Lithos Group — Audit Report / Information 2021

Aug 31, 2021

ALCHEMIST MINING INC.

Consolidated Financial Statements Years Ended April 30, 2021 and 2020

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Alchemist Mining Inc.

Opinion

We have audited the accompanying consolidated financial statements of Alchemist Mining Inc. (the “Company”), which comprise the consolidated statements of financial position as at April 30, 2021 and 2020, and the consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders’ equity (deficiency) for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s 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.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the consolidated financial statements, which indicates that the Company incurred a net loss of $1,025,348 during the year ended April 30, 2021, and, as of that date, the Company’s current liabilities exceeded its current assets by $144,317. As stated in Note 2, these events and conditions indicate that a material uncertainty exists 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 Information

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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In connection with our audit of the consolidated financial statements, our responsibility is to read the other information 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. If, based on the work we have performed, 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 IFRS, 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.

Auditor’s 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 auditor’s 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.

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• 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• 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 Group 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 though to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is Melyssa Charlton.

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CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada August 30, 2021

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ALCHEMIST MINING INC. Consolidated Statements of Financial Position As at April 30, 2021 and 2020 (Expressed in Canadian Dollars)

		Notes		2021		2020
Assets
Current
Cash			$	15,502	$	19,708
Amounts receivable				5,575		-
GST receivable				43,226		30,512
Prepaid expenses				142		-
				64,445		50,220
Equipment		6		306		465
Deposit		7		-		599,695
Total assets			$	64,751	$	650,380
Liabilities
Current
Accounts payable and accrued liabilities		9	$	197,509	$	486,959
Loan payable		10		-		55,000
Shareholder loans		9		11,253		24,380
				208,762		566,339
Long-term debt		9		240,000		-
Total liabilities				448,762		566,339
Shareholders’ equity (deficiency)
Share Capital		8		4,536,579		3,908,821
Share subscriptions		8		-		98,062
Reserves		8		27,600		146,260
Deficit				(4,948,190)		(4,069,102)
Total shareholders’ equity (deficiency)				(384,011)		84,041
Total liabilities and shareholders’ equity (deficiency)			$	64,751	$	650,380

Nature of operations (note 1) Going concern (note 2) Commitments (note 14) Contingency (note 15) Subsequent events (note 16)

Approved on behalf of the Board by:

“Paul Mann” “Awet Kidane” Director Director

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

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ALCHEMIST MINING INC. Consolidated Statements of Loss and Comprehensive Loss Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars)

Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars)
	Notes		2021		2020
Expenses
Accounting, legal and audit	9	$	62,272	$	70,187
Depreciation	6		159		294
Consulting	9		313,875		341,000
Filing fees and shareholder information			56,417		20,730
Interest	10		1,515		5,081
Office and general			4,399		4,062
Rent (expense recovery)			-		(2,156)
Travel and accommodation			4,500		14,626
			(443,137)		(453,824)
Foreign exchange loss			(19,885)		-
Gain on shares issued for debt settlement	8		17,484		-
Write-off accounts payable			-		32,902
Write-off of advances			-		(14,438)
Write-off of deposit	7		(579,810)		-
Loss and Comprehensive Loss for the Year		$	(1,025,348)	$	(435,360)
Basic and Diluted Loss Per Share		$	(0.01)	$	(0.01)
Weighted Average Number of Common Shares
Outstanding – Basic and Diluted			69,573,122		58,911,900

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

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ALCHEMIST MINING INC. Consolidated Statements of Changes in Shareholders’ Equity (Deficiency) (Expressed in Canadian Dollars)

