Ameriwest Critical Metals Inc. — Regulatory Filings 2021

Dec 31, 2021

EDEN EMPIRE INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars)

FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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

The accompanying unaudited condensed consolidated interim 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 the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited) (Expressed in Canadian Dollars) AS AT

EDEN EMPIRE INC.

	October 31, 2021	July 31, 2021
ASSETS Current Cash and cash equivalents $ Amounts receivable Prepaids (Note 3) Inventory (Note 4) Assets classified as held for sale (Note 9) Option agreement (Note 6) Property and equipment (Note 8) Intangible assets (Note 10) $	33,375 $ 89,334 110,607 26,685 1,420,058 1,680,059 - 2,201,259 31,133 3,912,451 $	71,245 267,843 182,356 54,946 1,533,594
		2,109,984 31,155 2,245,720 31,133
		4,417,992
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY) Current Accounts payable and accrued liabilities (Notes 5 and 14) $ Deposits (Note 9) Lease liabilities (Note 11) Loan payable (Note 12) Liabilities classified as held for sale (Note 9) Lease liabilities (Note 11) Deferred income tax liability Shareholders’ equity (deficiency) Share capital (Note 13) Reserves (Note 13) Accumulated other comprehensive loss Deficit Non-controlling interest $	1,356,181 $ 100,000 35,236 672,358 2,100,828 4,264,603 140,547 43,504 4,448,654 9,998,904 296,591 (126,911) (10,857,560) 152,773 (536,203) 3,912,451 $	997,180 150,000 34,032 664,429 2,068,438
		3,914,079 149,821 43,504
		4,107,404 9,998,904 272,847 (115,926) (10,022,135) 176,898
		310,588
		4,417,992
NATURE OF OPERATIONS AND GOING CONCERN (Note 1) SUBSEQUENT EVENTS (Note 18) Approved and authorized by the Board on December 30, 2021 /s/ Gerry Trapasso Director /s/ Kolten Taekema		Director

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

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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31,

EDEN EMPIRE INC.

	2021 2020
REVENUE COST OF SALES GROSS PROFIT EXPENSES Accounting and legal Consulting Depreciation (Note 8) Filing and transfer agent fees Foreign exchange gain Interest, accretion, and bank charges Investor relations Licenses and applications Management fees Office and administration Property costs Prospective location costs Salaries and wages Share-based payments (Note 13) Travel and meals Total operating expenses Other items: Allowance for amounts receivables Gain on disposal of assets (Note 8) Gain on settlement of loan (Note 12) Interest and other income Loss for the period OTHER COMPREHENSIVE LOSS Foreign exchange on translating foreign operations Loss and comprehensivelossforthe period	$ 83,403 $ - (64,787) -
	18,616 - 33,483 96,262 20,357 34,750 152,417 93,151 11,006 - 153 - 90,152 54,978 33,836 2,750 780 10,873 129,200 45,000 13,477 15,389 70,111 267 26,015 - 266,261 216,773 23,744 - 8,232 15,182
	(879,224) (585,375) - (17,611) 195 - - 10,000 863 17,724
	(1,058) 10,113
	(859,550) (575,262) (115,926) (3,955)
	$ (975,476) $ (579,217)
Net loss and comprehensive loss attributable to: Owners of the parent company Non-controlling interest	$ (835,425) $ (575,262) (24,125) -
	$ (859,550) $ (575,262)
Loss per share attributable to owners of the parent Basic and diluted	$ (0.01) $ (0.01)
Weighted average number of common shares outstanding	100,911,120 71,387,546

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

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EDEN EMPIRE INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31,

	2021	2020
CASH FLOWS USED IN OPERATING ACTIVITIES Net loss for the period $ Non-cash items: Accrued interest Allowance for amounts receivables Depreciation Finance expense Gain on sale of assets Gain on settlement of loan Prospective agreement costs Share-based payments Changes in non-cash working capital items: Amounts receivable Prepaid expenses and deposits Inventory Accounts payable and accrued liabilities CASH FLOWS USED IN INVESTING ACTIVITIES Bridge loan – funds provided Property and equipment Proceeds from sale of assets Lease inducements Option agreement payment Cash acquired on exercise of option agreement CASH FLOWS USED IN FINANCING ACTIVITIES Loan repayment Lease payments Interest paid on loans Foreign exchange effect on cash Change in cash and cash equivalents during the period Cash and cash equivalents, beginning of period Cash and cash equivalents, end ofperiod $	(859,550) $ - - 150,499 36,417 (195) - 26,015 23,744 178,509 71,749 28,261 335,391 (9,160) - (10,712) 1,010 - - 4,945 (4,757) - (14,245) (22,313) (36,558) 12,605 (37,870) 71,245 33,375 $	(575,262) (17,611) 17,611 93,151 54,978 - (10,000) - - (618) 13,162 - 233,172
		(191,417)
		(58,951) (205,717) - (5,000) (6,731) -
		(276,399)
		(30,000) - -
		(30,000)
		- (497,816) 688,346
		190,530

Supplementary cash flow information:

There were no non-cash financing or investing transactions for the three months ended October 31, 2021 and October 31, 2020.

