Northstar Clean Technologies Inc. — Interim / Quarterly Report 2021

Nov 24, 2021

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(formerly Northstar Venture Technologies Inc)

Condensed Consolidated Interim Financial Statements

For the nine month period ended September 30, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

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(formerly Northstar Venture Technologies Inc)

Dated November 23, 2021

Management’s Comments on Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements of Northstar Clean Technologies Inc. for the nine months ended September 30, 2021, and 2020 have been prepared by management, reviewed by the Audit Committee and approved by the Board of Directors of the Company.

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited interim financial statements for the nine-month period ended September 30, 2021.

1

Northstar Clean Technologies Inc.

(formerly Northstar Venture Technologies Inc.)

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - Expressed in Canadian Dollars) As at September 30, 2021 and December 31, 2020

	September 30, 2021 December 31, 2020
ASSETS Current Cash Accounts receivable Input tax credits receivable Prepaids Net investment in sublease (Note 5) Non-Current Deposits (Note 5) Property, plant and equipment (Note 6) Long-term investments Net investment in sublease (Note 5) Right-of-use asset (Note 5)	$ 8,251,481 $ 1,977,795 5 - 259,475 206,225 292,825 13,061 57,627 51,824
	8,861,413 2,248,905
	451,070 48,570 2,903,864 2,370,872 - 4 147,370 191,411 1,915,372 -
	5,417,676 2,610,857
	$ 14,279,089 $ 4,859,762
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities Credit facility payable (Note 7) Loans payable (Note 7) Lease liability (Notes 5) Non-Current Lease liability (Notes 5)	$ 100,997 $ 342,569 505,054 1,365,557 - 551,710 432,707 51,824
	1,038,758 2,311,660 1,774,641 191,411
	2,813,399 2,503,071
Shareholders' equity Capital stock (Note 9) Reserves (Note 10) Deficit	24,744,885 12,602,086 2,397,755 543,854 (15,676,950) (10,789,249)
	11,465,690 2,356,691
	$ 14,279,089 $ 4,859,762

Nature of operations and continuance of operations (Note 1) Subsequent events (Note 13)

On behalf of the Board:

“Neil Currie” Director “Gord Johnson”

Director

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

2

Northstar Clean Technologies Inc.

(formerly Northstar Venture Technologies Inc.)

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited - Expressed in Canadian Dollars)

For the three and nine months ended September 30, 2021, and 2020

	3 months September 30, 2021 3 months September 30, 2020 9 months September 30, 2021 9 months September 30, 2020
RESEARCH AND DEVELOPMENT EXPENSES Contract consulting fees Repairs and maintenance Site materials GENERAL AND ADMINISTRATIVE EXPENSES Advertising, marketing and promotion Bank charges, interest and finance charges Consulting fees Depreciation (Note 5 and 6) Insurance Investor relations Management fees (Note 8) Office and administration Professional fees (recovery) Rent and utilities Share-based compensation (Notes 9 and 10) Transfer agent and regulatory fees Travel Wages and benefits OTHER ITEMS Foreign exchange gain (loss) Interest income Gain on settlement of debt Loss and comprehensive loss for the period	$ 44,254 $ 3,900 $ 52,002 $ 8,900 7,741 18,926 22,890 22,017 65,560 243 126,313 243
	(117,555) (23,069) (201,205) (31,160)
	489,691 3,238 493,801 3,238 65,642 20,841 233,159 84,693 183,705 225 442,166 225 115,492 88,198 346,475 264,593 37,049 150 37,049 2,199 42,235 - 42,235 - - 27,880 - 83,641 6,316 1,058 10,645 2,492 92,333 (30,424) 426,422 98,256 44,721 36,041 120,488 149,656 568,564 - 2,214,528 9,803 12,033 - 88,331 - 38,689 - 55,800 - 96,570 - 193,275 -
	(1,793,040) (147,207) (4,704,374) (698,796)
	893 - 893 - 5,342 4 16,985 7 - 27,900 - 27,900
	6,235 27,904 17,878 27,907
	$ (1,904,360) $ (142,372) $ (4,887,701) $ (702,049)
Basic and diluted loss per share	$ (0.02) $ (0.00) $ (0.06) $ (0.02)
Weighted average number of common shares outstanding (basic and diluted)	106,110,903 41,248,577 81,795,990 39,170,215

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

3

Northstar Clean Technologies Inc.

