Lithium South Development : Finanacial Report

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

(Unaudited)

FOR THE THREE MONTHS ENDED MARCH 31 2024

NOTCE OF NO AUDITOR REVIEW OF THE CONDENSED INTERIM COLSOLIDATED

FINANCIAL STATEMENTS

These unaudited condensed consolidated interim financial statements of Lithium South Development Corporation for the three months ended March 31, 2024 have been prepared by management and approved by the Board of Directors. These unaudited condensed consolidated interim financial statements have not yet been reviewed by the Company's external auditors.

LITHIUM SOUTH DEVELOPMENT CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT

(Expressed in Canadian Dollars)

					March 31,		December 31,
					2024		2023
ASSETS
Current
	Cash and cash equivalents			$	505,219	$	1,490,459
	Receivables				10,426		59,360
	Prepaid expenses				162,959		309,234
					678,604		1,859,053
Equipment (Note 4)				143,414		150,963
Exploration and evaluation assets (Note 4)				12,085,974		12,085,974
Total assets			$	12,907,992	$	14,095,990
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
	Accounts payable and accrued liabilities (Note 5)	$	384,500	$	602,106
Shareholders' equity
	Share capital (Note 6)				67,754,706		67,741,056
	Subscriptions received in advance (Note 6 and 15)		500,000		-
	Reserves (Notes 7 and 8)				17,248,500		17,248,500
	Deficit				(72,979,714)		(71,495,672)
Total shareholders' equity				12,523,492		13,493,884
Total liabilities and shareholders' equity			$	12,907,992	$	14,095,990
Nature and continuance of operations (Note 1)
Commitments (Note 11)
Subsequent event (Note 15)
	On behalf of the Board:
	"Adrian F. C. Hobkirk"	Director "Christopher P. Cherry"			Director

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

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS THREE MONTHS ENDED MARCH 31,

(Expressed in Canadian Dollars) (Unaudited)

			2024		2023
EXPENSES
Administration	$	71,710	$	170,170
Exploration costs (Note 4)		685,666		2,717,377
Management fees (Note 10)		91,058		91,301
Professional fees (Note 10)		63,911		73,866
Marketing		361,204		154,561
Share-based payments (Note 8 and 10)		-		259,173
Transfer agent and filing fees		26,285		76,306
Travel		50,131		45,074
			(1,349,965)		(3,587,728)
OTHER ITEM
Foreign exchange gain (loss)			(134,077)		830,632
Loss and comprehensive loss for the period	$	(1,484,042)	$	(2,757,096)
Basic and diluted loss per common share	$	(0.02)	$	(0.03)
Weighted average number of common shares
outstanding - basic and diluted		96,977,694		96,498,230

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

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LITHIUM SOUTH DEVELOPMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed in Canadian Dollar)

		Share Capital			Total
		Common		Deficit		Shareholders'
		Shares	Amount	Reserves	Equity
Balance, December 31, 2022
96,500,147	$67,535,307	$(63,033,068)	$16,384,992	$20,887,231
Comprehensive loss for the period	-	-	(2,757,096)	-	(2,757,096)
Escrow shares cancelled	(3,750)	-	-	-	-
Share-based payments		-	-	-	259,173	259,173
Balance, March 31, 2023	96,496,397	$67,535,307	$(65,790,164)	16,644,165	$18,389,308
Balance, December 31, 2023	96,969,542	$67,741,056	$(71,495,672)	$17,248,500	$13,493,884
Comprehensive loss for the period	-	-	(1,484,042)	-	(1,484,042)
Shares issued on exercise of warrants	30,000	13,650	-	-	13,650
Balance, March 31, 2024	96,999,542	$67,754,706	$(72,979,714)	$17,248,500	$12,523,492

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

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31,

(Expressed in Canadian Dollars)

Unaudited

20242023

CASH FLOWS USED IN OPERATING ACTIVITIES Loss for the period

Items not affecting cash: Share-based payments

Amortization included in exploration expenditures Changes in non-cash working capital items:

Receivables Prepaid expenses

Accounts payable and accrued liabilities

Net cash used in operating activities

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds on issuance of share capital on exercise of warrants Proceeds on issuance of share capital, net

Net cash provided by financing activities Change in cash and cash equivalents during the period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period

$ (1,484,042) $ (2,757,096)

• 259,173
  7,549 9,435

48,934 (18,063)

146,275 84,626

(217,606) (296,779)

(1,498,890) (2,718,704)

13,650-

500,000-

513,650-

(985,240) (2,718,704)

1,490,459 3,558,192

$ 505,219 $ 839,488

Supplement disclosure with respect to cash flows (Note 14)

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

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED MARCH 31, 2024

(Expressed in Canadian Dollars) (Unaudited)