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

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EDEN EMPIRE INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY) (Unaudited)

(Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

		**Share capital **	**Share capital **		Reserves	Accumulated other comprehensive loss	Accumulated other comprehensive loss		Deficit	Non- controlling interest	**Total **
		**Number **	Amount
Balance, July 31, 2020 Loss and comprehensive loss for the period Balance, October 31, 2020		90,292,546 - 90,292,546	$ 8,873,458 - $ 8,873,458		$ 130,070 - $130,070		$ (3,289) (666) $ (3,955)		$ (6,369,014) (575,262) $ (6,944,276)	$ - - $ -	$ 2,631,225 (575,928) $2,055,297
Balance, July 31, 2021 Share-based payments Loss and comprehensive loss for the period Balance, October 31, 2021		100,911,120 - - 100,911,120	$ 9,998,904 - - $ 9,998,904		$ 272,847 23,744 - $296,591		$ (115,926) - (10,985) $ (126,911)		$ (10,022,135) - (835,425) $ (10,857,560)	$ 176,898 - (24,125) $ 152,773	$ 310,588 23,744 (870,535) $ (536,203)

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

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EDEN EMPIRE INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

1. NATURE OF OPERATIONS AND GOING CONCERN

Eden Empire Inc. (formerly Rosehearty Energy Inc.) (“Eden Empire” or the “Company”) was incorporated in the Province of Ontario on September 1, 2000, under the name Phoenix Matachewan Mines Inc. Effective December 30, 2008, the Company changed its name to Galahad Metals Inc., effective July 31, 2014, changed its name to Rosehearty Energy Inc. and effective May 14, 2020, changed its name to Eden Empire Inc. and continued into the Province of British Columbia. The records office of the Company is located at 408 – 150 24th Street, West Vancouver, British Columbia, V7V 4G8. The Company is listed on the Canadian Securities Exchange under the symbol “EDEN”.

The Company is in the business of investments and operations in the cannabis sector and engaging in retail and activities in respect of cannabis in Canada and the United States. It is the intention that the Company becomes a fully integrated cannabis product retailer company in Canada and the United States. The Company has registered certain trademark brands and has entered into an agreement to acquire dispensary locations currently under licensing process (Note 6). The Company has commenced retail operations at its location in Winnipeg, Manitoba.

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) on a going concern basis, which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, these consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

The Company reported a loss of $859,550 for the three months ended October 31, 2021, and had an accumulated deficit of $10,857,560 and non-controlling equity interest of $152,773 as at October 31, 2021. The Company’s ability to continue as a going concern is dependent upon its ability to raise funds primarily through the issuance of shares or achieve profitable operations. The achievement of profitable operations is dependent on successful licensing of its storefront operations. The outcome of these matters cannot be predicted at this time. If the Company is unable to obtain additional financing, management may be required to curtail certain expenses. These material uncertainties cast significant doubt about the Company’s ability to continue as a going concern.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. The pandemic has not had a drastic impact on the Company’s operations. Management continues to monitor the situation.

2. BASIS OF PREPARATION

Statement of compliance

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

The accounting policies and methods of computation applied by the Company in these condensed consolidated interim financial statements are the same as those applied in the Company’s annual consolidated financial statements for the year ended July 31, 2021.

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

EDEN EMPIRE INC.

2. BASIS OF PREPARATION (cont’d…)

Basis of consolidation and presentation

These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for certain financial instruments measured at fair value. In addition, these consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries as follows:

Subsidiary	Date of Incorporation	Location	Ownership
Eden Empire Inc. (formerly Rosehearty)	September 1, 2000	Canada	-
1194360 B.C. Ltd.	January 17, 2019	Canada	100%
1268495 B.C. Ltd.	October 2, 2020	Canada	50%
Eden Empire Ontario One Ltd.	April 28, 2020	Canada	100%
Eden Empire Manitoba One Ltd.	June 3, 2020	Canada	100%
King Edward & Cambie Operations Ltd.	January 9, 2019	Canada	100%
Peaceful Park Inc.	August 12, 2018	Canada	100%
Actium Botanicals, Incorporated	May 15, 2018	United States	100%
Eden Empire US, Inc.	August 7, 2019	United States	100%
Eden Empire Michigan, LLC	August 7, 2019	United States	100%
Eden EmpireBattle Creek RE,LLC	August7,2019	United States	100%

All material intercompany transactions have been eliminated upon consolidation. Subsidiaries are entities controlled by the Company. The Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its current ability to direct the entity’s relevant activities. The financial statements of subsidiaries are included in the condensed consolidated interim financial statements from the date that control commences until the date that control ceases.