Number of Shares Share Capital	Reserves Share-based Payments Warrants Share subscriptions Deficit Total
Balance, April 30, 2019 58,911,900 $ 3,908,821 Subscriptions received for warrants - - Expiry/cancellation of options and warrants - - Share subscriptions received - - Loss for the year - -	$ 257,773 $ 9,115 $ 70,000 $ (3,754,370) $ 491,339 - - 6,062 - 6,062 (111,513) (9,115) - 120,628 - - - 22,000 - 22,000 - - - (435,360) (435,360)
Balance, April 30, 2020 58,911,900 $ 3,908,821	$ 146,260 $ - $ 98,062 $ (4,069,102) $ 84,041
Exercise of warrants 107,500 6,062 Expiry/cancellation of options and warrants - - Private placements 16,125,714 592,000 Residual value of unit warrants - (27,600) Shares issued for debt 1,465,600 57,296 Loss for the year - -	- - (6,062) - - (146,260) - - 146,260 - - - (92,000) - 500,000 - 27,600 - - - - - - - 57,296 - - - (1,025,348) (1,025,348)
Balance, April 30, 2021 76,610,714 $ 4,536,579	$ - $ 27,600 $ - $ (4,948,190) $ (384,011)

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

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ALCHEMIST MINING INC. Consolidated Statements of Cash Flows Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars)

		2021		2020
Operating Activities
Loss for the year	$	(1,025,348)	$	(435,360)
Items not involving cash
Depreciation		159		294
Interest expense		1,083		-
Gain on settlement of accounts payable and accrued liabilities		(17,484)		-
Write-off of deposit		579,810		-
Foreign exchange loss		19,885		-
Write-off of accounts payable		-		(32,902)
Write-off of advances		-		14,438
Changes in non-cash working capital items:
Amounts receivable		(18,289)		(7,342)
Prepaid expenses		(142)		3,781
Accounts payable and accrued liabilities		8,830		368,444
Cash Used in Operating Activities		(451,496)		(88,647)
Financing Activities
Proceeds of loan payable		-		50,000
Repayment of loan payable		(55,000)		-
Proceeds from shareholder loans		24,411		24,380
Repayment of shareholder loans		(22,121)		-
Proceeds from exercise of warrants		-		6,062
Share subscriptions received		-		22,000
Issuance of common shares, net of share issue costs		500,000		-
Cash Provided by Financing Activities		447,290		102,442
Increase (Decrease) in Cash		(4,206)		13,795
Cash, Beginning of Year		19,708		5,913
Cash, End of Year	$	15,502	$	19,708
Supplemental disclosures with respect to cash flows
Taxes paid	$	-	$	-
Interest paid	$	1,083	$	-
Shares issued for debt settlement	$	40,796	$	-
Shares issued for shareholder loan	$	16,500	$	-
Shares subscribed	$	98,062	$	-
Residual value of warrants	$	27,600	$	-
Reclassification of accounts payable to long term debt	$	240,000	$	-
Reclassificationofoptions andwarrants onexpiry	$	146,260	$	-

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

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

1. NATURE OF OPERATIONS

Alchemist Mining Inc. (the “Company”) was incorporated as NY85 Capital Inc. under the Business Corporations Act on October 22, 2010 in the province of British Columbia. On October 1, 2012, the shareholders of the Company approved the name change from NY85 Capital Inc. to Alchemist Mining Inc. at the Annual General and Special Meeting of the Company. On August 20, 2014, the Company de-listed from the TSX-V and commenced trading on the Canadian Securities Exchange ("CSE"). The common shares of the Company are listed for trading on the CSE under the symbol AMS.X. The Company has been operating in a single business segment focusing on mineral exploration in Canada. The Company is transitioning to a technology developer and provider initially targeting the Cannabis sector and is waiting for approval of their change in business by the CSE.

2. GOING CONCERN

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

For the year ended April 30, 2021 the Company incurred a net loss of $1,025,348 (2020 - $435,260), and as at April 30, 2021, has an accumulated deficit of $4,948,190 (2020 - $4,069,102). At April 30, 2021 the Company has a working capital deficiency of $144,317 (2020 - $516,119). The Company has limited resources, no sources of operating cash flows and no assurances that sufficient funding will be available to continue operations for an extended period of time. These circumstances indicate that a material uncertainty exists which may cast significant doubt on the Company’s ability to continue as a going concern.