1. NATURE AND CONTINUANCE OF OPERATIONS
   Lithium South Development Corporation (the "Company") was incorporated in the Province of Ontario on June 20, 1995. Effective January 15, 2007, the Company was granted a Certificate of Continuation under the Business Corporation Act from the jurisdiction of Ontario into British Columbia. The Company is an exploration stage junior mining company engaged in the identification, acquisition and exploration of mineral properties in Argentina. The Company's head office, principal address and registered records office is located at Suite 400 - 1681 Chestnut Street, Vancouver, British Columbia, Canada.
   The Company's consolidated financial statements have been prepared on a going concern basis, which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.
   For the three months ended March 31, 2024 the Company incurred a net loss of $1,484,042 (December 31, 2023 - $8,462,604) and had an accumulated deficit of $72,979,714 (December 31, 2023 - $71,495,672). Management is planning to raise additional capital to finance operations to continue to explore its mineral properties. The successful completion of such financing cannot be guaranteed. These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Such adjustments would be material.
   The Company is in the process of exploring its exploration and evaluation assets and has not yet determined whether these properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of its mineral properties and upon future profitable production.
2. BASIS OF PRESENTATION Statement of Compliance
   These unaudited condensed interim consolidated financial statements, including comparatives, have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). They have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information. These consolidated financial statements are presented in Canadian dollars unless otherwise noted.

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED MARCH 31, 2024

(Expressed in Canadian Dollars) (Unaudited)

2. BASIS OF PREPARATION (cont'd)

Approval of the financial statements

The consolidated financial statements of the Company for the three months ended March 31, 2024 were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on May 30, 2024.

Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: 1140177 BC Ltd., and NRG Metals S.A Argentina, from the date control was acquired. Control exists when the Company possesses power over an investee, has exposures to variable returns from the investee and has the ability to use its power over the investee to affect its returns. All intercompany balances and transactions have been eliminated.

Critical Accounting Estimates and Judgments

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

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

1. The carrying value and the recoverability of exploration and evaluation assets, which are included in the statements of financial position. The cost model is utilized and the value of the exploration and evaluation assets is based on their acquisition cost. At every reporting period, management assesses the potential impairment which involves assessing whether indicators exist that suggest the carrying amount exceeds the recoverable amount.
2. The valuation of shares issued in non-cash transactions. Generally, the valuation of non-cash transactions is based on the value of the goods or services received. When this cannot be determined, it is based on the fair value of the non-cash consideration. When non-cash transactions are entered into with employees and those providing similar services, the non-cash transactions are measured at the fair value of the consideration given up using market prices.
3. Share-basedpayments are subject to estimation of the value of the award at the date of grant using pricing models such as the Black-Scholes option valuation model. The option valuation model requires the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options and because the subjective input assumptions can materially affect the calculated fair value, such value is subject to measurement uncertainty.
4. The Company has evaluated the economic environment its entities operate in and determined that the functional currency of the Company, including its Argentinean subsidiary, is the Canadian dollar. A change in this judgement would have significant impact on these consolidated financial statements.

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED MARCH 31, 2024

(Expressed in Canadian Dollars) (Unaudited)

3. MATERIAL ACCOUNTING POLICIES

Equipment

Equipment is stated at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to profit or loss during the period in which they are incurred.

The Company's equipment consists of exploration equipment subject to 20% declining balance basis.

The Company allocates the amount initially recognized in respect of an item of equipment to its significant parts and amortizes separately each such part. Residual values, method of amortization and useful lives are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of equipment are determined by comparing the proceeds with the carrying amount of the asset and are included in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held on call with banks, highly liquid investments that are readily convertible into a known amount of cash, are subject to insignificant risk of changes in value, and have an initial term to maturity on acquisition of three months or less, net of bank overdrafts which are repayable on demand.

Financial instruments

Financial assets

The Company classified its financial assets in the following categories: at fair value through profit and loss ("FVTPL"), at fair value through other comprehensive income ("FVTOCI"), or at amortized cost. The determination of the classification of financial assets is made at initial recognition. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL; for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI.

The Company's accounting policy for each of the categories is as follows:

Financial assets at FVTPL: Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in profit or loss in the year.

Financial assets at FVTOCI: Financial assets carried at FVTOCI are recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in fair value of the financial assets held at FVTOCI are included in other comprehensive (loss) income in the year.

Financial assets at FVTOCI: Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive (loss) income in they arise.

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LITHIUM SOUTH DEVELOPMENT CORPORATION (An exploration stage company)

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PERIOD ENDED MARCH 31, 2024

(Expressed in Canadian Dollars) (Unaudited)

3. MATERIAL ACCOUNTING POLICIES (continued)

Financial instruments (continued)

Financial assets at amortized cost: A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date, and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

Impairment of financial assets at amortized cost: The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.

The following table shows the classification of the Company's financial assets:

Financial asset	Classification
Cash and cash equivalents	FVTPL
Short term investment	Amortized cost
Receivables	Amortized cost

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was incurred. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized in the statement of operations and comprehensive loss.

Other financial liabilities - This category includes accounts payable and accrued liabilities and due to related parties, all of which are recognized at amortized cost using the effective interest method.

Transaction costs in respect of financial instruments at fair value through profit or loss are recognized in the statement of operations and comprehensive losses immediately, while transaction costs associated with all other financial instruments are included in the initial measurement of the financial instrument.

The following table shows the classification of the Company's financial liabilities:

Financial liability	Classification
Accounts payable and accrued liabilities	Amortized cost

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