(formerly Northstar Venture Technologies Inc.)

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Unaudited - Expressed in Canadian Dollars)

Number of Shares Capital Stock	Warrant Reserves	Option Reserves	Deficit Total Shareholders’ Equity
Authorized Share Capital: Unlimited number of common shares without par value Issued: Balance, December 31, 2019 39,166,077 $ 3,906,565 Warrants exercised (Notes 9 and 10) 2,082,500 312,375 Share-based payments (Note 10) - - Loss for the period - -	$ - - - -	$ 534,051 - 9,803 -	$ (4,192,456) $ 248,160 - 312,375 - 9,803 (702,049) (702,049)
Balance, September 30, 2020 41,248,577 4,218,940 Shares issued on Northstar Acquisition (Note 4) 27,034,412 8,383,146 Loss for the period - -	- - -	543,854 - -	(4,894,505) (131,711) - 8,383,146 (5,894,744) (5,894,744)
Balance, December 31, 2020 68,282,989 12,602,086 Private placements (Note 9) 34,975,178 12,241,312 Share issue costs (Note 9) - (1,096,971) Penalty shares issued (Note 4) 2,150,000 752,500 Share-based payments (Note 10) - - Shares issued for debt 702,736 245,958 Loss for the period - -	- - 391,873 - - -	543,854 - - 1,462,028 - -	$ (10,789,249) $ 2,356,691 - 12,241,312 - (705,098) 752,500 - 1,462,028 - 245,958 (4,887,701) (4,887,701)
Balance, September 30, 2021 106,110,903 $ 24,744,885	$ 391,873	$ 2,005,882	$ (15,676,950) $ 11,465,690

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

4

Northstar Clean Technologies Inc.

(formerly Northstar Venture Technologies Inc.)

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in Canadian Dollars)

For nine months ended September 30, 2021 and 2020

		September 30, 2021 September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES Net income loss for the period Items not affecting cash Depreciation Interest and finance charges on loans Share-based payments Interest on lease liabilities Gain on sale of investments Changes in non-cash working capital items Receivables Prepaids Accounts payable and accrued liabilities Net cash flows used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Deposits Lease payments received Net cash flows provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Loan proceeds Loan repayments Related party loan proceeds Bank indebtedness Lease liabilities Proceeds from issuance of shares Share issue costs Net cash flows provided by financing activities Change in cash and restricted cash during the period Cash, beginning ofperiod		$ (4,887,701) $ (702,049) 346,475 264,593 42,663 (6,825) 2,214,528 9,803 161,036 18,038 (1) -
		(2,123,000) (416,440) (53,250) (44,988) (279,764) - (241,572) 166,318
		(2,697,586) (295,110)
		(534,699) (417,097) (402,500) - 38,238 -
		(898,961) (417,097)
		480,000 274,396 (1,688,918) - - 500,000 - (65,733) (457,063) (269,325) 12,241,312 312,375 (705,098) -
		9,870,233 751,713
		6,273,686 39,506 1,977,795 -
Cash and restricted cash, end of period		$ 8,251,481 $ 39,506
Cash paid for interest Cash paid for tax Supplemental disclosures with respect to cash flows (Note 11)		$ 46,516 $ 57,511 $ - $ -

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

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Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements (Unaudited - Expressed in Canadian Dollars) September 30, 2021