Use of judgments and estimates

The preparation of these condensed consolidated interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The key areas of judgment applied in the preparation of the condensed consolidated interim financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

• Going concern

The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay its ongoing operation expenditures and to meet its liabilities for the ensuing year, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

• Deferred income tax

The value of deferred tax assets is evaluated based on the probability of realization; the Company has assessed that it is improbable that such assets will be realized and has accordingly not recognized a value for deferred taxes.

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EDEN EMPIRE INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

2. BASIS OF PREPARATION (cont’d…)

Use of judgments and estimates (cont’d…)

• Right-of-use assets and lease liability

The Company applies judgement in determining whether the contract contains an identified asset, whether they have the right to control the asset, and the lease term. The lease term is based on considering facts and circumstances, both qualitative and quantitative, that can create an economic incentive to exercise renewal options. Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option.

• Business combinations

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition.

• Held for sale

The Company used judgement in estimating the classification of assets or a disposal group as assets held for distribution to owners when management is committed to immediately distributing the asset or disposal group in its present condition, and this distribution is highly probable and expected to be completed within one year.

The key areas of estimates applied in the preparation of the condensed consolidated interim financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

• Intangible assets – impairment

The application of the Company’s accounting policy for intangible assets requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. The calculations for impairment testing of the Company’s indefinite life intangible assets involve significant estimates and assumptions. Items estimated include cash flows, discount rates and assumptions on revenue growth rates. These estimates could affect the Company’s future results if the current estimates of future performance and fair values change. Judgment is also exercised to determine whether an indication of impairment is present that would require the completion of an impairment test in addition to the annual testing.

 Right-of-use assets and lease liability

The Company uses estimation in determining the incremental borrowing rate used to measure the lease liability, specific to the asset, underlying currency, and geographic location. Where the rate implicit in the lease is not readily determinable, the discount rate of the lease obligations is estimated using a discount rate similar to the Company’s specific borrowing rate. This rate represents the rate that the Company would incur to obtain the funds necessary to purchase the asset of a similar value, with similar payment terms and security in a similar environment.

• Share-based payments and compensation

The Company applies estimates with respect to the valuation of shares issued for non-cash consideration. Shares are valued at the fair value of the equity instruments granted at the date the Company receives the goods or services for share-based payments made to those other than employees or others providing similar services. As a private entity, the Company relies on concurrent or recent financings to provide guidance with respect to prevailing share prices.

The Company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted for share-based payments made to employees or others providing similar services. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the fair value of the underlying common shares, the expected life of the share option or warrant, volatility and dividend yield and making assumptions about them.

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

EDEN EMPIRE INC.

3. PREPAIDS

	October 31, 2021 July 31, 2021
Purchase prepayments Prepaid expenses Deposits Balance, end ofperiod	$ 3,604 $ 10,172 86,670 151,851 20,333 20,333
	$ 110,607 $ 182,356

4. INVENTORY

Inventory	October 31, 2021 July 31, 2021
Packaged Dried Cannabis Packaged Cannabis Derived Accessories Promotional materials Balance, end ofperiod	$ 3,390 $ 17,316 2,556 9,209 4,322 6,254 16,417 22,167
	$ 26,685 $ 54,946

During the period ended October 31, 2021, the Company recognized $64,787 (2020 - $Nil) of cash costs expensed to costs of sales.

5. ACQUISITION OF B.C. DISPENSARIES

On May 16, 2019, as amended March 13, 2020, the Company entered into an agreement to acquire all of the issued and outstanding common shares of seven private companies, each holding a retail lease for a dispensary location, from 1175579 B.C. Ltd. (“1175579 B.C.”), a private company. Each one of the seven private companies is identified as a “Retail Subsidiary”.

Pursuant to the agreement, the Company will acquire the Retail Subsidiaries from 1175579 B.C. upon the issuance of a license to operate a private non-medical cannabis retail store under the Cannabis Control and Licensing Act (“License”). Each Retail Subsidiary will be acquired for $65,000 payable in the form of cash or common shares at a price of $0.30, escalating to $0.90 over 6 months following a Retail Subsidiary acquisition (at a rate of $0.10 per month), per share at the option of 1175579 B.C. and an amount not exceeding $15,000 for expenses in connection with certain allowable expenses incurred by 1175579 B.C. in connection with the Retail Subsidiary. Four of the seven Retail Subsidiaries are subject to a cash payment of $350,000 on acquisition. Should a Retail Subsidiary not be successful in obtaining a License, the Company will not be required to purchase that entity.

