Graphite One : Interim Financial Statements – March 31, 2024

GRAPHITE ONE INC.

Condensed Interim Consolidated Financial Statements

March 31, 2024 (Unaudited)

GRAPHITE ONE INC.

Condensed Interim Consolidated Statements of Financial Position (Unaudited - Expressed in United States dollars)

Approved by the Board of Directors:
«Anthony Huston»		«Douglas Smith»
Director		Director

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

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GRAPHITE ONE INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited - Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Condensed Interim Consolidated Statements of Shareholders' Equity (Unaudited - Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited - Expressed in United States dollars)

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

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GRAPHITE ONE INC.

Notes to the condensed interim consolidated financial statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in United States dollars, unless otherwise indicated)

1. NATURE OF OPERATIONS

Graphite One Inc. ("Graphite One" or the "Company") is a Canadian publicly traded mineral exploration company headquartered in Vancouver, British Columbia and its common shares trades on the TSX Venture Exchange ("TSXV") under the symbol GPH and the over-the-counter market exchange ("OTCQX") in the United States under the symbol GPHOF. The Company's registered office is located at Suite 600 - 777 Street Hornby, Vancouver, B.C. V6Z 1S4.

The Company is focused on developing its Graphite One Project (the "Project") with a plan to mine graphite from the Company's Graphite Creek Property, process the graphite into concentrate at a mineral processing plant located adjacent to the proposed mine, and ship the concentrate to the Company's proposed manufacturing plant in Ohio State where anode materials and other value-added graphite products would be produced.

The ability of the Company to proceed with the evaluation and development of the Project depends on a number of factors, the key ones including obtaining the necessary financing to complete the evaluation and development, and ultimately for the evaluation to demonstrate a positive financial outlook.

2. GOING CONCERN

These unaudited condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period.

As at March 31, 2024, the Company had a cash balance of $3,528,186 (December 31, 2023: $1,824,331), working

capital of $2,178,174 (December 31, 2023: $74,499), and an accumulated deficit of $49,127,102 (December 31,

2023: $47,931,655). The Company has incurred losses since inception and does not generate any cash inflows from operations. For the three months ended March 31, 2024, cash used in operating activities totaled $649,075 (March 31, 2023: $1,630,300) and $1,411,059 (March 31, 2023: $3,958,669) were spent on project related expenditures. Subsequent to March 31, 2024, the Company issued 5,130,873 common shares for gross proceeds of $3,794,348 (CA$5,130,873) received in the quarter from the exercise of common share purchase warrants at a reduced exercise price of $0.74 (CA$1.00) per common share pursuant to the Warrant Incentive Program, as such term is defined in Note 12d, and signed a revised cost share agreement with the Department of Defense ("DoD") to adjust the DoD's share of expenditures associated with the feasibility study from 50% to 75% based on a revised contract value of $49.8 million. The DoD's maximum share of the expenditures is now $37.3 million.

The Company's ability to continue to meet its obligations and conduct its planned exploration and development activities is uncertain and dependent upon the continued financial support of its shareholders and on securing additional financing. Based on projected administrative and project expenditures for 2024, the Company will require additional financings to continue to operate. There can be no assurance that the Company will be successful in securing adequate funding through additional financings, which gives rise to material uncertainty that may cast significant doubt regarding the going concern assumption and, accordingly, the ultimate appropriateness of the use of accounting principles applicable to a going concern. These unaudited condensed interim consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations for the foreseeable future. These adjustments could be material.

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GRAPHITE ONE INC.

Notes to the condensed interim consolidated financial statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in United States dollars, unless otherwise indicated)

3. BASIS OF PRESENTATION

These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") applicable to the preparation of interim financial statements, under International Accounting Standards ("IAS") 34 - Interim Financial Reporting and were approved for issuance by the Board of Directors of the Company on May 29, 2024. These financial statements have been condensed with certain disclosures omitted from the Company's audited consolidated financial statements for the year ended December 31, 2023. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the 2023 annual financial statements.

The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements, with the exception of those described in Note 5, are consistent with those applied and disclosed in the 2023 annual financial statements.