1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

Nature of operations

Northstar Clean Technologies Inc. (“Northstar” or the “Company”) was incorporated on August 21, 2017 as Blocktech Ventures Inc. under the laws of the British Columbia Corporations Act. On August 4, 2020, the Company entered into an amalgamation agreement and on December 23, 2020, the Company completed an amalgamation with its subsidiary 1257848 BC Ltd. and Empower Environmental Solutions Ltd (“Empower”) (the “Amalgamation”). Upon Amalgamation, the Company acquired all the shares of Empower (41,248,577 shares) by issuing 44,331,147 Company shares in exchange. Pursuant to the agreement, following completion of the transaction, Empower shareholders owned approximately 64.92% of the combined company resulting in the shareholders of the Empower controlling the Company. Accordingly, the transaction was considered a reverse takeover transaction (“RTO”). The head office and principal address of the Company is located at 7046 Brown Street, Delta, British Columbia, Canada, V4G 1G8. The Company’s registered and records office is Suite 900, 885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1.

The principal business of Empower and the Company subsequent to the Amalgamation, is the commercialization of a proprietary process technology for the recycling of asphalt shingles and the extraction and recovery of asphalt cement, fiberglass/felt and mineral aggregates to be sold and used in asphalt pavement, shingle manufacturing, construction products, and other industrial applications.

Going concern

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

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. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

2. BASIS OF PREPARATION

Statement of compliance

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

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Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

2. BASIS OF PREPARATION (Continued)

Statement of compliance (Continued)

The policies applied in these interim consolidated financial statements are based on IFRS issued and effective as of September 30, 2021. The Board of Directors approved the condensed consolidated interim financial statements for issue on November 23, 2021.

This consolidated interim financial report does not include all of the information required of a full annual financial report and is intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Company for the year ended December 31, 2020. However, this consolidated interim financial report provides selected significant disclosures that are required in the annual financial statements under IFRS. Certain amounts in prior periods have been reclassified to conform to the current period presentation.

Basis of measurement

The condensed consolidated interim financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value as explained in the accounting policies. These condensed consolidated interim financial statements have been prepared using the accrual basis of accounting with the exception of cash flow information.

Functional and presentation currency

These condensed consolidated interim financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries. All financial information is expressed in Canadian dollars unless otherwise stated and have been rounded to the nearest dollar.

Use of estimates and judgements

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires the use of judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although these judgments and estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those judgments and estimates.

The most significant accounts that require judgments and estimates as the basis for determining the stated amounts include the recoverability of property, plant and equipment, assumptions used in share-based payments, recognition of deferred income tax amounts, and the going concern assumption.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments are as follows:

Estimates

Recoverability of property, plant, and equipment

The carrying value and the recoverability of property and equipment, which are included in the consolidated statements of financial position. The cost model is utilized and the value of the property and equipment is based on the expenditures incurred. At every reporting period, management assesses the potential impairment which involves assessing whether or not facts or circumstances exist that suggest the carrying amount exceeds the recoverable amount.

7

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

2. BASIS OF PREPARATION (Continued)

Valuation of share-based payments

The Company uses the Black-Scholes option pricing model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.

Critical judgements

Income taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

Going concern

The going concern 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. Management plans to ensure the continuation of the operations is discussed in note 1.

3. SIGNIFICANT ACCOUNTING POLICIES

These unaudited condensed interim financial statements follow the same accounting policies and methods of application as the annual audited financial statements for the year ended December 31, 2020.

• (a) There were no new accounting standards adopted during the period

• (b) New accounting standards and interpretations not yet adopted

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The IASB has published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which clarifies the guidance on whether a liability should be classified as either current or non-current. The amendments:

• clarify that the classification of liabilities as current or non-current should only be based on rights that are in place “at the end of the reporting period”

• clarify that classification is unaffected by expectations about whether an entity will exercise the right to defer settlement of a liability

• make clear that settlement includes transfers to the counterparty of cash, equity instruments, other assets or services that result in extinguishment of the liability.

