Cleantek Industries : 2022 Q4 Annual Financial Statements

Consolidated Financial Statements

For the years ended December 31, 2022 and 2021

Management's Responsibility for Financial Statements

The management of Cleantek Industries Inc. is responsible for the preparation and integrity of the accompanying consolidated financial statements and all other information contained in these consolidated financial statements. These consolidated financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and include amounts that are based on management's informed judgments and estimates where necessary.

The Company maintains internal accounting control systems which are adequate to provide reasonable assurance that assets are safeguarded, transactions are executed in accordance with management's authorization and accounting records are reliable as a basis for the preparation of the consolidated financial statements.

The Board of Directors, through its Audit Committee, monitors management's financial and accounting policies and practices and the preparation of these consolidated financial statements. The Audit Committee meets periodically with the external auditors and management to review the work of each and the propriety of the discharge of their responsibilities. Specifically, the Audit Committee reviews with management and the external auditors the consolidated financial statements and management's discussion and analysis of the Company prior to submission to the Board of Directors for final approval. The external auditors have full and free access to the Audit Committee to discuss auditing and financial reporting matters.

The shareholders have appointed KPMG LLP as the external auditors of the Company and, in that capacity, they have examined the consolidated financial statements for the years ended December 31, 2022 and 2021. The Auditor's Report to the shareholders is presented herein.

Matt Gowanlock	Orson Ross, CPA, CA
President & CEO	Chief Financial Officer
April 28, 2023

KPMG LLP

205 5th Avenue SW Suite 3100 Calgary AB T2P 4B9 Tel [phone] Fax [phone] www.kpmg.ca

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Cleantek Industries Inc.

Opinion

We have audited the consolidated financial statements of Cleantek Industries Inc. (the "Entity"), which comprise:

• the consolidated statements of financial position as at December 31, 2022 and December 31, 2021;
• the consolidated statements of net loss for the years then ended;
• the consolidated statements of comprehensive loss for the years then ended;
• the consolidated statements of changes in shareholders' equity (deficiency) for the years then ended;
• the consolidated statements of cash flows for the years then ended;
• and notes to the consolidated financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2022, and December 31, 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of our auditor's report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance with these requirements.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2(b) in the financial statements, which indicates that there are upcoming maturities of the Entity's Canadian Private Debt Credit Facilities on October 31, 2023. The Entity's ability to continue as a going concern is dependent upon the Entity receiving the continued support of its Canadian Private Debt Credit Facilities lender as the Entity seeks to find an alternate lender or obtain an extension of the maturity date of the Canadian Private Debt Credit Facilities.

As stated in Note 2(b) in the financial statements, these events or conditions, along with other matters as set forth in Note 2(b) in the financial statements impacting the Entity's ability to address these maturities, indicate that a material uncertainty exists that may cast significant doubt on the Entity's ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the "Material Uncertainty related to Going Concern" section, we have determined the matter described below to be the key audit matter to be communicated in our auditor's report.

Assessment of indicators of impairment of the Entity's Rentals and Facility Dehydration cash generating units ("CGUs")

Description of the matter

We draw attention to Note 2, Note 3, Note 6, Note 7 and Note 8 to the financial statements. The carrying amounts of the Entity's non-financial assets including property and equipment, intangible assets and right of use assets are reviewed at each reporting date or when facts and circumstances suggest that the carrying amount may exceed its recoverable amount to determine whether impairment or impairment reversal indicators exist, and impairment or impairment reversal testing is required for a CGU.

Significant judgment is required to assess when impairment indicators exist, and impairment testing is required. The assessment of impairment or impairment reversal indicators is based on management's judgement of whether there are internal and external factors that would indicate that a CGU and specifically the non-financial assets within the CGU, are impaired. These factors include cash flow forecasts based on future revenues and expected maintenance and operating costs, expected industry activity levels, commodity price environment and market capitalization.

As at December 31, 2022, management determined no indicators of impairment or impairment reversal existed for the Entity's Rentals and Facility Dehydration CGUs.

Why the matter is a key audit matter

We identified the assessment of indicators of impairment of the Entity's Rentals and Facility Dehydration CGUs as a key audit matter. Significant auditor judgement was required in evaluating the internal and external factors included in the Entity's indicator of impairment analysis.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We compared the Entity's 2022 actual revenues and cash flows for the Rentals and Facility Dehydration CGUs to the 2022 budgeted revenues and cash flows to assess the Entity's ability to accurately forecast.

We evaluated the Entity's assessment of impairment indicators by:

• comparing the Entity's 2023 budgeted cash flow forecasts for the Rentals and Facility Dehydration CGUs to 2022 historical results considering the impact of changes in conditions and events affecting the Rentals and Facility Dehydration CGUs
• comparing internal and external factors, including expected industry activity levels and commodity price environment analyzed by the Entity to the relevant external market data or internal source documents
• comparing the market capitalization at December 31, 2022 to the carrying amount of the Entity's shareholders' equity at the end of the year.

Other Information

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

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor's report.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.