EQ Resources Limited Annual Report 2021

EQ Resources Limited Annual Report 2021 39 Notes to the Consolidated Financial Statements ANNUAL Report June 2021 Notes to the Consolidated Financial Statements 25 Notes to the Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Going Concern Basis for Preparation of Financial Statements These financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business. For the full-year ended 30 June 2021, the consolidated entity incurred a total comprehensive loss of $4,574,191 (2020: loss of $3,015,680), incurred cash outflows from operating activities of $3,816,722 (2020: $2,948,321) and had a net working capital deficit of $234,358 (2020: $2,571,385 surplus). The deficit in net working capital was due largely to the reclassification of the Offtake Contract Liability from non-current to current. The ability of the Company to continue to adopt the going concern assumption is based upon the Company raising $6 million via the issue of 2-year Convertible Notes in September 2021 along with it having a source of income from the Mt Carbine Quarry and the Company’s joint venture with CRONIMET Australia Pty Ltd for the development of the Mt Carbine Tailings and Low Grade Stockpile Retreatment Projects. Should additional funds be necessary the Directors are confident of securing these funds if and when necessary to meet the Company’s obligations as and when they fall due and consider the adoption of the going concern basis to be appropriate in the preparation of these financial statements. (b) Basis of Preparation These general-purpose financial statements have been prepared in accordance with the requirements of the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 . These financial statements have been prepared on a historical cost basis. The financial report is presented in Australian currency. The consolidated entity operates on a for-profit basis. (c) Statement of Compliance The financial statements have been prepared and comply with Australian Accounting Standards. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (d) Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) as at 30 June each year. Control is defined as entities which the Group has power over and the rights to, or is exposed to, variable returns from its involvement with the entity and has the ability to use its power to affect those returns. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Subsidiaries are fully consolidated from the date upon which control is transferred to the Group and cease to be consolidated from the date upon which control is transferred out of the Group.