HTC Purenergy : 2022 Second Quarter Report

INTERIM FINANCIAL STATEMENTS

2ND QUARTER END JUNE 30, 2022

HTC Extraction Systems - Financial Statements	Q2 2022

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 consolidated interim financial statements ("Financial Statements") for the six- month period ending June 30, 2022 ("Period") 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 ("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 ("interim filings"). Based on our knowledge, having exercised reasonable diligence, these interim 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

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HTC Extraction Systems - Financial Statements	Q2 2022

NOTICE TO READER OF THE

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

The condensed consolidated interim financial statements for the six-month period ending June 30, 2022 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

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HTC Extraction Systems - Financial Statements

Q2 2022

Condensed Consolidated Interim Statements of Financial Position

(In Canadian dollars)

For the period ended	Note	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Current Assets:
Cash			$	6,424	$	114,275
Accounts receivable	24			132,127		164,113
Government remittances receivable				18,282		5,755
Prepaid expenses and deposits	4			972		7,503
Inventory	5			39,414		212,489
Investments (FVTPL)	6		1,338,210		1,338,210
			1,535,429		1,842,345
Noncurrent Deposits				75,127		75,127
Property, plant and equipment	7		3,054,412		3,211,095
Right-of-use asset	8			78,135		91,629
Investment in associates	9		1,916,329		2,432,239
Total assets		$	6,659,432	$ 7,652,435
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	24	$		716,245	$	732,263
Dividend-in-kind payable	10		2,237,886		2,237,886
Dividend tax payable	10			12,998		12,998
Current portion of lease liability	11			17,164		32,540
Corporate tax payable	6			193,195		193,195
			3,177,488		3,208,882
Lease liability	11			49,686		49,686
Long term debt	12		5,306,013		5,249,048
Customer deposit	13			653,333		500,000
Promissory note	14		1,049,987		1,015,453
Total liabilities			10,236,507	10,023,069
Shareholders' equity:
Share capital	15		59,128,086	59,128,086
Contributed surplus	16		4,959,257		4,959,257
Accumulated deficit		(67,439,071)	(66,232,630)
Total equity attributable to shareholders of the Corporation			(3,351,728)	(2,145,287)
Total equity attributable to non-controlling interest				(225,347)		(225,347)
Total equity			(3,577,075)	(2,370,634)
Total liabilities and equity		$	6,659,432	$ 7,652,435
Going concern (Note 1)
Commitments (Note 27)
Subsequent events (Note 28)

See accompanying notes to the Financial Statements

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HTC Extraction Systems - Financial Statements

Q2 2022

Consolidated Statements of Income or Loss and Other Comprehensive Income or Loss

(In Canadian dollars)

For the six-month period ended June 30,	Note		2022	2021
Continuing operations
Consulting		$	-	$ 389,630
Inventory sales			249,031	-
			249,031	389,630
Cost of sales - consulting			-	11,409
Cost of sales - inventory	5		242,305	-
Commercialization, product development and administration	17		384,946	675,004
Amortization	8,9		188,972	694,565
Operating loss			(567,192)	(991,348)
Net finance income (expense)	18		(109,880)	(133,701)
Other income			-	140
Loss on sale of assets			(13,459)	-
Loss from equity investment Delta (net of tax)	10		(515,910)	(549,422)
Income (loss) before tax		(1,206,441)	(1,674,331)
Income tax recovery			-	-
Income (loss) from continuing operations		$ (1,206,441)	$ (1,674,331)
Income (loss) from discontinued operations, net of tax			-	2,501,701
Net income (loss) for the period		$ (1,206,441)	$ 827,370
Net income for the period attributable to:
Shareholders of the Corporation		$ (1,206,441)	$ 832,008
Non-controlling interest			-	(4,778)
Net income (loss) and comprehensive income (loss) for the period		$ (1,206,441)	$ 827,370
Net income per share - basic and dilutive	21		(0.01)	0.00
Net income per share - basic and fully diluted from	21		(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

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