The application of the going concern concept is dependent upon the Company’s ability to satisfy its liabilities as they become due and to obtain the necessary financing to complete the development of its technologies and the attainment of profitable operations. Management is actively engaged in seeking to raise the necessary capital to meet its funding requirements. There can be no assurance that management’s plan will be successful. If the going concern assumption were not appropriate for these consolidated financial statements then adjustments may be necessary in the carrying values of assets and liabilities, the reported expenses and the consolidated statement of financial position classifications used. Such adjustments could be material.

On March 11, 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, was declared by the World Health Organization as a global pandemic. This has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

3. BASIS OF PRESENTATION

Approval of the consolidated financial statements

The consolidated financial statements of the Company for the year ended April 30, 2021 were reviewed by the Audit Committee and approved and authorized for issue on August 30, 2021 by the Board of Directors of the Company.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PRESENTATION (Continued)

Statement of compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

Basis of preparation

The consolidated financial statements are presented in Canadian dollars, which is also the Company’s and its subsidiary’s functional currency. The consolidated financial statements of the Company have been prepared on a historical cost basis, except for certain financial assets and financial liabilities measured at fair value.

Basis of consolidation

These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary, 1282112 BC Ltd, incorporated and located in British Columbia (“1282112”). All significant intercompany transactions and balances have been eliminated on consolidation.

4. SIGNIFICANT ACCOUNTING POLICIES

Significant accounting judgments, estimates and assumptions

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses.

Significant accounting judgments

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the consolidated financial statements are discussed below:

Going concern

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

Significant accounting estimates and assumptions

Information about estimates and assumptions that have the most significant effect on the recognition and measurement of assets, liabilities, income and expenses are provided below. Actual results may be substantially different.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

The carrying value of the deposit for the Green Rush asset and the recoverability of the carrying value

The application of the Company’s accounting policy for the deposit for the Green Rush asset 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. Estimates and assumptions may change if new information becomes available. If, after payments are capitalized, information becomes available suggesting that the recovery of the payments are unlikely, the amount capitalized is written off in profit or loss in the period the new information becomes available. Management review estimates at least annually and are updated if expectations change as a result of technical obsolescence or legal and other limits to use.

During the year end April 30, 2021, the Company estimated the recoverability of the deposit to be $nil, and an impairment charge was recorded to write-off the balance (Note 7).

Deferred income tax

The Company recognizes a deferred tax asset to extent recovery is probable. Assessing the recoverability of deferred tax assets requires management to make significant estimates of future taxable profit against which deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized. In addition, changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods.

Equipment

Recognition and measurement

On initial recognition, equipment is valued at cost, being the purchase price and directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary to be capable of operating in the manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items.

Equipment is subsequently measured at cost less accumulated amortization, less any accumulated impairment losses.

Amortization

The amortization rates applicable to each category of equipment are as follows:

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Class of equipment Amortization rate
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Computer equipment 55% declining-balance Furniture and fixtures 20% declining-balance

One-half the normal amortization is taken in the year of acquisition.

The Company begins to depreciate an asset when it becomes available for use, which is when it is in the location and condition necessary for it being capable of operating in the manner intended by management.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Equipment (Continued)

An item is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.

Financial instruments

Financial assets

• (i) Recognition and measurement of financial assets

The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument.

• (ii) Classification of financial assets

The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income or measured at fair value through profit or loss.

Financial assets measured at amortized cost

A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:

• The Company’s business model for the such financial assets, is to hold the assets in order to collect contractual cash flows.

• The contractual terms of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary.

Financial assets measured at fair value through other comprehensive income (“FVTOCI”)

Elected investments in equity instruments measured at fair value through other comprehensive income is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income.

