recognized |
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Aduro Clean Technologies Inc.
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As at May 31, 2025, the Company has accumulated non-capital losses for the Canadian income tax purposes totaling approximately $
| |
Year of Origin |
Year of Expiry |
Amount $ |
| 2012 | |||
| 2013 | |||
| 2014 | |||
| 2015 | |||
| 2016 | |||
| 2017 | |||
| 2018 | |||
| 2019 | |||
| 2020 | |||
| 2021 | |||
| 2022 | |||
| 2023 | |||
| 2024 | |||
| 2025 | |||
| Total tax loss carry forwards |
19. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Interest rate risk
The Company is exposed to interest rate risk. The lease liabilities have fixed cost of funds rate until maturity though subject to interest rate fluctuations if refinanced.
Foreign exchange risk
The Company is primarily exposed to foreign currency fluctuations in relation to its US dollar cash and trade payables. US dollar financial instruments subject to foreign exchange risk are summarized below. The Company has assessed the risk and decided not to hedge the risk.
| (US$) |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| Cash and cash equivalents | ||||||
|
Services receivable |
|
|||||
| Trade payables | ||||||
| Net US dollar exposure | ( |
) |
As at May 31, 2025, with other variables unchanged, a $
Credit risk
Credit risk arises from cash and cash equivalents held with a bank as well as credit exposure to customers in the form of outstanding trade and other receivables but excluding balances receivable from government entities. The maximum exposure to credit risk is equal to the carrying value of the Company's cash and other receivables which reflects management's assessment of the credit risk which at May 31, 2025 was $
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Aduro Clean Technologies Inc.
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Impairment losses
The allowance for doubtful accounts in respect of other receivables is used to record impairment losses unless the Company is satisfied that no recovery of the amount owing is possible. At that point, the amounts are considered unrecoverable and are written off against the financial asset directly. The Company did not record any impairment for years ended May 31, 2025 and 2024.
Liquidity risk
Liquidity risk is the exposure of the Company to the risk of not being able to meet its financial obligations as they become due. The Company manages liquidity risk through management of its cash and cash equivalents and working capital balances.
The table below provides an analysis of the expected maturities of the Company's outstanding obligations as at May 31, 2025:
| Total | Due prior to | |||||||||||
| Amount | 2026 | 2027 | 2028 | |||||||||
| $ | $ | $ | $ | |||||||||
| Trade payables and other current liabilities | ||||||||||||
| Lease liability (Note 9) | ||||||||||||
| Total expected maturities | ||||||||||||
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income (loss) or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimizing returns.
Capital management
Management is focused on several objectives while managing the capital structure of the Company, specifically:
| • |
Ensuring the Company has the financing capacity to execute its business plan and meet its strategic objectives while capitalizing on opportunities that add value for the Company's shareholders; |
|
| • |
Maintaining a strong capital base; and |
|
| • |
Safeguarding the Company's ability to continue as a going concern, such that it provides returns for shareholders and benefits for other stakeholders. |
20. OPERATING SEGMENTS
Reportable Segments
The business is in early stage focusing on developing environmentally responsible technology for converting end-of-life plastics and tire rubber to specialty chemicals and fuels that replace petroleum, upgrading of heavy crude oils and the transformation of renewable oils into renewable fuels and specialty chemicals. For management purposes, the Company activities are managed and monitored by senior management as one operating segment. These consolidated financial statements are the same financial statements that management uses to monitor the performance of the Company and for the allocation of resources.
Entity Wide Disclosures
As at May 31, 2025, the Company's operations and assets were in Canada and the Netherlands.
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Aduro Clean Technologies Inc.
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As at May 31, 2025, geographic information was as follows:
| |
Canada | Netherlands | ||||
| Assets | ||||||
| Loss and comprehensive loss | ( |
) | ( |
) |
As at May 31, 2024, geographic information was as follows:
| |
Canada | Netherlands | ||||
| Assets | ||||||
| Loss and comprehensive loss | ( |
) | ( |
) |
As an early-stage development company, the Company was not yet generating sustainable revenues from its development activities. The revenues of $
21. SUPPLEMENTAL CASH FLOW INFORMATION
For the years ended May 31, 2025 and 2024, the net change in non-cash working capital balances consists of the following:
| |
May 31, 2025 $ |
May 31, 2024 $ |
||||
| Other receivables | ||||||
| Deposits and prepaid expenses | ( |
) | ||||
| Trade payables and other current liabilities | ( |
) | ||||
| Project contributions payable | ||||||
| Net change in non-cash working capital balances | ( |
) |
22. SUBSEQUENT EVENTS
Underwritten U.S. Public Offering
On June 11, 2025, the Company closed its underwritten U.S. public offering of
On June 20, 2025, the Company closed an underwriters over-allotment option of
Grant of Stock Options and RSUs
On July 3, 2025, the Company granted an aggregate of
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Aduro Clean Technologies Inc.
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In addition, the Company granted
Exercise of options and warrants
Subsequent to May 31, 2025,
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