Additionally, on execution of the agreement, the Company extended a bridge loan to 1175579 B.C. for the general working capital purposes to pursue Licenses and maintain operations of the Retail Subsidiaries (“Bridge Loan”). The Bridge Loan had a facility of up to $1,100,000, which is advanced and was subject to an interest rate of 8%. On February 11, 2021, the Company acquired and concurrently disposed of substantially all assets of the first Retail Subsidiary and upon closing, the principal and all accrued and unpaid interest on the Bridge Loan of $763,352 was forgiven pursuant to the terms of the underlying agreement with 1175579 B.C.

On November 16, 2020, the Company entered into agreement with 1175579 B.C. which permitted a Retail Subsidiary to dispose of substantially all of its assets to an unrelated third party for gross proceeds of $750,000. As described above, the Company completed this transaction with respect to the first Retail Subsidiary on February 11, 2021, and partial proceeds of $575,000 were received during the year ended July 31, 2021, with the balance remaining of $175,000 being received during the three months ended October 31, 2021. Pursuant to the agreement, the Company also reimbursed 1175579 B.C. for the associated legal fees, paid $65,000 to 1175579 B.C., and accrued an amount payable of $350,000 which 1175579 B.C. would otherwise have been entitled to under a Retail Subsidiary purchase within 14 months as the balance of funds are paid to the Company. The accumulated balance under the Bridge Loan for this Retail Subsidiary of $213,873 was forgiven and reflected as a reduction of the gain on the sale of the retail subsidiary and the Company has recorded a net gain on sale of this retail subsidiary of $121,127. In connection with this transaction, the Company has recorded an amount payable to 1175579 B.C. of $350,000 included in accounts payable and accrued liabilities as at October 31, 2021 (July 31, 2021 - $350,000).

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EDEN EMPIRE INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

6. OPTION AGREEMENT

Option Agreement for the Acquisition of Actium Botanicals

On October 7, 2019, the Company entered into an option agreement (the “Michigan Option”) to purchase all of the issued and outstanding shares of Actium Botanicals, Incorporated (“Actium”). Actium is in the process of applying for facility licenses at two locations: its Battle Creek facility and its Stronach facility in Michigan, USA. Pursuant to the Actium Option, the seller agrees to use reasonable best efforts for Actium to obtain the required licenses, consents, and approvals to initiate the operations of the facilities.

The Company paid a non-refundable deposit of USD$25,000 with respect to the Michigan Option, which may be applied against future payments due under the option. On September 20, 2021, the Michigan Option was exercised. For accounting purposes, the acquisition is considered to be outside the scope of IFRS 3 – Business Combinations (“IFRS 3”) since Actium, prior to acquisition, did not constitute a business. As a result of the acquisition, the Company recognized $26,015 in prospective location costs in profit and loss for the three months ended October 31, 2021.

Pursuant to the Michigan Option, the Company is also required to make payments in an amount equal to 4% of the amount of all gross receipts received by Actium at the Battle Creek and Stronach facilities, due within 45 days after each calendar quarter. The Company may terminate its obligation to make payments on gross receipts by making a one-time payment of US$5,000,000.

The Michigan Option provides that, concurrently with its execution, the Company and Actium enter into a service agreement and a lease for the real estate owned by the Company and an affiliate of the vendor, on which the Stronach Facility is situated. Pursuant to the service agreement, the Company will provide certain services to support Actium’s operation of the Battle Creek and Stronach facilities.

7. LEASE INDUCEMENTS

King Edward & Cambie Operations Ltd.

On August 21, 2019, entered into a lease agreement for a retail space through its wholly-owned subsidiary King Edward & Cambie Operations Ltd. (“Cambie”). The lease is for a period of 5 years, subject to extension. The Company will pay a monthly rent charge of $20,000 for the initial 5 years. Additionally, the Company must pay 3% of the gross sales of all goods or products legally sold from the leased premises up to $5,000,000 annually. The Company must also pay $110,000 in four non-refundable payments upon satisfaction of the following conditions:

• a) $20,000 upon acceptance of the lease offer (paid);

• b) $30,000 upon execution of the lease (paid);

• c) $30,000 on the date the Company obtains a development permit and the building permit from the City of Vancouver in order to use the premises for cannabis (paid); and

• d) $30,000 on the date the Company obtains a conditional cannabis permit issued by the applicable governmental authorities having jurisdiction over the sale of cannabis with respect to the premises.

On July 16, 2021, the lease agreement was terminated. Payments totaling $80,000 to hold the lease agreement originally recorded as lease inducements were non-refundable and forfeited to the landlord. Due to a fire at the premises, the leasehold improvements and office equipment were written off during the year ended July 31, 2021 (Note 8).