The amendment is effective for annual periods beginning on or after January 1, 2022. Earlier application is permitted. The Company does not expect the adoption of this amendment to have a significant impact.

8

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements (Unaudited - Expressed in Canadian Dollars) September 30, 2021

4. ACQUISITION

As described in Note 1, on December 23, 2020, Empower completed the Amalgamation with 1257848 BC Ltd., a wholly owned subsidiary of the Company. As consideration for the Amalgamation, the Company issued a total of 44,331,147 common shares to the shareholders of Empower.

The Amalgamation resulted in the shareholders of Empower obtaining control of the combined entity by obtaining control of the voting rights, governance, and management decision making processes, and the resulting power to govern the financial and operating policies of the combined entity.

The Amalgamation constitutes an RTO of Northstar by Empower and has been accounted for as a reverse acquisition transaction in accordance with the guidance provided in IFRS 2, Share-based Payments and IFRS 3, Business Combinations. As Northstar did not qualify as a business according to the definition in IFRS 3, the RTO does not constitute a business combination; rather it is treated as an issuance of common shares by Empower for the net assets of Northstar with Empower as the continuing entity. Accordingly, no goodwill or intangible assets were recorded with respect to the transaction as it does not constitute a business.

For accounting purposes, Empower was treated as the accounting parent company (legal subsidiary) and Northstar has been treated as the accounting subsidiary (legal parent) in these consolidated financial statements. As Empower was deemed to be the acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in these financial statements at their historical carrying values. Northstar’s results of operations have been included from the date of the Amalgamation.

9

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

4. NORTHSTAR ACQUISITION (Continued)

The following are the assumptions and adjustments relating to the acquisition of Northstar:

Total Purchase Consideration 23,951,842 shares at $0.35 per share private placement		$ 8,383,146
Allocation of Purchase Consideration Assets Current Cash Input tax credits Prepaid expenses Bridge loan (Note 8) Investments Net investment in sub-lease Non-Current Net investment in sub-lease Total assets Liabilities Current Accounts payable and accrued liabilities Lease liability Non-Current Lease liability Total liabilities Net assets acquired Share-based compensation Total	$ 1,975,538 133,246 13,159 731,301 4 51,824	$ 2,905,072 191,411
	$ 23,625 51,824
		3,096,483
		75,449 191,411
		(266,860)
		2,829,623 5,553,523
		$ 8,383,146

The consideration was measured at the fair value of the shares that Empower would have had to issue to the shareholders of Northstar (23,951,842 common shares), to give the shareholders of Northstar the same percentage equity interest in the combined entity that results from the RTO had it taken the legal form of Empower acquiring Northstar.

As part of the Post-Closing Covenants, since NorthStar Shares has not been listed on either the TSXV or the CSE on or before March 31, 2021, on April 1, 2021, NorthStar issued, for no additional consideration, an aggregate of an additional 2,150,000 NorthStar Shares and divided among the Entitled Shareholders pro-rata according to the interest each of them held in NorthStar as shown on the Equity Record. The shares were issued on April 1, 2021 at a cost of $0.35 per share for a total of $752,500 expensed as share-based compensation.

10

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

5. RIGHT-OF-USE ASSET AND LEASE LIABILITY

Right-of-use assets

The Company’s right-of-use assets are entirely comprised of premises for operating facility. The following is the continuity of the cost and accumulated depreciation of right-of-use assets as at September 30, 2021 and December 31, 2020:

20:
	September 30,		December 31,
		2021		2020
Cost
Balance at beginning of period	$	612,140	$	612,140
Expiration		(612,140)		-
Additions		2,260,140		-
Balance, end of period	$	2,260,140	$	612,140
Accumulated depreciation
Balance at beginning of period	$	612,140	$	319,377
Expiration		(612,140)		-
Depreciation		344,768		292,763
Balance, end of period	$	344,768	$	612,140
Right-of-Use Asset	$	1,915,372	$	-