Financial assets measured at fair value through profit or loss (“FVTPL”)

A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (continued)

Financial assets measured at fair value through profit or loss (“FVTPL”) (Continued)

As at April 30, 2021, the Company’s cash was measured as FVTPL and amounts receivable was measure at amortized cost.

Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the consolidated statements of loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

Derecognition of financial assets

The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in the consolidated statement of loss and comprehensive loss.

Financial Liabilities

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable. The Company’s financial liabilities include accounts payable and accrued liabilities, loan payable, shareholder loans and long-term debt, which are all measured at amortized cost.

Income taxes

Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of loss and comprehensive loss. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates substantively enacted at year-end, adjusted for amendments to tax payable with regard to previous years.

Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income taxes (Continued)

A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Share-based payments

Under the Company’s stock option plan, it may grant stock options to acquire common shares of the Company to directors, officers, employees and consultants. The fair value of share-based payments to employees is measured at grant date using the Black-Scholes option pricing model, and is recognized over the vesting period. Fair value of share-based payments for non-employees is recognized and measured at the date the goods or services are received based on the fair value of the goods or services received. If it is determined that the fair value of goods and services received cannot be reliably measured, the share-based payment is measured at the fair value of the equity instruments issued using the Black-Scholes option pricing model.

Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest, except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense.

For both employees and non-employees, the fair value of share-based payments is recognized as an expense with a corresponding increase in share-based payment reserves. The amount recognized as expense is adjusted to reflect the number of share options that actually vest. Consideration received on the exercise of stock options is recorded in share capital and the related share-based payment reserves is transferred to share capital.

Loss per share

Basic loss per share is calculated by dividing the net loss for the year by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding used in the calculation of diluted loss per share assumes that the deemed proceeds received from the exercise of share options, share purchase warrants and their equivalents would be used to repurchase common shares of the Company at the average market price during the year.

Existing share options and share purchase warrants have not been included in the computation of diluted loss per share as to do so would be anti-dilutive. Accordingly, basic and diluted loss per share is the same.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share capital

Proceeds from the exercise of stock options and warrants are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company. Share capital issued for non-monetary consideration is valued at the closing market price at the date of issuance. The proceeds from the issuance of units are allocated between common shares and warrants based on the residual value method. Under this method, the proceeds are allocated first to share capital based on the fair value of the common shares at the time the units are priced and any residual value is allocated to the warrants reserve. Consideration received for the exercise of options or warrants is recorded in share capital and the related residual value is transferred to share capital. For those options and warrants that expire, the recorded value is transferred to deficit.

Leases

The Company considers whether a contract is, or contains, a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.

At lease commencement date, the Company recognizes a right-of-use asset and a lease liability on the balance sheet. The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available. If the interest rate implicit in the lease is not readily available, the Company discounts using the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in profit or loss on a straight-line basis over the lease term. On the consolidated statement of financial position, right-of-use assets have been included under non-current assets and lease liabilities have been included under current and non-current liabilities.

As at April 30, 2021 and 2020, the Company did not have any leases. During the year ended April 30, 2020, the Company recognized a rent recovery of $2,156.

Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Provisions (Continued)

made. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at consolidated statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. The increase in the obligation due to the passage of time is recognized as finance expense. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Foreign exchange

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates.The functional currency of the Company and its subsidiary is the Canadian dollar. Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.

Accounting standards issued but not yet effective

During the year ended April 30, 2021, there were no new IFRS or IAS accounting standards that became effective that had a material impact on the Company’s consolidated financial statements. There are however a number of new standards and amendments to existing standards effective in future periods. The following may impact the reporting and disclosures of the Company:

IAS 16 – Property, plant and equipment – Proceeds before intended use (“IAS 16”) has been amended to clarify the accounting for the net proceeds from selling any items produced while bringing an item of property, plant or equipment to the location and condition necessary for it to be capable of operating in the manner intended by management. The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. These amendments are effective for periods beginning on or after January 1, 2022. The Company is currently assessing the impact of this amendment.

