HTC Purenergy : 2021 Third Quarter Report

INTERIM FINANCIAL STATEMENTS

3RD QUARTER ENDING SEPTEMBER 30, 2021

HTC Extraction Systems - Financial Statements	Q3 2021

To the Shareholders of HTC Purenergy Inc.

dba HTC Extraction Systems ("HTC" or the "Corporation")

Management's Accountability for Management's Discussion and Analysis and Financial Statements

The unaudited condensed consolidated interim financial statements for the period ending September 30, 2021 ("Financial Statements") have been prepared by management in accordance with International Financial Reporting Standards in Canada. Management is responsible for ensuring that these statements, which include amounts based upon estimates and judgment, are consistent with other information and operating data contained in management's discussion and analysis for the period ending September 30, 2021 ("MD&A") and reflect HTC's business transactions and financial position.

Management is also responsible for the information disclosed in the MD&A, including responsibility for the existence of appropriate information systems, procedures and controls, to ensure that the information used internally by management and disclosed externally is complete and reliable in all material respects.

In addition, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the Corporation's assets are appropriately accounted for and adequately safeguarded.

The board of directors ("Board") annually appoints an audit committee which includes directors who are not employees of the Corporation. This committee meets regularly with management and the shareholders' auditors to review significant accounting, reporting and internal control matters. The shareholders' auditors have unrestricted access to the audit committee. The audit committee reviews the interim and annual financial statements, the report of the shareholders' auditors, and the interim and annual management's discussion and analysis and has delegated authority to approve the interim filings and makes recommendations to the Board regarding annual filings.

Management has reviewed the filings of the Corporation's MD&A, Financial Statements and attachments thereto. Based on our knowledge, having exercised reasonable diligence, these filings do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, with respect to the period covered by the interim filings. Based on our knowledge, having exercised reasonable diligence, the Financial Statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, the financial performance, and cash flows of the Corporation, as of the date of and for the periods presented in the interim filings.

Signed "Lionel Kambeitz"	Signed "Jacelyn Case"
LIONEL KAMBEITZ	JACELYN CASE
CHAIRMAN & CEO	CHIEF FINANCIAL OFFICER

HTC Extraction Systems | Financial Statements	1

HTC Extraction Systems - Financial Statements	Q3 2021

NOTICE TO READER OF THE

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

The condensed consolidated interim financial statements for the nine-month period ending September 30, 2021 have been prepared by management in accordance with the International Financial Reporting Standards and have not been reviewed by HTC Purenergy Inc. dba HTC Extraction Systems' Auditor.

Signed "Lionel Kambeitz"

Lionel Kambeitz

Chairman, CEO and Director

HTC Extraction Systems | Financial Statements	2

HTC Extraction Systems - Financial Statements

Q3 2021

Condensed Consolidated Interim Statements of Financial Position

(In Canadian dollars)

For the period ended	Note	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Current Assets:
Cash		$	30,054	$	197,941
Accounts receivable	28		48,703		25,002
Other receivables	4		46,150		54,207
Government remittances receivable			4,940		37,131
Prepaid expenses and deposits	5		685,265		723,034
Inventory	7		932,051		762,104
Investments (FVTPL)	6		103,013		95,323
Assets available for sale	31		-		558,780
			1,850,176		2,453,522
Noncurrent Deposits	8		75,127		87,170
Property, plant and equipment	9		6,431,173		7,342,469
Right-of-use asset	10		297,999		349,011
Investment in associates	11		3,269,447		-
Intangible assets	12		616,233		902,977
Total assets		$ 12,540,155	$ 11,135,149
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	28	$	1,411,807	$	1,028,005
Dividend in kind payable	13		2,176,680		-
Dividend tax payable	13		16,425		-
Current portion of lease liability	14		114,438		172,906
Liabilities directly associated with the assets held for sale	31		-		50,986
			3,719,350		1,251,897
Lease liability	14		188,426		188,621
Long term debt	15		4,864,149		4,459,102
Promissory note	16		1,012,350		946,385
Total liabilities			9,784,275		6,846,005
Shareholders' equity:
Share capital	17		59,128,086		59,128,086
Contributed surplus	18		4,959,257		4,959,257
Accumulated deficit		(61,334,215)	(59,567,491)
Accumulated other comprehensive income (loss)			26,978		(214,769)
Total equity attributable to shareholders of the Corporation			2,780,106		4,305,083
Total equity attributable to non-controlling interest			(24,226)		(15,939)
Total equity			2,755,880		4,289,144
Total liabilities and equity		$ 12,540,155	$ 11,135,149
Going Concern (Note 1)
Commitments (Note 33)
Subsequent Events (Note 34)

See accompanying notes to the Financial Statements

HTC Extraction Systems | Financial Statements	3

		HTC Extraction Systems - Financial Statements			Q3 2021
	Consolidated Statements of Income
	(In Canadian dollars)
	For the nine-month period ended September 30,	Note		2021		2020
	Continuing operations
	Consulting		$	389,490	$	2,031
	Sales - CBD products (Kase)			5,290		5,957
	Sales - hemp inventory			6,485		-
					401,265		7,988
	Cost of sales - consulting			11,409		-
	Cost of sales - CBD products (Kase)			2,362		1,323
	Cost of sales - hemp inventory			5,775		-
	Commercialization, product development and administration	20		791,300		1,479,070
	Amortization	9,10,12		1,314,901		625,487
	Operating loss		(1,724,482)	(2,097,892)
	Finance income	21		37,634		134,406
	Finance expense	22		(226,648)		(57,299)
	Net finance income (expense)			(189,014)		77,107
	Other income			492,772		1,392
	Dividend income			-		2,672,700
	Gain on sale of assets			-		1,323,433
	Loss from equity investment Delta (net of tax)	11		(850,985)		-
	Impairment of inventory	7		(158,656)		-
	Unrealized gain on fair value growth of biological assets			-		370,478
	Stock based compensation expense	18		-		(105,521)
	Share issuance costs			-		(178,800)
	Income (loss) before tax		(2,430,365)		2,062,897
	Income tax recovery	19		-		-
	Income (loss) from continuing operations		$(2,430,365)	$ 2,062,897
	Income (loss) from discontinued operations, net of tax	31		2,848,459	(1,065,498)
	Net income for the period		$	418,094		$ 997,399
	Net income for the year attributable to:
	Shareholders of the Corporation		$	426,381	$ 1,006,684
	Non-controlling interest			(8,287)		(9,285)
	Net income for the period		$	418,094		$ 997,399
	Net income per share - basic and dilutive	25		0.00		0.00
	Net income per share - basic and fully diluted from	25		0.01		0.01
	continued operations*
	*Fully diluted earnings per share is not presented when there is a loss as the impact would be anti-
	dilutive.
		See accompanying notes to the Financial Statements
		HTC Extraction Systems | Financial Statements					4