Three Sixty Solar Ltd. — Interim / Quarterly Report 2024

Aug 15, 2024

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UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (EXPRESSED IN CANADIAN DOLLARS)

THREE SIXTY SOLAR LTD

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024, AND 2023

NOTICE OF NO AUDITORS’ REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

The accompanying unaudited condensed interim consolidated financial statements of Three Sixty Solar Ltd. (the “Company”) have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (“CPA Canada”) for a review of interim financial statements by an entity’s auditor.

THREE SIXTY SOLAR LTD.

AUGUST 14, 2024

THREE SIXTY SOLAR LTD CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited - Expressed in Canadian Dollars)

			June 30,		September 30,
As at			2024		2023
Assets	Notes
Current assets
Cash and cash equivalents		$	8,142	$	36,057
Prepaid expenses	3		69,190		382,628
Other receivables			67,332		94,390
Total current assets			144,664		513,075
Equipment	4		980		1,334
Right-of-use assets	5		223,015		303,300
Total assets		$	368,659	$	817,709
Liabilities and Shareholders’ Deficiency
Current liabilities
Accounts payable and accrued liabilities	6,9	$	1,695,748	$	1,175,655
Deferred other income	11		18,550		-
Loans payable	7,9		79,449		12,700
Lease liabilities	8		127,019		106,936
Total current liabilities			1,920,766		1,295,291
Lease liabilities	8		171,536		269,266
Total liabilities			2,092,302		1,564,557
Shareholders’ Deficiency
Share capital	10		11,640,320		11,407,260
Contributed capital	10		188,255		188,255
Obligation to issue shares	10		-		10,250
Reserves	10		943,323		893,772
Deficit			(14,495,541)		(13,246,385)
Total shareholders’ deficiency			(1,723,643)		(746,848)
Total shareholders’ deficiency and liabilities		$	368,659	$	817,709

Nature of operations and going concern (Note 1) Subsequent events (Note 13)

Approved by the Board of Directors on August 14, 2024:

“Brian Roth”

“Brian Roth” “Benjamin Parsons” Director Director

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

THREE SIXTY SOLAR LTD CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited - Expressed in Canadian Dollars, except for the number of shares)

			For the	three	months ended		For the	nine	months ended
			June 30,		June 30,		June 30,		June 30,
	Note		2024		2023		2024		2023
Operating expenses
Corporate		$	43,729	$	32,741	$	147,843	$	76,433
Depreciation	4,5		26,879		72,012		80,640		162,516
Marketing			23,362		1,353,076		155,141		4,866,431
Office			72,069		104,132		231,471		228,103
Professional fees	9		93,925		347,985		551,410		985,109
Research and development			-		4,059		13,888		4,059
Salaries and wages	9		46,853		40,562		143,458		153,189
Share-based compensation	10		11,272		141,177		45,193		644,169
Travel			24,802		14,508		26,415		25,246
Total operating expenses			(342,891)		(2,110,252)		(1,395,459)		(7,145,255)
Other
Interest income			-		454		48		855
Interest expense	7,8		(810)		-		(1,749)		-
Foreign exchange gain (loss)			(164)		7,843		(752)		8,819
Other income	11		54,000		-		148,756		-
Net loss and comprehensive loss		$	(289,865)	$	(2,101,955)	$	(1,249,156)	$	(7,135,581)
Weighted average number of
shares – Basic and diluted			45,689,710		39,760,434		45,335,029		31,889,919
Lossper share – Basic and diluted		$	(0.01)	$	(0.05)	$	(0.03)	$	(0.22)

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

THREE SIXTY SOLAR LTD CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIENCY) (Unaudited - Expressed in Canadian Dollars, except for the number of shares)