IAS 37–Provisions (“IAS 37”), has been amended to clarify (i) the meaning of “costs to fulfil a contract”, and (ii) that, before a separate provision for an onerous contract is established, an entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract, rather than on assets dedicated to that contract. These amendments are effective for periods beginning on or after January 1, 2022. The Company is currently assessing the impact of this amendment.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting standards issued but not yet effective (Continued)

IAS 1 –Presentation of Financial Statements (“IAS 1”), has been amended to clarify how to classify debt and other liabilities as either current or non-current. The amendment to IAS 1 is effective for the years beginning on or after January 1, 2023. The Company is currently assessing the impact of this amendment.

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments are agreements between two parties that result in promises to pay or receive cash or equity instruments. The carrying values of these instruments approximate their fair values due to their short term to maturity.

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Inputs for assets or liabilities that are not based on observable market data.

The Company’s financial instruments classified as Level 1 in the fair value hierarchy are cash and accounts payable and accrued liabilities. Their carrying values approximate the fair values due to short-term maturity of these instruments.

The Company has exposure to the following risks from its use of financial instruments:

• Credit risk;

• Liquidity risk; and

• Market risk.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company manages credit risk, in respect of cash, by placing cash at major Canadian financial institutions. The Company has minimal credit risk on its amounts receivable at year end, as the balance relates to an overpayment made to legal counsel.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquid funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The contractual financial liabilities of the Company as of April 30, 2021 equal $448,762 (2020 - $566,339). All of the liabilities presented as accounts payable are due within 90 days of April 30, 2021. Long term debt of $240,000 is due to related parties and is subject to subordination agreements and will not fall due within the next 12 months. The Company is seeking additional sources of capital through financing opportunities.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital.

As at April 30, 2021, the Company is not exposed to significant market risk.

6. EQUIPMENT

		Computer		Furniture and
		Equipment		Fixtures		Total
Cost
Balance,April 30,2020 and 2021	$	5,453	$	2,032	$	7,485
Accumulated depreciation
Balance, April 30, 2019		5,035		1,691		6,726
Depreciation		230		64		294
Balance, April 30, 2020		5,265		1,755		7,020
Depreciation		103		56		159
Balance,April 30,2021	$	5,368	$	1,811	$	7,179
Net Book Value
April 30,2020	$	188	$	277	$	465
April 30,2021	$	85	$	221	$	306

7. DEPOSIT

On March 19, 2019, the Company entered into an asset purchase agreement (“Agreement”) with Green Rush Consulting LLC (“Green Rush”) whereby Green Rush has granted the Company the right to purchase 100% of Green Rush’s right, title, and interest in and certain intellectual property rights relating to Green Rush’s Oddysee Software Platform, a software-as-a-service platform focused on the automation for city and state cannabis license applications.

In accordance with the Agreement, the Company is required to make a series of payments totaling US$3,750,000 (“Purchase Price”) and issue 20,000,000 common shares of the Company (“Consideration Shares”) to Green Rush.

As at April 30, 2021, the Company had paid $579,810 (US$453,895) (2020 - $599,695 (US$453,895)). This amount was recorded as a prepaid acquisition cost. The reminder of the purchase price of US$3,296,105 will be issued as a secured promissory note. The Company shall pay the reminder of the Purchase price, issue the common shares and promissory note once the closing date is agreed upon between the Company and Green Rush.

During the year ended April 30, 2021, the Company wrote-off the full balance of the deposit of $579,810, as it was not deemed to be recoverable.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

8. SHARE CAPITAL

Authorized

Unlimited number of common shares without par value.

Issued

For the year ended April 30, 2021:

On September 15, 2020, 14,285,714 common shares were issued at a price of $0.035 per share for gross proceeds of $500,000.

