HTC Purenergy : 2020 Annual Report

ANNUAL AUDITED FINANCIAL STATEMENTS

YEAR END DECEMBER ,

CLEAN ENERGY

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of HTC Purenergy Inc.

Opinion

We have audited the consolidated financial statements of HTC Purenergy Inc. and its subsidiaries (the "Company") which comprise the consolidated statement of financial position as at December 31, 2020 and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the year then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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 Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying consolidated financial statements which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Matter

The consolidated financial statements of the Company as at December 31, 2019 and for the year then ended, which are presented for comparative purposes, were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements in their report dated June 13, 2020.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

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

In connection with our audit of the consolidated 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 consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

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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. We have nothing to report in this regard.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditors' report is Joseph Bonvillain.

/S/ MANNING ELLIOTT

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, British Columbia

July 30, 2021

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	HTC Extraction Systems - Financial Statements			2020
	Consolidated Statements of Financial Position
	(In Canadian dollars)
	As at	Note	Dec. 31, 2020	Dec. 31, 2019
	ASSETS
	Current Assets:
	Cash		$	197,941	$ 5,208,433
	Accounts receivable	33		25,002	1,655,031
	Other receivables	5		54,207	4,005,530
	Government remittances receivable			37,131	243,327
	Prepaid expenses and deposits	6		723,034	662,040
	Inventory	9		762,104	254,225
	Grain contract assets	7		-	1,245,203
	Investments (FVTPL)	8		95,323	93,736
	Assets held for sale	36		558,780	-
				2,453,522	13,367,525
	Noncurrent deposits	10		87,170	3,013,843
	Property, plant and equipment	11		7,342,469	27,874,459
	Right-of-use asset	12		349,011	308,627
	Other receivables - long term	5		-	6,967
	Loan receivable	21		-	1,511,991
	Product development	13		-	289,062
	Investments (FVTOCI)	15		-	103,579
	Patents	16		-	104,850
	Intangible assets	17		902,977	158,220
	Total Assets		$ 11,135,149	$ 46,739,123
	LIABILITIES
	Current Liabilities:
	Accounts payable and accrued liabilities	33	$	1,028,005	$ 1,795,076
	Deferred guarantee			-	157,019
	Bank line of credit	20		-	2,479,679
	Current portion of lease liability	19		172,906	115,693
	Current portion of long-term debt	20		-	495,102
	Liabilities held for sale	36		50,986	-
				1,251,897	5,042,569
	Lease liability	19		188,621	419,440
	Long term debt	20		4,459,102	11,893,486
	Promissory note	21		946,385	-
	Total Liabilities			6,846,005	17,355,495
	EQUITY
	Share capital	22		59,128,086	47,979,086
	Contributed surplus	23		4,959,257	4,606,214
	Accumulated deficit		(59,567,491)	(26,762,054)
	Accumulated other comprehensive loss			(214,769)	(209,951)
	Total equity attributable to shareholders of the Corporation			4,305,083	25,613,295
	Total equity attributable to non-controlling interest			(15,939)	3,770,333
	Total equity			4,289,144	29,383,628
	Total Liabilities and Equity		$ 11,135,149	$ 46,739,123
	Going Concern (Note 1)

Commitments and Contingencies (Note 38)

Subsequent Events (Note 39)

The accompanying notes are an integral part of these financial statements.

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