	Share Capital Number of Shares Amount Contributed Capital Reserves Obligation to Issue Securities Deficit Total Shareholders’ Equity (Deficiency)
Balance, September 30, 2022	24,084,730 $ 4,188,748 $ 188,255 $ 2,632,414 $ - $ (3,962,968) $ 3,046,449
Units issued from private placement Shares issued for warrant exercises Share subscriptions refunded Shares issued for financing warrants Shares issued for RSU conversion Share issuance costs Share issuance costs – broker warrants Share-based compensation Net loss for the period	2,524,587 1,446,130 - 68,622 - - 1,514,752 13,922,583 3,143,687 - (109,465) - - 3,034,222 - (5,000) - - - - (5,000) 1,996,000 1,996,000 - (1,996,000) - - - 435,000 299,396 - (299,396) - - - - (100,992) - - - - (100,992) - (19,474) - 19,474 - - - - - - 644,169 - - 644,169 - - - - - (7,135,581) (7,135,581)
Balance, June 30, 2023	42,962,900 $ 10,948,495 $ 188,255 $ 959,818 $ - $ (11,098,549) $ 998,019
Balance, September 30, 2023	44,781,875 $ 11,407,260 $ 188,255 $ 893,772 $ 10,250 $ (13,246,385) $ (746,848)
Units issued from private placement Shares issued for warrant exercises Share issuance costs Share-based compensation Net loss for the period	753,472 195,903 - (7,535) (10,250) - 178,118 335,000 38,357 - 11,893 - - 50,250 - (1,200) - - - - (1,200) - - - 45,193 - - 45,193 - - - - - (1,249,156) (1,249,156)
Balance, June 30, 2024	45,870,347 $ 11,640,320 $ 188,255 $ 943,323 $ - $ (14,495,541) $ (1,723,643)

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

THREE SIXTY SOLAR LTD CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED

• (Unaudited Expressed in Canadian Dollars)

		June 30,		June 30,
		2024		2023
Cash flow from operating activities
Net loss for the period	$	(1,249,156)	$	(7,135,581)
Items not affecting cash:
Depreciation		80,640		162,516
Accrued interest		47,676		-
Share based compensation		45,193		644,169
Non-cash working capital items:
Accounts payable and accrued liabilities		520,092		381,283
Other receivables		27,058		21,080
Prepaid expenses		313,438		(1,110,022)
Deferred other income		18,550		-
Net cash used in operating activities		(196,509)		(7,036,555)
Cash flows from financing activities
Proceeds received for shares and warrants issued		178,118		3,034,222
Proceeds received for units issued		50,250		1,441,444
Proceeds from loans		65,000		-
Share subscriptions refunded		-		(5,000)
Share issuance costs		(1,200)		(22,667)
Subscription proceeds received for shares to be issued		50,250		-
Principal payments on lease obligation		(123,574)		(119,914)
Interest paid on leaseliabilities		-		8,508
Net cash flows provided by financing activities		168,594		4,336,593
Net change in cash and cash equivalents		(27,915)		(2,699,962)
Cash, beginning		36,057		2,708,553
Cash, ending	$	8,142	$	8,591
Cash and cash equivalents consist of the following:
Cash held in banks	$	8,142	$	8,591
	$	8,142	$	8,591
Supplementary cash flow information:
Taxes paid	$	-	$	-
Initial recognition of right of use asset and liability		-		356,825
Fair value on exercise of RSUs		-		299,396
Fair value on exercise of warrants	$	7,535	$	109,465

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Three Sixty Solar Ltd (the “Company”) was incorporated in Canada on February 12, 1996. The address of the Company’s registered office and its head office is 1500, 1055 West Georgia Street, Vancouver, BC, V6E 4N7. The Company’s stock trades on the Cboe Canada exchange (“Cboe Canada”) under the symbol “VSOL”.

On August 4, 2022, the Company completed a reverse takeover with Three Sixty Solar Operations Ltd. (formerly Three Sixty Solar Ltd.) (“Opco”) (the “Transaction”). Opco is focused on developing a high-density clean energy solution. Opco is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the condensed interim consolidated financial statements at their historical carrying value. The Company’s operations are considered to be a continuance of the business and operations of Opco. The Company’s results of operations are those of Opco, with the Company’s operations being included from August 4, 2022, the closing date of the Transaction.

These condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to 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 nine months ended June 30, 2024, the Company has negative cash flow from operations and recurring operating losses and as at that date, has an accumulated deficit of $14,495,841. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

The Company’s ability to continue its operations and to realize assets at their carrying values is dependent upon its ability to raise financing and generate profits and positive cash flows from operations in order to cover its operating costs. The Company has been dependent on its ability to raise capital through debt and or equity to provide financing cash flows to date. There can be no assurance that financing activities will continue, or if the Company will be able to arrange other sources of financing.

2. BASIS OF PRESENTATION

a) Statement of compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosure included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted and these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended September 30, 2023.

The Company’s management makes judgments in its process of applying the Company’s accounting policies in the preparation of its condensed interim consolidated financial statements. In addition, the preparation of the financial data requires that the Company’s management make assumptions and estimates of the effects of uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting effects on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively. The critical judgments and estimates applied in the preparation of the Company’s condensed interim consolidated financial statements are consistent with those applied and disclosed in the Company’s financial statements for the year ended September 30, 2023. In addition, the accounting policies applied in these condensed interim consolidated financial statements are consistent with those applied and disclosed in the Company’s audited financial statements for the year ended September 30, 2023, except the following:

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

Sub-leases

When the Company is a sub-lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset, and makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease, and the income is recorded as other income in profit or loss. As part of this assessment, the Company considers certain indicators such as whether the lease term is a short-term lease.

The Company’s interim results are not necessarily indicative of its results for a full year.

These condensed interim consolidated financial statements were approved by the Board of Directors on August 14, 2024.

b) Basis of presentation

These condensed interim consolidated financial statements are presented in Canadian dollars which is the functional currency of the Company and its wholly owned subsidiaries. These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments, which are stated at fair value. In addition, they have been prepared using the accrual basis of accounting, except for the cash flow information.

c) Basis of consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are those entities over which the Company has control. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity and be exposed to the variable returns from its activities. Details of the Company’s subsidiaries are as follows:

	OWNERSHIP	JURISDICTION OF
SUBSIDIARIES	PERCENTAGE	INCORPORATION
Three Sixty Solar Operations Ltd	100%	British Columbia, Canada
Victory Exploration Inc.	100%	Quebec, Canada
Liberty One Utah Inc.	100%	Utah, United States

Inter-company balances and transactions are eliminated on consolidation. Victory Exploration Inc. and Liberty One Utah Inc. are inactive.

3. PREPAID EXPENSES

As at		June 30, 2024		September 30, 2023
Prepaid share issuance costs	$	-	$	190,945
Prepaid insurance		32,921		61,716
Rent deposit		29,890		29,890
Other		6,379		13,362
Prepaid marketing services		-		11,521
Prepaid consulting expenses		-		75,194
	$	69,190	$	382,628

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023

(Expressed in Canadian Dollars)

4. EQUIPMENT

		Computer		Furniture		Leasehold
		Equipment		and Fixtures		Improvement		Total
Cost
Balance, September 30, 2022	$	2,354	$	12,369	$	20,388	$	35,111
Additions		-		-		-		-
Balance, September 30, 2023, and
June 30, 2024	$	2,354	$	12,369	$	20,388	$	35,111
Accumulated depreciation
Balance, September 30, 2022		550		1,893		3,210		5,653
Depreciation		470		10,476		17,178		28,124
Balance, September 30, 2023	$	1,020	$	12,369	$	20,388	$	33,777
Depreciation		354		-		-		354
Balance, June 30, 2024	$	1,374	$	12,369	$	20,388	$	34,131
Net book value:
September 30, 2023	$	1,334	$	-	$	-	$	1,334
June 30, 2024	$	980	$	-	$	-	$	980

5. RIGHT-OF-USE ASSET

On March 14, 2023, the Company renewed its lease agreement (Note 8) for three years commencing in August 2023. The right of use asset related to the renewal were remeasured on March 14, 2023, and treated as a lease modification as shown below.