On October 22, 2020, the Company issued 1,840,000 units with a price of $0.05 per unit, for gross proceeds of $92,000. Each unit consists of one common share and one share purchase warrant. The warrants have an exercise price of $0.075 per share and expire one year from the date of issuance. In connection with the financing, the Company recorded a residual value of $27,600 on the warrants. The proceeds for the private placements were received during the years ended April 30, 2019 and 2020, and were recorded previously as subscriptions received.

On October 22, 2020, the Company issued 107,500 common shares to complete the exercise of warrants initiated during the year ended April 30, 2020, for gross proceeds of $6,062. The proceeds were received during the year ended April 30, 2020, and were previously recorded as subscriptions received.

On October 22, 2020, the Company settled $58,280 of debt by issuing 1,165,600 common shares with a fair value of $40,796. The Company recognized a gain on the settlement of debt of $17,484 on the transaction.

On October 22, 2020, the Company settled $16,500 of debt by issuing 300,000 common shares with a fair value of $16,500. The Company recognized a gain on the settlement of debt of $nil on the transaction (Note 9).

For the year ended April 30, 2020:

During the year ended April 30, 2020, the Company received $6,062 for the proposed exercise of 107,500 warrants at prices between of $0.055-$0.075 per share. The transaction was completed during the year ended April 30, 2021.

The Company received $22,000 during the year ended April 30, 2020 in share subscriptions which were applied towards the private placement which closed on October 2020.

Share options

The Company has adopted a share option plan pursuant to which the Board of Directors of the Company may, from time to time, in its discretion, and in accordance with the CSE requirements, grant to directors, officers, employees and consultants of the Company non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares at the time of grant and exercisable for a period of up to ten years from the date of grant. The number of common shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and outstanding common shares and the number of common shares reserved for issuance to all consultants will not exceed 2% of the issued and outstanding common shares. Options may be exercised within 90 days following cessation of the optionee’s position with the Company, provided that if the

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

8. SHARE CAPITAL (Continued)

Share options (Continued)

cessation of office, directorship, employment or consulting arrangement was by reason of death, the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option.

The changes in share options during the years ended April 30, 2021 and 2020 are summarized as follows:

			2021			2020
				Weighted		Weighted
	Number of			Average	Number of	Average
	Options		Exercise Price		Options	Exercise Price
Outstanding and exercisable,
beginning of year	1,120,000		$	0.21	2,520,000	$ 0.15
Expired	(1,120,000)			0.21	(950,000)	0.06
Cancelled		-		-	(450,000)	0.22
Outstanding,end ofyear		-	$	-	1,120,000	$0.21

During the year ended April 30, 2021, the Company granted Nil (2020 – Nil) stock options. During the year ended April 30, 2021, the Company reclassified $146,260 (2020 - $111,513) from sharebased payments reserve to deficit on the expiry or cancellation of the options.

Warrants

The changes in warrants during the years ended April 30, 2021 and 2020 are summarized as follows:

	2021	2021		2020	2020
			Weighted		Weighted
	Number of		Average	Number of	Average
	Warrants	Exercise Price		Warrants	Exercise Price
Outstanding, beginning of year	-		-	25,174,500	$ 0.075
Issued	1,840,000		0.075	-	-
Exercised	-		-	(107,500)	0.056
Expired	-		-	(25,067,000)	0.070
Outstanding, end of year	1,840,000	$	0.075	-	$ -

During the year ended April 30, 2021, the Company reclassified $Nil (2020 - $9,115) from warrants reserve to deficit on the expiry of the warrants.

During the year ended April 30, 2020, 107,500 warrants were exercised for gross proceeds of $6,062. At the time of the exercise, the Company’s stock was cease traded and the common shares were not issued until October 22, 2020. The commitment to issues the shares of $6,062 was included in share subscriptions as at April 30, 2020.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

9. RELATED PARTY TRANSACTIONS

Key management personnel compensation

The remuneration of the Company’s directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the activities of the Company, consists of the following amounts.