The Company’s Net investment assets (“NIS”) are comprised of premises under lease and are sub-leased. The following is the continuity of the NIS asset as at September 30, 2021 and December 31, 2020:

	September 30,	September 30,		December 31,
Net investment insublease		2021		2020
NIS asset acquired form Northstar	$	243,235	$	243,235
Lease payments received		(55,224)		-
Finance income		16,986		-
Value of net investment in sublease, end of period		204,997		243,235
Current portion		(57,627)		(51,824)
Non-current portion	$	147,370	$	191,411

Lease liabilities

The following is the continuity of lease liabilities as at September 30, 2021 and December 31, 2020:

	September 30,	September 30,	December 31,	December 31,
		2021		2020
Cost
Balance at beginning of year	$	243,235	$	310,251
Additions		2,260,140		-
Lease payments		(474,049)		(329,175)
Lease acquired form Northstar		-		243,235
Interest accretion on lease liability		178,022		18,924
Balance, end of period	$	2,207,348	$	243,235
Current portion		(432,707)		(51,824)
**Non-current portion **	**$ **	1,774,641	$	191,411

11

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

5. RIGHT-OF-USE ASSET AND LEASE LIABILITY (Continued)

The following is a schedule of future minimum lease payments under lease commitments as at September 30, 2021 and December 31, 2020:

30, 2021 and December 31, 2020:
	September 30,			December 31,
		2021		2020
Total Payments:
No later than one year	$	633,982	$	73,824
Later than one year, not later than five years		2,081,093		221,471
Later than five years		-		-
Net minimum lease payments	$	2,715,075	$	295,295

Payments recognized in the consolidated financial statements relating to short-term leases and low-value assets for the periods ended September 30, 2021, were $Nil (December 31, 2020 - $Nil).

In connection with the agreement for the lease, the Company made a deposit payment of $85,000 of which $37,800 was applied to the Basic Rent due in December 2015, and the balance of $47,200 will be held as a security deposit. The Company renegotiated a new lease on January 1, 2021 and the security deposit held with the addition of $402,500 formed part of the new security deposit.

In connection with the NIS lease, the Company’s lease term is until November 30, 2024. The current monthly basic rent is payable monthly in advance at a rate of $6,136 per month plus the proportion share of expense in respect of operating costs and property taxes. The Company entered into an assignment agreement whereby the assignee has accepted the terms of the Company’s lease terms and is paying the lease payments directly to the Landlord.

6. PROPERTY, PLANT AND EQUIPMENT

	Recycling equipment Storage Facility Equipment under construction Furniture and Fixtures Leasehold Improve- ments Total
Cost Balance – December 31, 2019 Additions Balance – December 31, 2020 Additions Balance – September 30, 2021 Accumulated Depreciation Balance – December 31, 2019 Additions Balance – December 31, 2020 Additions Balance – September 30, 2021 Net Book Value Balance – December 31, 2020 Balance–September30,2021
	$ 28,210 $ 20,300 $1,798,623 $ 3,600 $ 56,604 $1,907,337 - - 560,888 - - 560,888
	$ 28,210 $ 20,300 $2,359,511 $ 3,600 $ 56,604 $2,468,225 - 36,168 497,953 578 - 534,699
	$ 28,210 $ 56,468 $2,857,464 $ 4,178 $ 56,604 $3,002,924
	$ 22,885 $ 12,817 $ - $ 2,273 $ 28,518 $ 66,493 1,065 1,497 - 212 28,086 30,860
	$ 23,950 $ 14,314 $ - $ 2,485 $ 56,604 $ 97,353 639 900 - 168 - 1,707
	$ 24,589 $ 15,214 $ - $ 2,653 $ 56,604 $ 99,060
	$ 4,260 $ 5,986 $2,359,511 $ 1,115 $ - $2,370,872 $ 3,621 $ 41,254 $2,857,464 $ 1,525 $ - **$2,903,864 **

12

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

7. LOANS PAYABLE

Credit Facility:

The Company has a variable rate term loan with a maximum authorized limit of $1,500,000 with Vancity Savings Credit Union. The credit facility carries an annual interest rate of Vancity Prime + 1.75%, is calculated and payable monthly and secured by a general security agreement and personal guarantees of certain Directors and Shareholders. All amounts due under the credit facility are due on demand. The amount outstanding as at September 30, 2021 was $505,054 (December 31, 2021 - $1,365,557).