		Office
Cost
Balance, September 30, 2022	$	147,847
Lease modification (Note 8)		356,825
Balance, September 30, 2023 and June 30, 2024	$	504,672
Accumulated depreciation
Balance, September 30, 2022	$	24,641
Depreciation		176,731
Balance, September 30, 2023	$	201,372
Depreciation		80,285
Balance, June 30, 2024	$	281,657
Net book value
September 30, 2023	$	303,300
June 30, 2024	$	223,015

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

As at		June 30, 2024		September 30, 2023
Accounts payable	$	1,519,326	$	637,723
Accrued liabilities		153,878		522,452
Payroll liabilities		22,544		15,480
	$	1,695,748	$	1,175,655

7. LOAN PAYABLE

The Company obtained unsecured loans of $40,000 and $25,000 on November 30, 2023, and January 12, 2024, respectively. Both loans bear interest at the rate of 5% annually and payable on demand.

		Total Loans
Balance, September 30, 2023 and 2022 (Note 9)	$	12,700
Additions		65,000
Balance, June 30, 2024	$	77,700

As at June 30, 2024, $1,749 of interest was accrued on these loans.

8. LEASE LIABILITY

The Company had a lease agreement to lease office space which expired on July 31, 2023. This lease liability was measured using an incremental borrowing rate of 15%. Additional payments consisting of utilities and additional rent are expensed as incurred.

On March 14, 2023, the Company renewed its lease agreement for three years commencing in August 2023. The renewed lease agreement offers a rent-free period of one month. After the rent-free period, the monthly base rent payment is $13,730 with a 4% and 3% increase in the years that follow respectively. The lease liability and right of use asset related to the renewal were remeasured on March 14, 2023, and treated as a lease modification as shown below.

		Building
Balance, September 30, 2022	$	124,565
Interest expense		41,780
Lease payments		(146,968)
Lease modification		356,825
Balance, September 30, 2023	$	376,202
Interest expense		45,927
Lease payments		(123,574)
Balance, June 30, 2024	$	298,555
Current portion	$	127,019
Long-termportion	$	171,536

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

At June 30, 2024, the Company is committed to minimum lease payments as follows:

Maturity analysis		June 30, 2024		September 30, 2023
Less than one year	$	170,361	$	165,783
One to five years		189,991		345,198
Total undiscounted lease payments		360,352		510,981
Amount representing implicit interest		(61,797)		(134,779)
Lease liabilities	$	298,555	$	376,202

9. RELATED PARTY TRANSACTIONS AND BALANCES

Related Party Transactions

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. Key management personnel comprise officers and directors of the Company.

The Company incurred the following salaries fees charged by directors and officers and companies that are significantly influenced by the directors and officers of the Company for the three and nine months ended June 30, 2024:

		Three months ended	Three months ended			Nine months ended	Nine months ended	Nine months ended
		June 30,					June 30,
		2024		2023		2024		2023
Salaries and benefits
Chief Executive Officer (“CEO”)	$	45,000	$	48,458	$	135,000	$	139,841
Directors		-		-		-		4,798
Professional fees
Chief Financial Officer(“CFO”)		9,000		22,000		27,000		27,000
Share-based compensation
CFO		-		-		-		55,860
Directors		-		24,005		-		55,005
	$	54,000	$	94,463	$	162,000	$	282,504

Related party balances

As at June 30, 2024, included in accounts payable and accrued liabilities is $14,095 (September 30, 2023 - $11,077) due to the CEO of the Company.

As at June 30, 2024, included in accounts payable and accrued liabilities is $24,600 (September 30, 2023 - $Nil) due to the CFO of the Company.

As at June 30, 2024, included in loans payable (Note 7) is $12,700 (September 30, 2023 - $12,700) due to a director of the Company. This loan is non-interest bearing, unsecured and payable on demand.

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

10. SHARE CAPITAL

a) Authorized capital

The Company is authorised to issue unlimited number of common shares without par value.

b) Issued

During the nine months ended June 30, 2024:

During the nine months ended June 30, 2024, the Company issued 753,472 common shares pursuant to the exercise of 753,472 warrants at $0.25 for proceeds of $195,903, including $10,250 subscription received during the year ended September 30, 2023 which was reclassed from obligation to issue shares. As a result of this warrant exercise, $7,535 was transferred from reserves to share capital.