The following table summarizes transactions with related parties during the year ended April 30, 2021 and 2020:

	Year ended
	April 30, 2021 April 30, 2020
Consulting fees $ Accounting fees	291,375 $ 234,000 6,000 7,500
$	297,375 $ 241,500

As at April 30, 2021, $75,175 (2020 - $218,125) of unpaid consulting and professional fees was included in accounts payable and accrued liabilities. The amounts are unsecured, non-interest bearing and due on demand.

As at April 30, 2021, $240,000 (2020 - $Nil) is included in long term debt which is due to related parties. Of this amount, $180,000 was due to the CEO of the Company and $60,000 was due to a director. The amounts represent accounts payable balances that were subordinated for working capital purposes. The debt is unsecured, non-interest bearing and is due 12 months from the date the Company resumes trading on the CSE.

Shareholder loans

	Year ended
	April 30, 2021 April 30, 2020
Opening balance $ Cash received Cash paid for principal Cash paid for interest Shares issued to settle debt (Note 8)	24,380 $ - 24,411 - (22,121) 24,380 1,083 - (16,500) -
$	11,253 $ 24,380

On July 1[st] , 2020, the Company entered into a loan agreement with a non-arms length party. The principal of the loan received was $11,017 and had a fixed interest rate of 10%. The loan was unsecured and repayable within 30 days of the Company receiving further funding. In September 2020, the Company repaid the full balance of $12,100, which included $11,107 in principal and $1,083 in accrued interest.

During the year ended April 30, 2021, the Company received working capital advances from related parties of $13,394 (2020 – $7,880) and repaid $10,021 (2020 - $nil). The advances are unsecured, non-interest bearing and have no repayment terms. As at April 30, 2021, $11,253 (2020 - $7,880) remained outstanding.

During the year ended April 30, 2020, the Company received $16,500 in shareholder loans. The loans were non-interest bearing, unsecured and due on demand. During the year ended April 30, 2021, the loans were settled through the issuance of 300,000 common shares with a fair value of $16,500 (Note 8).

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

10. LOAN PAYABLE

On February 10[th] , 2020, the Company entered into a loan agreement with a non-arms length party. The principal on the loan was $50,000 with interest of $5,000 that represents a fixed interest of 10% regardless of term. The loan is unsecured and is repayable upon the Company receiving any monies from any source whatsoever. The loan was repaid in full in September 2020.

As at April 30, 2021, the Company had a total loan payable of $Nil (2020 - $55,000) and incurred interest expense of $nil (2020 - $5,000).

11. INCOME TAXES

Income tax expense differs from the amount that would be computed by applying the Canadian statutory income tax rate of 27% (2020 - 27%) to income before income taxes.

A reconciliation of income taxes at statutory rates with reported taxes is as follows:

		2021		2020
Net loss for the year	$	(1,025,348)	$	(435,360)
Statutory income tax rate		27%		27%
Expected income tax recovery		(277,000)		(117,466)
Change in unrecognized deductible temporary differences		282,000		117,466
Change in statutory, foreign tax, foreign exchange rates and other		(5,000)		-
Total income tax expense(recovery)	$	-	$	-

Significant components of the Company’s deferred tax assets are as follows:

		2021		2020
Deferred tax assets (liabilities)
Exploration and evaluation assets	$	126,000	$	125,632
Property and equipment		3,000		2,462
Share issue costs		1,000		2,036
Non-capital losses available for future period		1,097,000		814,472
		1,227,000		944,602
Unrecognized deductible temporary differences		(1,227,000)		(944,602)
Net deferred tax assets	$	-	$	-

Deferred tax assets are recognized to the extent that it is probable that taxable income will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized.