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EDEN EMPIRE INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

8. PROPERTY AND EQUIPMENT

	Office equipment	Investment property	Right-of-use assets	Leasehold improvements	Total
Cost Balance, July 31, 2020 Additions Classified as held for sale (Note 9) Disposal (Note 9) Foreign exchange Balance, July 31, 2021 Disposals Foreign exchange Balance, October 31, 2021	$ 61,336 30,370 (28,768) (32,568) (327) $ 30,043 - (92) $ 29,951	$ 1,455,518 366,483 - - (110,243) $ 1,711,758 - (10,713) $ 1,701,045	$ 1,657,854 636,234 (2,093,543) - - $ 200,545 - - $ 200,545	$ 15,451 457,107 (30,840) (17,189) - $ 424,529 (1,010) - $ 423,519	$ 3,190,159 1,490,194 (2,153,151) (49,757) (110,570) $ 2,366,875 (1,010) (10,805) $ 2,355,060
Accumulated Depreciation Balance, July 31, 2020 Depreciation expense Classified as held for sale (Note 9) Disposal Foreign exchange Balance, July 31, 2021 Depreciation expense Classified as held for sale (Note 9) Disposal Foreign exchange Balance, October 31, 2021	$ 6,134 15,717 (8,821) (9,581) (42) $ 3,407 2,204 (1,438) - 1,878 $ 6,051	$ - - - - - $ - - - - - $ -	$ 213,917 429,071 (607,407) - - $ 35,581 126,230 (116,526) - - $ 45,285	$ 1,994 91,402 (6,905) (4,324) - $ 82,167 22,065 (1,572) (195) - $ 102,465	$ 222,045 536,190 (623,133) (13,905) (42) $ 121,155 150,499 (119,536) (195) 1,878 $ 153,801
Net Book Value Balance, July 31, 2021 Balance, October31,2021	$ 26,636 $ 23,900	$ 1,711,758 $ 1,701,045	$ 164,964 $ 155,260	$ 342,362 $ 321,054	$ 2,245,720 $ 2,201,259

At July 31, 2021, the Company reclassified property and equipment with a cost of $2,153,151 and accumulated depreciation of $623,133 to assets to held for sale. The Company recognized additional deprecation of $119,536 with respect to held for sale assets in the period ended October 31, 2021. The assets consisted primarily of a right-of-use asset as well as leasehold improvements pertaining to the right-of-use asset. Management estimates that the fair value of these assets less costs to sell exceeds the carrying value and therefore the assets are measured at their carrying values.

During the three months ended October 31, 2021, the Company disposed of leasehold improvements for proceeds of $1,010 and recorded a gain on disposal of asset of $195.

During the year ended July 31, 2021, the leasehold improvements and office equipment were written off due to a fire at the Cambie premises, resulting in a loss on disposal of assets of $114,332. In addition, the Company disposed of office equipment for proceeds of $2,680 and recorded a gain on disposal of asset of $780.

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EDEN EMPIRE INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

9. SALE OF SUBSIDIARIES

1268495 B.C. Ltd.

On June 15, 2021, the Company issued 100 Class B non-voting shares, which represent a 50% interest, in its wholly owned subsidiary, 1268495 B.C. Ltd. for total proceeds of $500,000. Proceeds were paid in part by the settlement of $200,000 of the Notes (Note 12).

On July 24, 2021, the Company entered into a non-binding exclusivity and deposit agreement with the Class B shareholder to purchase the remaining shares or substantially all the assets of 1268495 B.C. Ltd. for an aggregate purchase price of $600,000. The Company received a deposit of $100,000 which will be applied to the purchase price pending the satisfaction of a number of conditions. In the event the transaction fails to close for any reason other than by reason of breach of terms and conditions, the deposit will be fully refunded to the non-voting shareholder by Company.

In relation to the issuance of Class B shares, the Company recorded a gain of $310,928 in equity, and non-controlling interest of $189,072 during the year ended July 31, 2021.

As at October 31, 2021, as a result of the pending sale of 1268495 B.C. Ltd., the Company reclassified the carrying value of $331,210 (July 31, 2021 - $367,707) as assets held for sale and $416,371 (July 31, 2021 - $425,934) as liabilities held for sale.

Peaceful Park Inc.

During the year ended July 31, 2021, the Company executed a letter of intent to enter into a share purchase agreement with a private arm’s length third party to dispose of a 50% interest in Peaceful Park Inc., and received $50,000 to be applied to the proposed purchase price of $1,050,000. On September 20, 2021, the Company closed the share purchase agreement to sell a 50% interest in its subsidiary, Peaceful Park Inc. for the purchase price of $1,050,000. Subsequently, both parties decided not to proceed with the joint venture arrangement. The Company will continue to operate the Davie Street location while the Company continues to locate a buyer for Peaceful Park Inc.