On April 29, 2024, the Company closed the first tranche of a unit private placement at $0.15 per unit. Each unit consists of one common share and one half of one warrant, with each warrant entitling the holder to purchase one additional common share at a price of $0.50 per share until April 29, 2026. The Company received proceeds of $50,250 and issued 335,000 units. $11,893 was allocated to the warrants based on the residual method.

During the year ended September 30, 2023:

During the year ended September 30, 2023, the Company issued 15,741,558 common shares pursuant to the exercise of 15,741,558 warrants, 2,976,152 warrants of these warrants were exercised at $0.10 and 12,765,406 warrants at $0.25 for proceeds of $297,615 and $3,191,352 respectively. The Company issued a further 53,000 shares for the exercise of 53,000 Financing Warrants (the “Financing Warrants”) for no consideration, $53,000 was transferred from reserves to share capital. In addition, the Company also issued 435,000 common shares for the exercise of 435,000 RSUs. $5,000 was refunded relating to share subscriptions received for shares that were not issued.

On February 6, 2023, 1,943,000 Financing Warrants were automatically converted to 1,943,000 units, where each unit consists of one common share and one additional warrant. $1,943,000 was transferred from reserves to share capital. Each additional warrant allows the holder to purchase one common share at an exercise price of $2 per share for 24 months following the date of issue.

On June 9, 2023, the Company closed the first tranche of a unit private placement at $0.60 per unit (the “LIFE Financing”), and another unit private placement occurring concurrently with the LIFE Financing (the “Concurrent Financing”). Each unit consists of one common share and one warrant, with each warrant entitling the holder to purchase one additional common share at a price of $0.75 per share until June 9, 2025. The Company received proceeds of $1,029,332 and issued 1,715,553 units. $68,622 was allocated to the warrants based on the residual method. In connection with the private placement, the Company incurred agent commissions of $22,667 issued 37,450 broker warrants entitling the holders to purchase one common share at a price of $0.60 per share until June 9, 2028. The fair value of the broker warrants was estimated to be $16,224 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 105%, riskfree interest rate - 3.68% and an expected remaining life – 5 years.

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

On June 26, 2023, the Company closed the second tranche of the LIFE and Concurrent Financings at $0.60 per unit. Each unit consists of one common share and one warrant, with each warrant entitling the holder to purchase one additional common share at a price of $0.75 per share until June 26, 2025. The Company received proceeds of $485,420 and issued 809,034 units. No residual value was allocated to the warrants based on the residual method. In connection with the private placement, the Company incurred agent commissions of $3,990 and issued 6,650 broker warrants entitling the holders to purchase one common share at a price of $0.60 per share until June 26, 2028. The fair value of the broker warrants was estimated to be $3,253 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 106%, riskfree interest rate - 3.70% and an expected remaining life – 5 years.

c) Warrants

	Number of warrants		Weighted average exerciseprice
Balance, September 30, 2022	28,513,806	$	0.21
Issued	2,568,687		0.75
Exercised	(15,741,558)		0.22
Balance, September 30, 2023	15,340,935	$	0.28
Issued	167,500		0.50
Exercised	(753,472)		0.25
Balance, June 30, 2024	14,754,963	$	0.29

The following table discloses the number of warrants outstanding as at June 30, 2024:

Number of warrants		Price	Expiry date
6,981,122	$	0.25	August 4, 2025
1,103,975		0.10	January 25, 2025
100,345		2.00	August 4, 2024
3,833,334		0.05	August 4, 2027
1,715,553		0.75	June 9, 2025
37,450		0.60	June 9, 2028
809,034		0.75	June 26, 2025
6,650		0.60	June 26, 2028
167,500	$	0.50	April 29, 2026
14,754,963

As at June 30, 2024, the weighted average life remaining of the warrants outstanding is 1.57 years.

d) Financing Warrants

On February 6, 2023, 1,996,000 Financing warrants automatically converted to one unit as per the financing warrant agreements. 53,000 of the warrants were converted into one common share each and 1,943,000 were converted into units. Each unit consists of one share and one warrant (the “Additional Warrant”). The fair value of the additional warrants was assigned to be $Nil.