The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

11. INCOME TAXES (Continued)

		2021	2021		2020	2020
Temporary Differences
Exploration and evaluation assets	$	465,000	No expiry date	$	465,302	No expiry date
Equipment		9,000	No expiry date		9,119	No expiry date
Share issue costs		4,000	2022 to 2023		7,540	2021 to 2023
Non-capital losses available for
futureperiod		4,061,000	2031 to 2041		3,016,564	2031 to 2040

12. SEGMENTED INFORMATION

The Company operates in a single reportable operating segment, development of technology, and all of its operations and assets are in Canada.

13. CAPITAL MANAGEMENT

The Company considers its capital to be comprised of shareholders’ equity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will continue this method of financing due to the current difficult market conditions.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. Management reviews the capital structure on a regular basis to ensure that the above objectives are met. There have been no changes to the Company’s approach to capital management during the year ended April 30, 2021. The Company is not subject to external restrictions on its capital.

14. COMMITMENTS

Contingent commitments existing as at April 30, 2021 were as follows:

• Company has agreed to grant 250,000 stock options at an exercise price of $0.07 per share to the Company’s VP.

• The Company will issue 1,000,000 common shares to the CEO on the successful introduction of an acceptable and completed qualifying transaction.

15.

CONTINGENCY

The Company has been named as a defendant in a legal proceeding commenced in the Provincial Court of British Columbia. The legal proceeding claims the Company made certain misrepresentations with respect to the business and financial status of the Company. As of the date of these consolidated financial statements, uncertainty exists relating to the timing and amount of any possible cash settlements, however, it is estimated at approximately $25,000. A provision has not been recorded as of April 30, 2021.

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ALCHEMIST MINING INC. Notes to the Consolidated Financial Statements Years Ended April 30, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

16. SUBSEQUENT EVENTS

Subsequent to the year ended April 30, 2021:

• (a) Subsequent to April 30, 2021, the Company filed its initial listing statement with the CSE. The listing statement discloses amendments made to the APA on March 1, 2021 whereby the parties agreed to a 6.2% holdback on the shares (the “Holdback Shares”) issued as consideration, payable under the event two of the leases (the “Holdback Leases”) to be acquired by the Company are note successfully transferred to the Company on closing. Once the Holdback Leases are transferred to the Company, the Holdback Shares will be issued to All Nations.

The acquisition will be an arm’s length transaction and is expected to constitute a change of business of Alchemist under the CSE rules and policies. Completion of the acquisition is subject to receipt of necessary consents and approvals, including, without limitation: (i) approval of the CSE for the listing statement and the listing of the common shares of the resulting issuer; and (ii) approval of Alchemist’s shareholders. There can be no assurance that the acquisition will be completed on the terms proposed in the amended and restated APA or at all.

No finders’ fee is payable in connection with the acquisition, and no advances or other consideration will be paid by Alchemist to All Nations in advance of closing of the acquisition.

In August 2021, the Company terminated the Asset Purchase Agreement with All Nations.

• (b) Subsequent to April 30, 2021, the Company received the following loans payable:

• a. $87,500 loan that is unsecured, bears interest at 10%, and due within 30 days of the Company resuming trading. The loan is repayable in cash or through the issuance of 2,500,000 units. Each unit will be comprised of one common share and one share purchase warrant. The warrants will have an exercise price of $0.75 and will be exercisable for a period of two years from the date of issuance; and

• b. $100,000 loan that is unsecured, non-interest bearing, and due within 30 days of the Company resuming trading. The loan is repayable in cash or through the issuance of common shares.

• (c) On August 23, 2021, the Company entered into a letter of intent for the acquisition of Alinea Cannabis Inc. – a Health Canada licensed, federally registered corporation.

The Company proposed to enter into a share exchange agreement which contemplates the purchase of all of the assets of Alinea Cannabis Inc. including but not limited to its name, real estate land holdings, cultivation facility and business agreements. The purchase price will be $3,680,000 paid through the issuance of 49,066,667 common shares of Alchemist Inc. determined at a fixed share price of $0.075 per share.

The legal obligations of the parties for the purchase will be outlined in a definitive agreement.

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