Shareholder loans:

The Company had a loan payable to a non-related party shareholders in the amount of $523,520. The loans carried an annual interest rate of 10%, was unsecured and were paid in full in June 2021. The amount outstanding as at September 30, 2021 was $Nil (December 31, 2020 - $523,520) including $Nil (December 31, 2020 - $79,513) in interest.

The Company had a loan payable to a non-related party shareholder in the amount of $28,190. The amount was non-interest bearing, is unsecured and was repaid in full in June 2021. The amount outstanding as at September 30, 2021 was $Nil (December 31, 2020 - $28,190).

Directors’ loans:

The Company had borrowed $480,000 during May and June on a short-term basis. The loans carried an annual interest rate of 6%, was unsecured and were paid in full in June 2021 with interest totaling $2,495.

Bridge loan:

Prior to the Amalgamation, Northstar advanced a total of $731,301 to Empower. These amounts were eliminated after the Amalgamation date.

8. RELATED PARTY TRANSACTIONS AND BALANCES

• (a) As at September 30, 2021, accounts payable and accrued liabilities include $7,350 (December 31, 2020 - $16,793) owing to companies with certain directors in common and companies controlled by certain directors and officers. The amounts are unsecured, non-interest bearing and due on demand.

• (b) The Company considers its officers and directors to be key management personnel. During the periods presented the Company paid or accrued the following key management personnel compensation to directors, officers, and/or companies controlled by directors and officers and/or companies with certain directors in common:

ommon:
	September 30,		September 30,
		2021		2020
Consulting fees	$	40,000	$	-
Management fees		-		83,641
Professional fees		57,000		-
Wages and benefits		169,723		-
Share-basedpayment		1,227,949		9,803

• (c) During the nine months ended September 30, 2021, the Company acquired equipment in the amount of $Nil (2020 - $2,827) from a company with certain directors in common and companies controlled by certain directors and officers.

13

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

9. CAPITAL STOCK

Authorized Share Capital:

Unlimited number of common shares without par value

Issuance of shares

During the period ended September 30, 2021, the Company completed the following share transactions:

• Issued a total of 702,736 common shares with a fair value of $245,958 in settlement of debts in the amount of $245,958 (Note 8).

• On April 1, 2021, the Company issued 2,150,000 shares under a Post-Closing Covenant in the Northstar Empower Agreement with a benefit to each shareholder of $0.35 per share for a total benefit of 752,500. The benefit was recorded as share-based compensation.

• Issuance of shares received on subscription receipts:

• On March 25, 2021 and March 26, 2021, the Company raised $12,251,812 on 34, 975,178 Subscription Receipts at a price of $0.35 per Subscription Receipt. The Subscription Receipts incurred $705,098 in finders fees payable in cash of which $352,649 was withheld from the Subscription Receipts and the balance of $352,449 in finders fees were paid on Escrow Release. Each Subscription Receipt converted into one unit upon the receipt of the final prospectus by the British Columbia Securities Commission on June 22, 2021. Each Unit is comprised of one common share in the capital of the Company (each, a “Share”) and one-half of one transferable common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant entitles the holder thereof to acquire one Share (each, a “Warrant Share”) at a price of $0.50 per Warrant Share for a period of two years from listing on a public market. In addition, to the cash portion of the finder’s fees, 2,014,565 Special Warrants were issued and has converted to 2,014,565 Broker Warrants on Escrow Release valued at $391,873.