As at June 30, 2024, the Company has 1,943,000 Additional Warrants outstanding.

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

e) Options

The Company has a Stock Option Plan (the “Plan”) which provides that the Committee or Board of Directors (“the Committee”) of the Company may from time to time, in its discretion, grant to directors, officers, employees and technical consultants and contractors to the Company, non-transferable options to purchase common shares of the Company. The Plan was approved by the Company’s shareholders on November 15, 2022.

All options granted pursuant to the Plan shall be subject to the terms and conditions of the Plan. The number of shares which will be available for purchase pursuant to an option will be equal to the number of shares as determined by the Committee from time to time, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares. If any option expires or otherwise terminates for any reason without having been exercised in full, the number of shares in respect of such expired or terminated option shall again be available for the purposes of granting options pursuant to the Plan. The grant date and the expiry date of an option shall be the dates fixed by the Committee at the time the option is granted and shall be set out in the option certificate issued in respect of such option. The exercise price shall also be determined by the Committee and set out in the option certificate issued in respect of the option and shall not be less than the market value of the shares for a particular grant date.

On October 3, 2023, the Company granted 200,000 stock options exercisable at $0.60 until October 3, 2026, 10 % of these options vest immediately and 15% vest on February 4, 2024 and in equal tranches every 6 months thereafter. The fair value of the options was estimated to be $19,824 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility -111.87%, risk-free interest rate – 4.76% and an expected remaining life – 3 years.

The volatility percentage used was based on industry standards for comparable companies with a historical volatility.

During the nine months ended June 30, 2024, share-based compensation in the amount of $14,955 (June 30, 2023

The continuity of stock options is summarized below:

	Number of options		Weighted average
			exerciseprice
Balance, September 30, 2022	1,730,000	$	1.09
Issued	525,000		0.75
Forfeited	(225,000)		1.00
Expired	(75,000)		3.00
Balance, September 30, 2023	1,955,000	$	0.93
Issued	200,000		0.60
Forfeited	(60,000)		1.00
Balance, June 30, 2024	2,095,000	$	0.90

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

The following table discloses the number of options outstanding as at June 30, 2024:

Number of options	Exercisable		Price	Expiry date
1,370,000	1,370,000	$	1.00	August 9, 2024
350,000	350,000		0.62	October 25, 2024
75,000	75,000		1.00	December 2, 2024
50,000	50,000		1.00	April 19, 2025
50,000	50,000		1.00	July 12, 2025
200,000	50,000		0.60	October 3,2026
2,095,000	1,945,000

As at June 30, 2024, the weighted average life remaining of options outstanding is 0.40 years.

f) Restricted Share Units (“RSUs”)

The Company grants RSUs to directors, officers, employees and consultants as compensation for services, pursuant to its RSU Plan (the “RSU Plan”). The number of RSUs awarded and underlying vesting conditions are determined by the Board of Directors in its discretion. At the election of the Board of Directors, upon each vesting date, participants receive the issuance of common shares from treasury equal to the number of RSUs vesting. Fractional Shares shall not be issued and where a Participant would be entitled to receive a fractional Share in respect of any fractional vested RSU, the Company shall pay to such Participant, in lieu of such fractional Share, cash equal to the Vesting Date Value which is the closing price of the common shares on Cboe Canada for the trading day immediately preceding such payment date.

The RSU plan is authorized to grant a combination of stock options and restricted shares up to a maximum of 20% of the total number of common shares issued and outstanding at the time of the grant. The RSUs can be settled in either cash, shares, or a combination thereof at the sole discretion of the Company. Such a decision is to be made on each vesting date.

On the grant date of RSUs, the Company determines whether it has a present obligation to settle in cash. If the Company has a present obligation to settle in cash, the RSUs are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period. The Company has a present obligation to settle in cash if the choice of settlement in shares has no commercial substance, or the Company has a past practice or a stated policy of setting in cash, or generally settles in cash whenever the counterparty asks for cash settlement. If no such obligation exists, RSUs are accounted for as equity settled share-based payments and are valued using the share price on grant date.

