Nextleaf : Q3 2022 FS

Nextleaf Solutions Ltd.

Condensed Interim Consolidated Financial Statements

For the nine months ended

June 30, 2022

Unaudited - Prepared by Management

(Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed interim consolidated financial statements of Nextleaf Solutions Ltd. ("the Company") for the three and nine months ended June 30, 2022 and June 30, 2021, have been prepared by the management of the Company and approved by the Company's Audit Committee and the Company's Board of Directors.

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by CPA Canada for a review of the condensed interim financial statements by an entity's auditor.

Nextleaf Solutions Ltd.

Condensed Interim Consolidated Statements of Financial Position

Unaudited - Prepared by Management (Expressed in Canadian Dollars)

As at June 30, 2022 and September 30, 2021

		June 30,	September 30,
	Note	2022	2021
	$	$
Assets
Current assets
Cash		456,312	915,385
Receivables and prepayments	3	999,497	1,221,174
Inventory	4	1,864,577	1,824,066
		3,320,386	3,960,625
Non-current assets
Deposits		114,773	57,751
Property and equipment	5	4,099,594	4,693,175
Intangible assets	6	336,287	481,204
		4,550,654	5,232,130
Total assets		7,871,040	9,192,755
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities	9	2,637,103	2,476,946
Customer deposits		-	42,500
Lease liability - current	5	39,308	35,300
Convertible debenture	7	984,176	2,852,122
		3,660,587	5,406,868
Non-current liabilities
Lease liability	5	288,787	318,634
Government loan	15	40,000	40,000
		328,787	358,634
Total liabilities		3,989,374	5,765,502
Shareholders' equity
Share capital	8	25,238,504	22,341,574
Reserves	8	4,167,040	4,085,276
Deficit		(25,523,878)	(22,999,597)
Total shareholders' equity		3,881,666	3,427,253
Total liabilities and shareholders' equity		7,871,040	9,192,755
Nature of operations and going concern	1
Other receivables and contingency	16

Approved on behalf of the Board of Directors on August 29, 2022:

"Paul Pedersen"	Director	"Kevin Keagan"	Director

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

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Nextleaf Solutions Ltd.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

Unaudited - Prepared by Management (Expressed in Canadian Dollars)

For the three and nine months ended June 30, 2022, and June 30, 2021

		Three months ended	Nine months ended
		June 30,	June 30,	June 30,	June 30,
		2022	2021	2022	2021
	Note	$	$	$	$
Revenue
Cannabis concentrate sales		425,921	655,861	1,169,305	2,042,965
Product sales		776,717	-	2,327,992	-
		1,202,638	655,861	3,497,297	2,042,965
Cost of sales		1,314,011	763,386	2,843,810	2,536,077
Gross margin		(111,373)	(107,525)	653,487	(493,112)
Expenses
Accretion/interest on convertible debenture	7	58,608	149,561	421,537	149,561
Administrative expenses		157,053	85,708	353,097	205,773
Amortization	6	11,761	87,257	144,917	261,681
Depreciation	5	5,845	3,340	12,525	10,020
Finance costs, net	5	8,350	9,172	25,695	28,036
Investor relations and marketing		141,999	109,569	447,044	302,934
Professional fees and consulting	9	131,939	280,774	595,941	759,816
Research and operational supplies		25,048	4,060	61,848	33,657
Salaries and fees	9	319,174	415,753	1,111,324	1,180,623
Share-based payments	7,8	76,140	96,930	76,140	266,043
		(935,917)	(1,242,124)	(3,250,068)	(3,198,144)
Gain on disposal of equipment	5	-	-	-	16,846
Government assistance	15	-	102,987	22,473	550,450
Loss provision on receivables	16	-	(79,394)	-	(302,690)
Loss on settlement of accounts payable	8	-	(13,676)	-	(13,676)
		-	9,917	22,473	250,930
Loss and comprehensive loss for the period		(1,047,290)	(1,339,732)	(2,574,108)	(3,440,326)
Loss per share
Weighted average number of common shares
outstanding:
Basic #		142,371,809	123,736,738	136,927,164	122,215,291
Diluted #		142,371,809	123,736,738	136,927,164	122,215,291
Basic loss per share		(0.01)	(0.01)	(0.02)	(0.03)
Diluted loss per share		(0.01)	(0.01)	(0.02)	(0.03)

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

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Nextleaf Solutions Ltd.

Condensed Interim Consolidated Statements of Cash Flows

Unaudited - Prepared by Management

(Expressed in Canadian Dollars)

For the nine months ended June 30, 2022 and June 30, 2021

		June 30,	June 30,
		2022	2021
	Note	$	$
Operating activities
Loss for the period		(2,574,108)	(3,440,326)
Adjustments for:
Accretion/interest on convertible debenture		421,537	149,561
Amortization		144,917	261,681
Depreciation	5	574,815	643,012
Finance costs		25,695	28,036
Share-based payments		76,140	266,043
Shares issued for services		22,500	244,390
Gain on disposal of equipment		-	(16,846)
Loss provision on receivables		-	302,690
Loss on settlement of accounts payable		-	13,676
Non-cash working capital items:
Receivables and prepayments		221,677	195,768
Inventory		(20,474)	(872,031)
Deposits		(57,022)	-
Accounts payable and accrued liabilities		364,927	308,289
Customer deposits		(42,500)	42,500
		(841,896)	(1,873,557)
Investing activities
Purchases of property and equipment		(108,831)	(228,892)
Proceeds on disposal of equipment	5	-	47,500
Payments for intangible assets		-	(3,228)
		(108,831)	(184,620)
Financing activities
Lease payments	5	(51,534)	(48,834)
Issuance of convertible debenture	7	-	3,000,000
Repayment of convertible debenture	7	(2,289,483)	-
Transaction costs on convertible debenture	7	-	(178,932)
Issuance of units/common shares, net of share issue costs	8	2,832,671	310,250
		491,654	3,082,484
Change in cash		(459,073)	1,024,307
Cash, beginning of period		915,385	988,675
Cash, end of period		456,312	2,012,982
Supplemental cash flow information	11

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

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