4. SIGNIFICANT JUDGMENTS IN APPLYING ACCOUNTING POLICIES

The preparation of these financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities at the period end date and reported amounts of expenses during the reporting period. Such judgements and estimates are, by their nature, uncertain. Actual outcomes could differ from these estimates.

The impact of such judgements and estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. These judgements and estimates are continuously evaluated and are based on management's experience and knowledge of the relevant facts and circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised and are accounted for prospectively. Critical accounting estimates and judgement that have the most significant effect on the amounts recognized in the financial statements are disclosed in Note 4 of the Company's consolidated financial statements for the year ended December 31, 2023 with the addition of:

Leases

The Company follows IFRS 16 in accounting for leases. A lessee recognises a right-of-use asset and a corresponding lease liability for almost all lease contracts greater than 12 months and the contract is enforceable. A lease contract is the acquisition of a right to use an underlying asset, with the purchase price paid in installments. The lessee recognises the right-of-use asset and the lease liability initially at the commencement date or at the start of the non- cancellable period of the lease.

The Company exercised judgement in defining the lease term for a 50-year lease signed on March 15, 2024 that includes termination rights. The Company has a right to terminate the lease during the first 18 months of the lease term (the "Termination Rights Period").

As at March 31, 2024, management is reasonably uncertain whether the Company will not terminate the lease due to the risk of certain triggering events that may result in the Company exercising its right to terminate the lease. As a result of these uncertainties, management will recognize the lease on a month-to-month basis. Management will reassess the accounting as the circumstances change.

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GRAPHITE ONE INC.

Notes to the condensed interim consolidated financial statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in United States dollars, unless otherwise indicated)

5. NEW STANDARD ADOPTED ON JANUARY 1, 2024

Presentation of Financial Statements (Amendment to IAS 1)

The amendments to IAS 1, clarifies the presentation of liabilities. The classification of liabilities as current or noncurrent is based on contractual rights that are in existence at the end of the reporting period and is affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of 'settlement' to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date.

The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The implementation of this amendment did not have a material impact on the Company.

1. CASH AND CASH EQUIVALENTS
2. RECEIVABLES

On July 17, 2023, the Company was awarded a DoD Technology Investment Agreement grant of up to $37.5 million (the "Grant") under Title III of the Defense Production Act, funded through the Inflation Reduction Act. The Grant provided for the DoD to fund 50% of the costs to complete the Graphite Creek feasibility study by November 30, 2024.

During the three months ended March 31, 2024, the Company made submissions to the DoD to draw down $1,137,917 from the Grant for reimbursement of DoD's 50% share of the feasibility study costs of which $944,906 was outstanding at March 31, 2024. In addition, $262,590 was outstanding from the Defense Logistics Agency (Note 15). Subsequent to March 31, 2024, the outstanding balances were received.

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GRAPHITE ONE INC.

Notes to the condensed interim consolidated financial statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in United States dollars, unless otherwise indicated)

8. PREPAIDS AND DEPOSITS

9. PROPERTY AND EQUIPMENT

Property and equipment are comprised of the following:

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GRAPHITE ONE INC.

Notes to the condensed interim consolidated financial statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in United States dollars, unless otherwise indicated)

10. EXPLORATION AND EVALUATION PROPERTY

The following table summarizes the capitalized costs associated with the Company's exploration and evaluation property:

Property Summary

The Graphite Creek Property consists of 135 State of Alaska mining claims ("State Claims") and forty-one state selected claims ("SS Claims"). The Company maintains the State Claims by performing the required annual assessment work on or for the benefit of the State Claims; timely recording of the Affidavits of Annual Labor attesting to the performance of the required assessment work and by making timely annual rental payments to the Alaska Department of Natural Resources. The SS Claims only require an initial deposit and do not require any annual labor obligations or rental payments.

Taiga Mining Company, Inc. ("Taiga") has a 1% net smelter royalty ("NSR") on the Graphite Creek Property that commences on the first day of the month in which the first concentrate is produced from certain of the mineral claims for a period of twenty (20) years.

There are two NSR's outstanding on the Graphite Creek Property: a 5% NSR and a 2.5% NSR on certain Alaska state claims, of which 2% of each NSR can be purchased for a total of $4.0 million, leaving a 3.0% and a 0.5% NSR on their respective claims.

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