During the nine months ended June 30, 2024, share-based compensation in the amount of $30,239 (June 30, 2023 - $442,909) was recognized on the issuance and vesting of RSUs to directors, officers and consultants.

As at June 30, 2024, the Company had 217,500 RSUs outstanding (September 30, 2023 – 280,000) of which 67,500 were vested.

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

The continuity of compensation options is summarized below:

	Number of Restricted Share Units
Balance, September 30, 2022 and September 30, 2021	-
Issued	902,500
Forfeited	(187,500)
Exercised	(435,000)
Balance, September 30, 2023	280,000
Forfeited	(62,500)
Balance, June 30, 2024	217,500

11. OTHER INCOME

On October 1, 2023, the Company entered into an office space sharing agreement with an unrelated party for an initial term of six months for a monthly amount of $10,000. A cash payment of $63,000 for the first six months was received in November 2023.

On January 1, 2024, February 1, 2024, and June 1, 2024, the Company entered into 3 additional office space sharing agreements on a month-to-month basis for which it will receive $4,762, $6,667, and $3,150 per month respectively.

In connection with these agreements, the Company has recognized $143,000 in rental income for the nine months ended June 30, 2024 (June 30, 2023 - $Nil) and $18,550 has been received in advance as at June 30, 2024.

During the nine months ended June 30, 2024, the Company received $5,756 for the completion of a feasibility study which covered the expenses for the work that had been subcontracted to a third party.

12. FINANCIAL INSTRUMENTS

The Company’s financial instruments are comprised of cash and cash equivalents, other receivables, accounts payable and accrued liabilities, loans payable and ease liabilities. Fair values of financial instruments are classified in a fair value hierarchy based on the inputs used to determine fair values. The levels of the fair value hierarchy are as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – Inputs that are not based on observable market data (unobservable inputs).

The Company has designated its cash as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities and lease liabilities are classified as other financial liabilities, which are measured at amortized cost.

As at June 30, 2024, the carrying value of the Company’s financial instruments approximate their fair value due to their short-term nature.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Fair value

The carrying amounts for cash, and accounts payable and accrued liabilities on the statements of financial position approximate fair value because of the limited term of these instruments.

THREE SIXTY SOLAR LTD NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 and 2023 (Expressed in Canadian Dollars)

Interest rate risk

The Company has cash balances and loans payable. Interest rate risk is considered to be low.

Credit risk

Credit risk is the risk that a client or vendor will be unable to pay or receive any amounts owed or owing by the Company. Management's assessment of the Company's risk is low as it is primarily attributable to funds held in banks, unit subscription receivable and GST receivable.

Liquidity Risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. Management intends to obtain additional equity or debt financing in order to meet its current liabilities as they become due. As at June 30, 2024, the Company had cash of $8,142 to settle short term liabilities of $1,920,766.

The following table outlines the undiscounted contractual maturities of the Company’s financial liabilities at June 30, 2024:

	Less than 1year	1 – 5years	Thereafter
Accounts payable and accrued liabilities	$ 1,695,748	$ -	$	-
Lease liabilities	170,361	189,991		-
	$ 1,866,109	$ 189,991	$	-

Foreign currency risk

Foreign exchange risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company is exposed to foreign currency risk on its foreign currency denominated cash and accounts payable. As at June 30, 2024, the Company had CAD $171 (September 30, 2023 – CAD $231) in cash denominated in the United States Dollar and CAD $17,000 (September 30, 2023 - $4,862) in accounts payable denominated in the United States Dollar. Assuming all other variables remain constant, a 10% change in the value of the Canadian dollar against the US dollar would result in an approximate $1,717 change in profit or loss. Foreign currency risk is considered to be low.

13. SUBSEQUENT EVENTS

On July 23, 2024, the Company issued 100,800 shares pursuant to the exercise of 100,800 warrants at $0.25 for proceeds of $25,200.

On August 1, 2024, the Company issued 100,000 shares pursuant to the exercise of 100,000 warrants at $0.25 for proceeds of $25,000.