As at October 31, 2021, the Company has classified Peaceful Park Inc. as a separate disposal group held for sale, which consists of $1,088,848 (July 31, 2021 - $1,165,887) of assets held for sale and $1,684,457 (July 31, 2021 - $1,642,504) of liabilities held for sale as the Company actively pursues a divestment of the entity.

10. INTANGIBLE ASSETS

The Eden IP and underlying trademarks have been assigned an indefinite useful life, as there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows, and the Company’s intention is to continue to utilize these trade names for the foreseeable future.

	October 31, 2021 July 31, 2021
Trademarks Balance, end ofperiod	$ 31,133 $ 31,133
	$ 31,133 $ 31,133

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

EDEN EMPIRE INC.

11. LEASE LIABILITIES

Lease liabilities	October 31, 2021	July 31, 2021
Balance, beginning of period Additions Accrued finance expense Lease payments paid or accrued in accounts payable Classified as held for sale (Note 9) Balance, end of period Current Long term	$ 183,853 - 59,881 (163,645) 95,694 $ 175,783 $ 35,236 $ 140,547	$ 1,563,034 616,234 240,785 (620,294) (1,615,906) $ 183,853 $ 34,032 $ 149,821

The Company has applied an incremental borrowing rate of 14%.

The Company has the following lease commitments:

Lease commitments	Fiscal year 2022 Fiscal year 2023 Fiscal year 2024 Fiscal year 2025 Fiscal year 2026
1674 Davie St. (Note 9) 2230 McPhillips St. 348 Water St. (Note 9)	$ 330,000 $ 450,000 $ 462,000 $ 234,000 $ - 42,734 56,978 56,978 56,978 9,496 126,000 170,200 85,800 - -
	$ 498,734 $ 677,178 $ 604,778 $ 290,978 $ 9,496

In the event the Company receives a business license from the City of Vancouver, the Company will have to pay a success fee of $120,000 to the landlord of the Davie St. property.

On July 20, 2020, the Company signed a five-year lease for McPhillips St. in Winnipeg, Manitoba, which commenced on October 1, 2020. The Company has the option to renew for two five-year periods.

On September 25, 2020, the Company signed a three-year lease for Water St. in Vancouver, British Columbia, which commenced on February 1, 2021.

12. LOAN PAYABLE

The Company received a $40,000 revolving line of credit as part of the Canada Emergency Business Account (“CEBA”) program due to COVID-19. The loan was interest free and required no principal payments until December 2022 (“Initial Term Date”). In the year ended July 31, 2021, the loan was repaid before the Initial Term date and as a result 25% of the loan was forgiven and the Company recorded a gain on settlement of debt of $10,000.

On December 4, 2020, the Company issued two interest bearing promissory notes (together, the “Notes”) to two arm’slength parties for proceeds of $700,000 and $200,000 subject to an interest of 14% and 13% respectively. The Company paid finders’ fees of $37,000 with respect to the Notes which are accreted over the term of the Notes. The Notes have a term of fourteen months ending February 4, 2022, following which the principal amount then outstanding will be due and payable by the Company. The Notes are secured against the Company’s interest in and to its present and after acquired personal property and its interest in and to the Company’s option to acquire a Retail Subsidiary located in Nanaimo, B.C. (Note 5). During the year ended July 31, 2021, $200,000 of the Notes was applied to a shareholders’ agreement as detailed in Note 9.

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

EDEN EMPIRE INC.

12. LOAN PAYABLE (cont’d…)

Loanspayable	October 31, 2021	July 31, 2021
Balance, beginning of period Funds received Finders’ fees Finance expense Interest paid Repayment Forgiveness of debt Settled with common shares (Note 13 (b)(ii)) Applied to shareholders’ agreement (Note 9) Balance, end ofperiod	$ 664,429 - - 30,242 (22,313) - - - - $ 672,358	$ 40,000 900,000 (37,000) 99,569 (73,140) (30,000) (10,000) (25,000) (200,000) $ 664,429

13. SHARE CAPITAL AND RESERVES

a) Authorized share capital

Unlimited number of common shares without par value. Unlimited number of preferred shares without par value.

b) Issued share capital

There were no common shares issued in the three months ended October 31, 2021.

In the year ended July 31, 2021, the Company:

• i. Issued 7,708,733 units at a price of $0.12 per unit for gross proceeds of $925,048. Each unit consists of one common share and one share purchase warrant. Each warrant is exercisable at a price of $0.20 per share for a period of 24 months and subject to certain acceleration clauses (Note 13(c)). In connection with the private placement, the Company paid finders’ fees of $34,380, other share issue costs of $20,100, and issued 286,500 broker warrants. The broker warrants were valued at $21,979 using the following Black-Scholes inputs: expected life of 2 years, volatility of 120%, and risk-free interest rate of 0.26%.

