Accounting, Tax & IFRS Treatment

The numbers in this data room rest on a handful of accounting and tax positions. The material ones are deliberately conservative, and where they matter most they are still to be confirmed by an auditor and by Peruvian tax counsel. This section sets them out plainly, including the ones that could move the headline.

How revenue is recognised

The model follows IFRS 15, the standard for recognising revenue from contracts.

The licenses and the monitoring service are recognised over time, not in a lump sum. The jurisdictional and enterprise data licenses (IS1, IS2) give the customer a right to access an evolving data layer, so the revenue is spread across the contract as access is provided; the monitoring service (IS3) is recognised as it is delivered. The one open item is to confirm cancellability in the contract terms.
The principal-versus-agent question is the one that can move the headline. When CeibaQ is paid as a subcontractor inside a fund-financed program, an auditor could decide it is acting as an agent and require revenue to be shown net of pass-through costs rather than gross. That would lower the reported top line without changing the cash. The contracts are deliberately structured as a service procurement, with CeibaQ as the principal that owns the deliverable, so that revenue is recognised gross. This is a structuring goal, and we flag it as one.

The grant, and depreciation

The platform is funded mostly by a non-dilutive grant, and how that grant is accounted for decides whether depreciation reaches the profit line.

Under IAS 20, the standard for government and institutional grants, the grant is netted against the asset it funds, so the carrying value is close to zero and the depreciation that hits the profit line is close to zero in the base case. The alternative treatment — holding the grant as deferred income released over the asset's life — is the auditor's election; either way the roughly $19.3M build is non-dilutive and does not run through the equity rounds.
The no-grant case capitalises the full build and depreciates it straight-line at roughly $2.4M a year at peak, which is the difference shown in Downside & Stress. The election between the two treatments is pending the IFRS auditor.

Tax: the Amazon regime

CeibaQ operates in Loreto under Peru's Amazon Investment Law (Law No. 27037).

The headline benefit is a 5% corporate income-tax rate, against the standard 29.5%, together with zero import duties on equipment, and it runs through to the end of 2048, not a near-term expiry. The financial model applies the 5% rate.
The eligibility position is a management estimate, to be confirmed by counsel. The law's list of qualifying activities is closed and built around forestry, agriculture and related processing. The concession company does forest activity and qualifies plainly. The data company's claim rests on its infrastructure and its jobs all sitting in the Amazon and on its forestry linkage; because a pure data and measurement activity is not explicitly named in the list, the 5% rate for the data company is a position that Peruvian tax counsel must confirm. The fallback, if it is not confirmed, is the 10% Amazon rate or the 29.5% standard rate.
We make no claim to any VAT exemption. The value-added-tax relief once available in Loreto was repealed in 2018, and the model does not assume it.
The 2027 build-year loss is conservatively not modelled as a tax shield against later profits, which is a small upside if Peru's loss-carry-forward rules allow it.

The independence firewall

The outcome-verification stream depends on CeibaQ being seen as independent, and the accounting structure protects that.

CeibaQ cannot be both the data supplier and the independent verifier of the same instrument. That would be an assurance-independence conflict under the ISAE 3000 and 3410 assurance standards. The verification work is therefore walled off, through a separate entity or a third-party assurer, and the carbon credits themselves are issued and verified outside the data company, in the structure set out in Corporate Structure.

Intellectual property

One United States patent application is pending. It is an application, not a granted patent, and is described that way throughout. The inventor and contractor intellectual-property assignment agreements to AWAKEN AI must be executed before due diligence, and are not yet signed; completing them is one of the legal steps of this round.

The honest read

These are the positions the model rests on, and the ones that matter are conservative and still open: the grant treatment awaits the IFRS auditor, the 5% tax rate and the gross revenue recognition await Peruvian counsel and the auditor, and the IP assignments await signature. Where a position is uncertain, the model takes the conservative side or names the fallback, rather than assuming the best case. Two Peruvian counsel memoranda — one on the tax position and one on the ownership of ecosystem data as distinct from the underlying natural resource — are being finalised and are available to investors on request.