During the year ended December 31, 2020, the Company completed the following share transactions:

• Northstar issued a total of 44,331,147 shares in connection with the RTO (Note 4) valued at $8,383,146.

• Empower, prior to the Amalgamation issued a total of 2,082,500 shares at a price of $0.15 per share for gross proceeds of $312,375 on warrant exercises.

14

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

10. RESERVES

Stock options

The Company has a stock option plan in place under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option is as determined by the Board at the time of grant. Options vest as determined by the Board of Directors. The options can be granted for a maximum term of 10 years.

Stock option transactions are summarized as follows:

Stock option transactions are summarized as follows:
		Weighted
	Number		Average
	of Options	Exercise Price
Outstanding,December 31, 2019 and 2018	2,280,000	$	0.250
Cancelled on RTO	(2,280,000)	$	0.250
Outstanding,December 31, 2020	-	$	-
Issued	5,400,000	$	0.350
Outstanding, September 30, 2021	5,400,000	$	0.350

Share-based compensation recognized for options vested during the nine months ended September 30, 2021 was $1,059,018 (December 31, 2020 - $9,803).

Outstanding and exercisable stock options as at September 30, 2021:

Number of Options ExpiryDate Exercise Price Outstanding Exercisable	Number of Options ExpiryDate Exercise Price Outstanding Exercisable	Number of Options ExpiryDate Exercise Price Outstanding Exercisable
February 16, 2031 July12,2026	$ 0.35 $0.35	3,300,000 2,475,000 2,100,000 525,000
Total Outstanding		5,400,000 3,000,000

The fair value of stock options were calculated using the Black-Scholes option pricing model with the following weighted average assumptions:

weighted average assumptions:
	September 30,	December 31,
	2021	2020
Expected volatility	125%	N/A
Risk-free interest rate	1.05%	N/A
Expected life	8.43 years	N/A
Dividend yield	-	N/A
Estimated fair value per option	$0.32	N/A

15

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

10. RESERVES (Continued)

Warrants

Warrant transactions are summarized as follows:

Warrant transactions are summarized as follows:
		Weighted
	Number		Average
	of Warrants	Exercise Price
Outstanding, December 31, 2019	8,818,073	$	0.35
Exercised*	(2,082,500)	$	0.15
Expired	(1,434,167)	$	0.30
Adjustment for conversion ratio**	396,183	$	0.06
Outstanding, December 31, 2020	5,697,589	$	0.30
Issued	19,502,149	$	0.50
Outstanding, September 30, 2021	25,199,738	$	0.46

The Warrants will be void and of no value unless exercised on or before 5 years from the date that the warrants are issued, provided however, that if the Company’s shares are listed for trading on a Stock Exchange or Stock Market before the expiry of the 5 year term at which the Warrant may be exercised any time after the expiry of five years from the date that the Company’s shares are listed for trading on such Stock Exchange or Stock Market.

• All warrants were given a one-time reduction of exercise price from their original exercise price to $0.15 from January 1, 2020 to June 30, 2020 at which time 2,082,500 warrants were exercised. On July 1, 2020 the exercise price reverted back to their original terms.

**The warrants outstanding on acquisition (Note 4) were converted at a ratio of 1 old for 1.0747 new warrants on December 23, 2020 and the price was adjusted by the same ratio.

Outstanding warrants:

Outstanding warrants:
		Exercise	September 30,	December 31,
	ExpiryDate	Price	2021	2020 (1)
	July 13, 2026(1)	$ 0.279	4,596,268	4,596,268
Finders warrants	July 13, 2026(1)	$ 0.279	406,249	406,249
	July 13, 2026(1)	$ 0.465	490,615	490,615
Finders warrants	July 13, 2026(1)	$ 0.465	204,457	204,457
	June 22, 2023(2)	$ 0.500	17,487,584	-
Broker warrants	June 22, 2023(2)	$0.500	2,014,565	-
Outstanding and exercisable			25,199,738	5,697,589

(1)The warrants outstanding on acquisition (Note 4) were converted at a ratio of 1 old for 1.0747 new warrants on December 23, 2020 and the price was adjusted by the same ratio. All warrants were reissued on July 13, 2021, for a period of 5 years when the Company become publicly listed and trading, with a new expiry date of July 13, 2026. These warrants are non-transferable.