• ii. Issued 2,919,841 common shares to settle outstanding liabilities of $397,655.

c) Warrants

Warrant transactions are summarized as follows:

	Numberof Warrants Weighted Average ExercisePrice
Balance outstanding, July 31, 2020 Issued Expired/Cancelled Balance outstanding, July 31, 2021 Expired Balance outstanding and exercisable, October31,2021	1,672,796 $ 0.48 9,153,566 0.20 (1,806,130) 0.42
	9,020,232 $ 0.21 (166,666) 0.06
	8,853,566 $ 0.20

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EDEN EMPIRE INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

13. SHARE CAPITAL AND RESERVES (cont’d…)

• c) Warrants (cont’d…)

Warrants outstanding as at October 31, 2021:

	Number outstanding Exercise price Expiry date
Warrants	4,991,833 (1) $ 0.20 March 18, 2023 2,120,000 (1) 0.20 April 15, 2023 883,400 (1) 0.20 April 30, 2023 858,333 (1) 0.20 May 14, 2023 8,853,566

• (1) If the Company’s weighted average price of its common shares is $0.40 or greater for any ten consecutive trading days, the Company may accelerate the expiry date to 30 days following date of notice.

As at October 31, 2021, the weighted average outstanding life of the Company’s outstanding warrants is 1.42 years (July 31, 2021 – 1.48 years).

• d) Options

Options transactions are summarized as follows:

	NumberofOptions Weighted Average ExercisePrice
Balance outstanding, July 31, 2020 Issued Balance outstanding, July 31, 2021 Issued Balance outstanding, October 31, 2021 Balance exercisable, October31,2021	- $ - 700,000 0.05
	700,000 $ 0.05 350,000 0.05
	1,050,000 $ 0.05 291,669 $ 0.05

Options outstanding as at October 31, 2021:

	Number outstanding Exercise price Expiry date
Options	700,000 $ 0.05 May 2, 2031 350,000 0.05 September 1, 2023 1,050,000

As at October 31, 2021, the weighted average outstanding life of the Company’s outstanding options is 9.62 years (July 31, 2021 – 9.76 years). During the three months ended October 31, 2021, the Company issued 350,000 (2020 – nil) options with a weighted average fair value of $0.05 (2020 - $nil) per option. The Company recognized $23,744 (2020 - $nil) in reserves with respect to these options and options granted in prior periods.

		October 31,	October 31,
		2021	2020
Grant date share price	$	0.05 $	-
Risk-free interest rate		1.18%	-
Expected life of options		10 years	-
Expected annualized volatility		120.00%	-
Dividendrate		-	-

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EDEN EMPIRE INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

14. RELATED PARTY TRANSACTIONS AND BALANCES

Management Compensation

Key management personnel comprise the Chairman, Chief Executive Officer, President & Chief Business Officer, Chief Financial Officer, and directors of the Company. The remuneration of the key management personnel during the three months ended October 31, 2021 and 2020 is as follows:

**Payments to key management personnel **		2021		2020
Consulting fees paid to a company controlled by an officer	$	30,000	$	45,000
Salaries paid to directors and officers of the Company		99,200		60,000
Share-based payments to directors and officers ofthe Company		23,744		-

As at October 31, 2021, the Company had $53,061 (July 31, 2021 - $32,522) due to a significant shareholder included in accounts payable. All balances are unsecured, non-interest-bearing, have no fixed repayment terms and are due on demand.

15. SEGMENTED INFORMATION

The Company operates in one segment, being cannabis retail investment. The Company’s non-current assets, other than financial instruments are located as follows:

Non-current assets	Canada	United States	**Total **
Property and equipment Office equipment Investment property Right-of-use assets Leasehold improvements Intangible assets Balance, October 31, 2021	$ 13,015 - 155,260 321,054 31,133 $ 520,462	$ 10,885 1,701,045 - - - $ 1,711,930	$ 23,900 1,701,045 155,260 321,054 31,133 $ 2,232,392

Non-current assets	Canada	United States	**Total **
Option agreement Property and equipment Office equipment Investment property Right-of-use assets Leasehold improvements Intangible assets Balance, July 31, 2021	$ - 13,781 - 164,964 342,362 31,133 $ 552,240	$ 31,155 12,855 1,711,758 - - - $ 1,755,768	$ 31,155 26,636 1,711,758 164,964 342,362 31,133 $ 2,308,008

16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments

Cash and cash equivalents, accounts payable and loan payable are carried at amortized cost. The Company considers that the carrying amount of these financial assets and liabilities measured at amortized cost to approximate their fair value due to the short-term nature of the financial instruments.

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EDEN EMPIRE INC. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Financial instruments (cont’d…)

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. Although the Company believes its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value.

Financial risk factors

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets, including cash and cash equivalents and receivables. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and cash equivalents with high-credit quality financial institutions. The Company considers the risk of financial loss on cash and cash equivalents to be remote. The Company’s receivables consist materially of GST input tax credits recoverable from the government of Canada. The Company considers credit risk with respect to these amounts to be low.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at October 31, 2021, the Company had a working capital deficiency of $2,584,544. The Company’s financial liabilities mature within 30 days, with the exception of the lease liabilities, which are payable over several years (Note 11), and the Notes, which are due in February 2022 (Note 12).

Market risk

Market risk is the risk of loss that may arise from changes in market factors, such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives.

a) Interest rate risk

The Company is exposed to interest rate risk through its of cash and cash equivalents. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. Management believes the interest rate risk is low given the current low global interest rate environment.

The interest rate applied to the Company’s loan payable is fixed and reduces interest rate liability risk.

b) Foreign currency risk

The Company holds an investment property (Note 8) and an option agreement (Note 6) in the United States (“US”). The investment in the US could increase the Company’s exposure to foreign currency risk in the future.

As at October 31, 2021, the Company’s net foreign denominated financial assets and liabilities are as follows:

	US Dollars
Cash Accounts payable Net liabilities (US Dollars) Equivalent in Canadian Dollars	$ 3,100 (193,428) (190,328) $ (235,702)

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EDEN EMPIRE INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Expressed in Canadian Dollars) FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020

16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Financial risks (cont’d…)

Market risk (cont’d…)

b) Foreign currency risk (cont’d…)

Based on the balances held as at October 31, 2021, a 10% increase (decrease) in the Canadian dollar to US dollar exchange rate on this date would have resulted in a decrease (increase) in the net loss for the period of approximately $23,570.

17. CAPITAL MANAGEMENT

The Company’s capital management policy is to maintain a strong but flexible capital structure that optimizes the cost of capital, creditor and market confidence while sustaining the future development of the business.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. The Company’s capital structure includes shareholders’ equity. In order to maintain or adjust the capital structure, the Company may from time-to-time issue shares, seek debt financing and adjust its capital spending to manage current and working capital requirements. The Company is not subject to externally imposed capital requirements.

18. SUBSEQUENT EVENTS

On November 1, 2021, the Company completed the acquisition of two Retail Subsidiaries from 1175579 B.C. (see Note 5) for consideration of $130,000, settled in common shares of the Company at a price of $0.054 per share. In addition, the Company also reimbursed 1175579 B.C. for costs incurred in connection with the two Retail Subsidiaries totaling $195,000, which were settled in common shares of the Company at a price of $0.054 per share. As a result, the Company issued a total of 6,500,000 common shares valued at $325,000.

On November 16, 2021, the Company announced a non-brokered private placement at a price of $0.05 per unit. Each unit consists of one common share and one common share purchase warrant. Each warrant is exercisable at $0.10 per common share for a period of 36 months from date of issuance and includes an acceleration clause that is triggered by a share price of $0.24 per share or greater for any 10 consecutive trading days during the period where the warrants are outstanding; the Company may, by written notice to the holder or by issuing a news release, accelerate the expiry date of the warrants to be 30 days following the date of such notice or news release. On November 24, 2021, the Company closed the first tranche, issuing 4,800,000 units for gross proceeds of $240,000. In connection with the first tranche, the Company paid a cash finder’s fee of $5,600 and issued 112,000 broker warrants. On December 3, 2021, the Company closed the second tranche, issuing 4,000,000 units for gross proceeds of $200,000. In connection with the second tranche, the Company paid a cash finder’s fee of $14,000 and issued 280,000 broker warrants. On December 29, 2021, the Company closed a third tranche, issuing 4,700,000 units for gross proceeds of $235,000. In connection with the third tranche, the Company paid a cash finder’s fee of $7,700 and issued 154,000 broker warrants.

On December 15, 2021, the Company issued a promissory note (“Promissory Note”) in the amount of $630,000. The Promissory Note may be converted into 12,600,000 common shares at a price of $0.05 if the settlement payment of $125,575 is not made on or before March 31, 2022.

On December 15, 2021, the Company completed the acquisition of two additional Retail Subsidiaries from 1175579 B.C. (see Note 5) for consideration of $130,000, settled in common shares of the Company at a price of $0.05 per share. In addition, the Company also reimbursed 1175579 B.C. for costs incurred in connection with the two Retail Subsidiaries totaling $105,000, which were settled in common shares of the Company at a price of $0.05 per share. As a result, the Company issued a total of 4,700,000 common shares valued at $235,000.

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