(2)The warrants issued on June 22, 2021 trade on the TSX-V under the symbol ROOF.WT.

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Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements

(Unaudited - Expressed in Canadian Dollars) September 30, 2021

11. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the nine months ended September 30, 2021:

• Issued 2,150,000 shares at $0.35 per share with a value of $752,500 as share based payments.

• Settled $245,958 in vendor debts with 702,736 shares at $0.35 per share.

• Recognition of $2,260,140 in right-of-use assets and lease liabilities on adoption of IFRS 16.

Significant non-cash transactions during the year ended December 31, 2020:

• Settled $274,341 in vendor debts with shareholder loans.

• Shares issued in connection with the RTO.

• Property, plant, and equipment included in accounts payable and accrued liabilities - $125,377.

• Recognition of $612,140 in right-of-use assets and lease liabilities on adoption of IFRS 16.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

a) Capital Management

The Company manages its capital to ensure that it will be able to continue as going-concern while maximizing the return to shareholders through the optimization of debt and equity balances.

The capital of the Company consists of items included in Shareholders’ Equity of $11,465,690.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may issue equity or return capital to shareholders. There were no changes to the Company’s approach to capital management during the period ended September 30, 2021. The Company is not subject to externally imposed capital requirements.

b) Financial Risk Management Objectives

The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk and interest rate risk. Where material, these risks are reviewed and monitored.

c) Credit Risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date.

Cash is held with reputable banks in Canada. The long-term credit rating of these banks, as determined by Standard and Poor’s, was A+.

d) Liquidity Risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they become due.

Accounts payables and accrued liabilities are paid in the normal course of business generally according to their terms. In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. As at September 30, 2021, the Company had $8,251,481 cash to settle current liabilities of $1,038,758.

17

Northstar Clean Technologies Inc. (formerly Northstar Venture Technologies Inc.) Notes to the Condensed Consolidated Interim Financial Statements (Unaudited - Expressed in Canadian Dollars) September 30, 2021

12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

• e) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. The Company’s credit facility bears interest at a rate of prime plus 1.75%, and as such the Company is exposed to interest rate risk. The effect of a 10% increase in interest rates would be nominal. In addition, an immaterial amount of interest rate exposure exists in respect of cash balances on the statement of financial position.

f) Foreign currency risk

The Company is exposed to foreign currency risk to the extent that monetary financial instruments are denominated in United States dollars. The Company has not entered any foreign currency contracts to mitigate this risk. The Company’s sensitivity analysis suggests that a 10% change in the rate of exchange between the Canadian and United States dollar would have an insignificant impact on its results of operations as it held nominal financial assets and liabilities denominated in United States dollars.

• g) Fair Value Measurements Recognized in the Statement of Financial Position

The following table summarizes the carrying values of the Company’s financial instruments.

	September 30,	September 30,	December 31,	December 31,
		2021		2020
Financial assets at FVTPL (i)	$	8,251,481	$	1,977,799
Financial liabilities at amortized cost(ii)	$	606,051	$	2,259,836

(i) Cash, restricted cash and investments (ii) Bank indebtedness, Accounts payable and accrued liabilities and loans payable.

The Company categorizes its financial assets and liabilities measured at the fair value into one of three different levels depending on the observability of the inputs used in the measurement.

The three levels are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 – inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Cash and restricted cash is measured at fair value using Level 1 inputs. Investments are measured at Level 2. Fair value of level 2 investments were estimated by reference to an agreed sales price.

The fair values of other financial liabilities approximate their carrying value, due to their short-term nature.

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